"As appealing as this may sound, many states have laws that require that final paychecks be paid within a specified time," Mack said. When departing employees don't return equipment, one option some employers are tempted to resort to is withholding final paychecks entirely until all company property is returned. She recommended that employers be able to demonstrate that an employee was at least negligent in failing to properly safeguard the property before holding the worker personally responsible for the cost of the losses.Ībad Lopez, an attorney with Dykema in Chicago, said, "Willful destruction, in appropriate circumstances, would be treated more harshly, including immediate termination." Ordinary wear and tear or losses that occur in the normal course of business are simply a cost of doing business." Mack said that in enforcing their policies, "employers should remember that accidents happen. "Often, the policy will contemplate that the company will do some form of cause analysis upon learning of an incident that resulted in damage or destruction" of company equipment. "The policy should retain flexibility to match the level of discipline with the level of seriousness," such as negligence, recklessness or willfulness, he said. The policy also should address disciplinary actions, said Tim Garrett, an attorney with Bass, Berry & Sims in Nashville. "Some states, like California, prohibit deductions for simple negligence but permit deductions for destruction caused by a dishonest or willful act or through the gross negligence" of a nonexempt employee, Grisham said. "Nonexempt employees should also sign an agreement at the beginning of employment that authorizes a deduction from wages for destruction of the employer's property," Grisham said.Īn employer may be required by state law to make a distinction between property destruction caused by a nonexempt employee's negligence and destruction caused by a willful act. "Care is essential because an employer that deducts from an employee's salary improperly risks nullifying the exemption and creating exposure to overtime claims," said Andrew Sherrod, an attorney with Hirschler in Richmond, Va.įor nonexempt employees, the policy must prohibit deductions if those deductions would reduce the employee's pay below any statutorily required minimum wage or overtime pay that is due. Mack also recommended that the policy define the circumstances in which the employee would be required to pay for the cost of repairing or replacing the property, such as intentional misconduct or failing to return property at the end of employment.Ī policy on charging employees for damage to or destruction of company property must differentiate between exempt and nonexempt employees, said Greg Grisham, an attorney with Fisher Phillips in Memphis, Tenn.ĭeductions from an exempt employee's salary for damage to or destruction of employer's property would violate the Fair Labor Standards Act's salary-basis requirement, he said. The policy should provide notice to employees of any disciplinary action that could result from failing to safeguard company equipment.
This is particularly important for electronic devices, such as cellphones, computers and tablets, that may contain confidential company information. Workers should be required to notify a company representative within a specified time in the event of any damage, theft or other loss of company property, Mack said.
The policy also should require that employees maintain the equipment and use it only for its intended function in work-related activities, she added. When employees damage their employer's property-whether it's a laptop used while working from home during the pandemic or machinery in the employer's facility-how should the company respond? The answer depends partly on the company's policies about its property, as well as whether exempt or nonexempt employees damaged the property and whether the damage was caused by negligence or willfulness.Īs for former employees' damage to equipment or failure to return company property, employers will have to weigh the costs of litigation versus the likelihood of recouping expenses.Ī policy regarding company property should emphasize that any equipment provided to the employee remains the sole and exclusive property of the company, said Emily Mack, an attorney with Burr & Forman in Nashville, Tenn.
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