Think Twice Before Deducting From Employee's Last Paycheck
"Charlie, I've got a problem," Pete said.
"Tell me about it," Charlie said.
"Well, I had to fire one of my sales people earlier this week. The termination seemed to go fine but he hasn't returned his company laptop or cell phone. I want to deduct the value of those items from his last paycheck or at least withhold his last paycheck until he brings those things back to me." Pete responded.
"Do you have any type of written agreement with him regarding the return of the equipment?" Charlie asked.
"No, I don't," said Pete.
Charlie advised, "I know it is frustrating but Chapter 91A.5 of the Iowa Code won't allow you withhold the check or deduct the value in this situation unless you have written agreement with the employee where the equipment has been specifically assigned to the employee, and acknowledged in writing by the employee. Also the written agreement should authorize you to deduct the value of the equipment from the last paycheck if not returned. If you violate the law you could be forced to pay the employee's attorney's fees, liquidated damages and any court costs plus the wages you owe him. You definitely have the right to your equipment but you can't get it that way."
"I am glad I asked. By the way, maybe you could prepare an agreement for my employees to sign authorizing me to deduct the value of the equipment from wages if the equipment is not returned," Pete asked.
"You bet. By the way, you may want to check out a blog post from Jill Pugh on 10 Things to Keep in Mind When You Fire an Employee. It's also a good idea to review the provisions of Iowa's Wage Payment Collection Act."
"Thanks a lot, Charlie. I am glad I called."
Photo on Flickr by cutesmallfuzzy.
* This is a hypothetical. Be sure to seek the advice of an employment attorney for advice in your specific situation.