HR Question:

One of our employees quit but hasn’t returned their company equipment or keys. Even though we generally use direct deposit, can we require the employee to pick up their final paycheck when the equipment is returned? What else can we do to get our property back?

HR Answer:

It’s understandable that your organization wants to make sure company property is recovered after an employee’s resignation. In addition to the obvious desire to mitigate misuse of company information, the expense of replacing computers or laptops, company cell phones, or even door keys can be cost-prohibitive for smaller companies. With larger companies, recouping company property might even include items such as company cars or vehicles.

So how can employers entice their employees to return company property in a timely manner?

Can I Cut a Live Check?

While most companies provide direct deposit options for their payroll, they may choose to cut a live check instead of depositing a terminated or departing employee’s final paycheck. This option may encourage the employee to return any company property they may still have. However, as ADP points out, an employer’s ability to do so may be determined by their state laws.

It makes sense why you’re considering using the final check as an incentive. However, you must be careful on how you handle final pay. For example, even if the property hasn’t been returned, are you paying them by the next scheduled pay date? If you choose to deduct the cost of the equipment from the person’s paycheck, is the amount paid still keeping the employee above minimum wage? Is the person exempt (and thus exempt from this deduction)? These are questions you’ll want to answer ahead of time.

As you assess how you want to proceed, there are multiple state and federal regulations and laws to keep in mind. Consult with your attorney to determine your next best steps to ensure that you’re paying out the final check in a timely and compliant manner.

What If the Person Worked Remotely?

In this age of remote work, it may not be logistically possible for the ex-employee to return equipment in person and pick up a paycheck. As an alternative, consider making it convenient for the employee to return the equipment by sending a preprinted shipping label and/or container to return the equipment, along with instructions for pick up or drop off. It’s recommended to also include a timeline to be received. If you cut the live check, be aware of how and when you plan to have that in the employee’s hands (i.e., sending via USPS Priority Mail or Fed Ex) since it’s important to remain cognizant of any time limits set by the law.

How Do I Avoid This in the First Place?

A best practice is to implement procedures ahead of time to try to prevent these challenges before they happen. For example, one option is to provide an agreement that the employee signs when they are issued the equipment. The terms could include a description of the items the employee is receiving and what may happen if the equipment is not returned after their employment is terminated.

In the end, make sure you and your HR advisor are working with legal counsel to ensure that any course of action you take is compliant with applicable federal and state laws.

Thank you to Sheryl Fleming, MA, SHRM-SCP, HR Business Advisor, for contributing to this HR Question of the Week.

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