Payroll Deductions after Termination
Aurora IL
19 Posts
I was hoping someone would be able to point me in the right direction...
Recently I discovered that the payroll deduction for the employee portion of the health insurance premium was never set up for a particular employee. The deduction should've been set up back in May. I calculated the amount the employee owes the company and notified the employee. The solution we came up with was a double deduction until the amount owed was repaid. I e-mailed this solution to the employee and he called me on the phone and agreed to it over the phone. A few days after that, and just shortly before the double deductions were to begin, this employee was terminated by his supervisor.
I was told by the supervisor that the separation was somewhat amicable so he offered 2 wks severance pay in addition to any wages owed to him and pay for unused paid time off.
At this point, the employee told the supervisor about the situation with the health insurance deductions...
He said that since this was a company error he should not be expected to pay and he does not want his it deducted from his final wages, PTO or severance.
I think we should be able to deduct it from his severance since we technically do not owe him this. Can anyone tell me if this is illegal in any way?
Recently I discovered that the payroll deduction for the employee portion of the health insurance premium was never set up for a particular employee. The deduction should've been set up back in May. I calculated the amount the employee owes the company and notified the employee. The solution we came up with was a double deduction until the amount owed was repaid. I e-mailed this solution to the employee and he called me on the phone and agreed to it over the phone. A few days after that, and just shortly before the double deductions were to begin, this employee was terminated by his supervisor.
I was told by the supervisor that the separation was somewhat amicable so he offered 2 wks severance pay in addition to any wages owed to him and pay for unused paid time off.
At this point, the employee told the supervisor about the situation with the health insurance deductions...
He said that since this was a company error he should not be expected to pay and he does not want his it deducted from his final wages, PTO or severance.
I think we should be able to deduct it from his severance since we technically do not owe him this. Can anyone tell me if this is illegal in any way?
Comments
The form states that the employee authorizes the employer to make salary redirections in the amounts of the current premiums being charged and that if there are any premium increases or decreases, their salary redirections will be automatically adjusted.
But like I said, he didn't technically sign a form for 2006.
Health insurance premiums are deductions that are considered "to the benefit of the employee," so express written consent of the employee is not required (though it's still a good idea to have it). I would think that, since the employee received the benefit of the health insurance premiums, there is a good argument for deducting that amount from his pay, especially since he previously had agreed to pay it back, which means he acknowledged that he received the benefit and that he owed money for past premiums.
Note, however, that Illinois' Wage Payment and Collection Act provides that "Where the legitimacy of any deduction from wages is in dispute, the amount in question may be withheld if the employer notifies the Department of Labor on the date the payment is due in writing of the amount that is being withheld and stating the reasons for which the payment is withheld. Upon such notification the Department of Labor shall conduct an investigation and render a judgment as promptly as possible, and shall complete such investigation within 30 days of receipt of the notification by the employer that wages have been withheld. The employer shall pay the wages due upon order of the Department of Labor within 15 calendar days of issuance of a judgment on the dispute." (820 ILCS 115/9)
Of course there is the issue of whether you want to invite a DOL investigation into the matter, but if you think the employee will file a complaint with the DOL, then it's probably better to have taken the proper steps rather than having the DOL investigate on the employee's behalf and find that you neglected to notify it despite knowing that the employee disputed the deduction.
From what I've read about severance pay, it is completely voluntary and it is not "owed" to the employee.
He signed the agreement. He agreed to make up the premiums. He needs to pay up. No pay, no coverage. Simple.
Good luck!
Nae
Your best bet would be to contact your state department of labor - you don't have to use names - and find out what you can legally do.