My Employee Refuses To Return Equipment

By VICKY BROWN

We’ve all been in this situation.  An employee who’s leaving, either by their own choice or yours, has a company laptop, or cell phone, or hasn’t paid back a company loan or advance.  How can you get the equipment or money back?

Well, first up, the equipment vs. outstanding loan or advance are two different situations.  Let’s talk about loans and advances first.

My advice – don’t do either.

I know sometimes heartbreaking situations come up, and you (with your big heart) want to do everything possible to help that high performing employee.  But you have to keep in mind, that what you do for one person, you have to have available for everyone – even that not so high performing employee.  And keep in mind, that if you do decide to do either a loan or an advance, you really should have a contract that lays out the repayment requirements, and what happens if the person leaves before the amount is repaid.

Which brings us to the question I am most often asked – can I just take the balance out of their final paycheck.  And while I know that sounds reasonable, after all, they owe the company money, and the company owes them their final pay, so why not just do a deduction and even everything out.  Yep, sounds simple, but unfortunately it isn’t.  You see the federal government, and most states, have very strict rules about what qualifies as a legitimate payroll deduction.  And things like taxes, benefit payments, garnishments and unemployment insurance fees are in the OK column.

But, in California for instance, balloon loan repayments are in the not OK column.  You can only deduct the amount of one installment payment.  And, even if your state doesn’t have any guidelines, you have to be careful with the federal laws – you can’t deduct so much from someone’s pay that the remaining amount results in less than the minimum wage.

In both cases, you need the employee’s written authorization to make any deduction.  So again, back to providing the employee a loan or advance agreement to sign.  And remember, since it is a contract, it  really should be drafted by an attorney.  I personally wouldn’t feel comfortable taking a 2 paragraph page to court to defend my right to be repaid – because that could very well be the outcome.  Having to defend your position in court – probably small claims court, but court nonetheless.

…whenever you’re giving out computer equipment, make sure it’s equipped with some type of ‘find me’ software, and that you have the ability to remotely wipe the information if the system is lost or stolen.

So again, my advice, don’t do loans or advances.  Set up an retirement account, like a 401k with a loan provision.  That way, the employee is contributing their own money, and if they find they are in a bind, they can tap their 401k account and pay it back, instead of your company.  And takes you out of the mix  around having to make a judgement of if the loan is allowed or not.  It’s a much cleaner situation for everyone.

OK, on to the equipment question.  Well, this is a cloudier situation.

Of course, whenever you hand over a piece of equipment, you should have a check-out procedure that includes providing a copy of your equipment policy, and a form both outlining exactly what equipment was given with serial numbers etc., and expectations around keeping the equipment safe and in good working order, no expectation of privacy (in the case of a laptop for instance), and what to do if the equipment is damaged, lost or stolen.

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But what happens when, even with all that, they don’t return the equipment?  Well I go back to the push and pull between state and federal laws around deductions.  You’ll have to check your specific state’s laws to see if you can make a payroll deduction; but again, even if you find that you can, you still have to content with the federal laws around deductions and minimum wage levels.  So before you just decide to make that deduction, you should definitely check with counsel to see what options are available to you.

Another option is to invoice the employee for the unreturned equipment, and if they don’t pay then you could pursue them in court – again, usually small claims court.

But before you get to that point, try to do everything possible to make it easy for your equipment to make it back to you.  Provide a shipping label, or better yet, send a messenger to pick it up – this is the best option when you’re talking about something like a laptop or computer.  You don’t want it floating around on a delivery truck somewhere, with company information on it.

Which brings me to one other point – whenever you’re giving out computer equipment, make sure it’s equipped with some type of ‘find me’ software, and that you have the ability to remotely wipe the information if the system is lost or stolen.  And of course, it should be password protected.

So, take a moment to consider before you allow payroll advances or loans.  And also take steps to protect the company, before you hand out equipment.

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