Engage News

Handling Wage Deductions and Protecting Company Property

“My employee didn’t return their company phone — can I deduct the value from his or her last paycheck?” Unfortunately, this is a frequently-asked question among today’s employers.

With telecommuting and flexible work arrangements becoming more common workplace practices, company-issued laptops, smartphones and other mobile devices are often used outside of the office.

So what happens when a former employee does not return company property? The answer is: it depends.

State laws apply

State laws ultimately determine the types of wage deductions that an employer can and cannot make. In some states, wage deductions are permissible without a written agreement or other restrictions.

Some wage deductions are universally permissible, such as those mandated by law. Deductions for medical, vision, dental, disability or life insurance and other fringe benefits with the employee’s consent are also widely permissible.

However, in many states, there are limits to what other wage deductions are allowed. Here’s a snapshot of how some states approach wage deductions.

  • Connecticut and New York rigorously limit the types of allowable deductions and most deductions must be evidenced by a written document.
  • Texas, Iowa and Maryland allow several types of wage deductions as long as they are in writing.
  • Florida and Georgia allow several types of wage deductions, and it is recommended to have written authorization.

Protect your assets

To protect their assets, employers may wish to have employees sign a return of property or equipment agreement. Such an agreement would include equipment serial numbers and should be updated as new equipment is issued or replaced.

The agreement should include a notice that if the employee fails to return the equipment, the cost, factoring in depreciation, will be deducted from their paycheck or the employee will otherwise have to repay the company. It should also include language that the company may take legal action against the employee.

Here’s a brief summary of actions to protect company assets and stay in compliance of state employer rules for wage deductions:

  • Review the wage laws in all states where you have employees to avoid making illegal deductions.
  • Always avoid wage deductions that bring employees below the minimum wage.
  • Have a return of property or equipment agreement in place and communicate it to all employees.
  • Consider civil legal action as an option to recover unreturned company property.

Even if a company is aware of state laws, employer regulations can change often, especially in local jurisdictions. Companies should consult with a human resources expert or employment attorney before making any paycheck deductions that are outside of the norm or to review workplace policies to protect company property.