Dear Littler: We are a multi-state employer that allowed a large percentage of our employees to work remotely during the pandemic. To help facilitate the transition to home offices, we provided our remote workers with office equipment, cell phones, laptops, monitors—you name it. Some of these employees have now returned to the workplace as their primary office but have yet to return these items. We have the same problem with those who have quit. Can we deduct the cost of unreturned property from their paychecks?
—No Good Deed in Decatur
We hear your frustration and you are certainly not alone. Employers had to adapt to a changing work environment in a short period of time and invested significant sums in the process. Trying to recoup that investment can be challenging as workers wandered to different cities, states, and even countries from their employer’s physical location. Employees may be enjoying having a full home office for the time they spend working at home or performing personal projects. Ex-employees might be reluctant to return company property out of spite, particularly if they left on bad terms. Or they just might not have gotten around to it, or not realized the items were not theirs to keep. While withholding a final paycheck or deducting the amount from a current employee’s pay might be tempting, there are significant restrictions on this approach depending on the jurisdiction. But that does not mean there is nothing you can do. First, we will explain why deductions might be problematic for you, then we will address steps you can take to get your equipment back.
Deducting from Paychecks
Many states have laws in place that govern how, when, and how much an employer can deduct from an employee’s paycheck. In most instances, simply deducting the entire value of the unreturned property from the employee’s paycheck, or withholding the paycheck entirely, is unlawful. In some states such as Indiana, for example, deductions for unreturned company property are not included within the express list of permitted purposes for payroll deductions. In other states, including Arizona and Illinois, employers may deduct the amount of the unreturned property only pursuant to a written agreement between the employer and employee. In your question you do not indicate whether you received a deposit upon issuance of the equipment, but some states, including Alaska and Delaware, allow employers to require a reasonable deposit as security for the return of equipment. That said, in many instances, such a deposit cannot be deducted from employee wages unless the employee provides written consent to do so. Lastly, if you are moving forward with making a deduction from a current employee’s paycheck, ensure the employee’s post-deduction pay is above the applicable minimum wage.
Deducting from Final Paycheck
Whether you can deduct these amounts from an employee’s final paycheck is also highly regulated by state law. Several states have laws stipulating how an employer must distribute the employee’s final paycheck. For example, in your home state of Illinois, an employer cannot withhold any part of an employee’s final pay while awaiting return of employer property unless the employee freely gives express written consent when the deduction is made. A handful of states do allow employers to offset the value of unreturned property from an employee’s final paycheck, but outline specific steps an employer must take to recoup the amount of any unreturned …….