Illegal verbiage in Employee Handbook
HR Mouse
53 Posts
I am a newer employee to my company & have been given the task of updating a couple policies in the Employee Handbook. While going through it looking for spelling & grammatical errors I noticed a section about Company Property. It states:
Return of Company Property<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
When your employment with this Company ends, we expect you to return Company property—and to return it clean and in good repair. This includes documents, phones, computers, equipment, keys, and tools.
If you do not return a piece of property, we will withhold from your final paycheck the cost of replacing that piece of property. If you return a piece of property in disrepair, we will withhold from your final paycheck the cost of repair. We also reserve the right to take any other lawful action necessary to recover or protect our property.
I know that we cannot legally hold an employee's paycheck for any reason (although several of our managers seem to think they can to get the employees to do things), but can we state that we will deduct the cost of replacement from a final paycheck for unreturned company property?
Comments
Try this--it doesn't mention docking the final paycheck and it gives them a chance to make good
When your employment with this company ends, it is expected that you will return all company property (keys, computers and other equipment, tools, etc.) in good condition. If property is not returned in good condition at termination or within X days of termination, you must contact the Human Resources Manager regarding reimbursement of the company for the cost of repair or replacement. We also reserve the right ... (continue as is).
Actually, this is legal in Texas. There is a wage deduction authorization agreement that the Texas Workforce Commission promulgates and it includes deductions for equipment lost or that the EE fails to return, among other things. We use this authorization for but we don't do much with tools and equipment.
http://www.twc.state.tx.us/news/efte/wage_deduction_authorization_agreement.html
There are important caveats at the bottom!
[quote user="Sheila2008"][...]If I am reading this right, if I have ee's sign something stating that if they leave the company for any reason and the tools have not been returned, their account paid off and/or the use of non accrued vacation time will be deducted from their last paycheck[...][/quote]
Whoa! We got off your original topic in discussing Texas law. The California Department of Industrial Relations spells it out pretty well at
http://www.dir.ca.gov/dlse/FAQ_Deductions.htm
Specifically, "The ability of an employer to deduct amounts from an employee’s wages due to a cash shortage, breakage, or loss of equipment is specifically regulated by the Industrial Welfare Commission Orders and limited by court decisions. (Kerr’s Catering v. Department of Industrial Relations (1962) 56 Cal.2d 319). In addition, there have been several court decisions that significantly restrict an employer’s ability to take an offset against an employee’s wages. Barnhill v. Sanders (1981) 125 Cal.App.3d 1, (Balloon payment on separation of employment to repay employee’s debt to employer is an unlawful deduction even where the employee authorized such payment in writing); CSEA v. State of California (1988) 198 Cal.App.3d 374 (Unlawful to deduct from current payroll for past salary advances that were in error); Hudgins v. Nieman Marcus (1995) 34 Cal.App.4th 1109 (Deductions for unidentified returns from commission sales unlawful.)"
See items 2 and 4 on the FAQ
Can you prove dishonesty, willfull acts of harm or gross negligience? If not, California law appears to say suck it up. There are a couple of CA experts in here, too.
Actually, MY original question was about un-returned/lost/broken company property and the verbiage in our handbook regarding withholding the cost of replacement or repair from an employee's final paycheck (please see the original post). The other question was posted by someone else in Cali.......
We are in Illinois - so I guess I need to know what we can have in our Employee Handbook about this. I have to re-write that policy by next week (possibly the end of this week). Where can I go to find that out? Is there a good website with laws specific to Illinois? Can we make any deductions from a final paycheck legally if we have the policy written that we will do so and the employee signs off on the Handbook? We have a "Handbook Acknowledgement Form" at the back of the Handbook which the employee is required to sign & date within 1 week of starting work for us. Does that hold water?
Thanks!
Sorry, Mouse -- I think we were all waiting to find out what state you were in because it's a state sensitive topic. I've worked in Illinois and I'm familliar with the answer. I'll give you the short answer and a good link to have around:
Section 300.830 Return of Employer's Property In no case shall an employer withhold all or part of the final compensation due an employee while the employer awaits return of property in the possession of the employee unless the employee's express written consent is given freely at the time the deduction is made. (Source: Added at 16 Ill. Reg. 13828, effective September 1, 1992)
That's in the administrative code, but you can get the text of the statute as well at:
http://www.state.il.us/agency/idol/laws/Law115.htm
Keep in mind that deductions taking pay below minimum wage are covered elsewhere and may simply be illegal in Illinois. I haven't run into that part in that state before.
Sorry to generate a flap: my "whoa" was just because I didn't want the person in California to do something based on our discussion about Texas law while waiting to find out what State Mouse was in. It wasn't a big deal "whoa" in my head, just a friendly Texas "whoa" to keep our California friend out of trouble, but that doesn't always come across well in typing.
No problem about the other posters questions - I just wanted to make sure everyone was clear that there were 2 different people posing questions & 2 different scenarios. Also that I am in Illinois & not California.
That being said I really, really appreciate everyone's input - I am removing the current verbiage from our Handbook & replacing it with a version of the above suggestions. What exactly it will state, I'm not sure just yet, but I'll figure it out.
And I guess as long as we're on the subject of final paycheck deductions, can we legally deduct the balance of an Employee Advance/Loan owed from a person's final paycheck as long as they have signed an agreement at the time of the loan stating that will occur and as long as it does not make their pay below minimum wage? If that is the case (their pay would become below the IL State Minimum Wage amnt) how can we therefore legally recover the balance of an Employee Advance/Loan???
Thanks!
(same link as above to the administrative code)
Section 300.750 -- Cash Advance Repayment Agreement -- If a cash advance is to be repaid through payroll deductions, both the employer and the employee must sign an agreement specifying the amount of the advance, the repayment schedule, and the method of repayment.
(Source: Added at 16 Ill. Reg. 13828, effective September 1, 1992)
Section 300.810 -- Balance Due at Termination If, upon termination, an employee owes an amount greater than 15% of gross wages, that amount may be withheld from the employee's final compensation, but only if such an arrangement was included in the agreement signed when the advance was made.
(Source: Added at 16 Ill. Reg. 13828, effective September 1, 1992)
There are additional portions covering tuition reimbursement, advanced vacation pay, etc.
balance total will be deducted from his/her final paycheck.
This is the exact verbiage from our Employee Advance form. The form also contains the total loan amount, repayment schedule, etc. Does anyone see any problems with this as it is? Should we add the above from Section300.810 which states if the amnt owed at the time of termination is greater than 15% of the gross wages it can be deducted from their final check? If that is not mentioned on here I would assume that means we'd have to deduct only an amnt which is less than 15% - but if that's the case should we mention an alternate re-payment to the company? Does that make sense? If an employee leaves the company & their advance balance is 25% of their final check's gross wages can we take 14% out of their final check & then make them pay back the new remaining balance after they leave the company?
The regulation says strictly greater than 15%. I speculate that you can only deduct the normal amount unless you have something in the loan agreement stating otherwise, and you do. I think you are OK in the general sense but my only heartburn on this is about deducting below minimum wage. In this kind of situation, attorneys ask what the deduction is for and did the (former) employee get full value of the thing for which the deduction is being made and so on. I'm not sure in Illinois, it's probably in the regs somewhere. That's the only major potential problem I see at this time.
Well I would say that YES the employee received full value since that form is only for Cash Advances - we give them a check for the full loan amnt when we receive the completed & approved Advance Form.
As for the property.....ugh....I'm getting a headache from this part, but I think we will have to have the employee's sign a new agreement which contains a list of all company property in their position (mostly cell phones & their accessories).
Thanks everyone for all of the great information!!!! [:D]