One of our employees quit, but hasn’t returned their company key or equipment. We typically use direct deposit, but is it acceptable to require employee to pick up their final paycheck when company property has not been returned?
This can definitely get tricky, as it is understandable that you want to ensure receipt of all company property. Regardless of whether the employee has failed to return company property, it is important to remember that you must meet federal and state final pay deadlines. Federal law requires final pay at the next regular payday, but some states require final pay sooner.
While withholding an employee’s final paycheck is not allowed, there are some cases in which deductions may be permitted under federal law. For non-exempt employees, the Fair Labor Standards Act (FLSA) permits deductions for unreturned equipment as long as it does not reduce the employee’s pay below the minimum wage and does not cut into any overtime pay. Some states prohibit this practice or have additional requirements. Please check your state law before making a deduction. Deductions for unreturned equipment are never permitted for employees classified as exempt from overtime.
There is no legal issue with cutting a “live” check for their final paycheck instead of direct deposit as long as you follow both the federal and state final pay laws.
We understand, there are just too many new Labor Laws to keep up with. Not only are there laws that govern hiring practices, safety concerns and recordkeeping requirements, then there are the compensation and benefit laws. Let strategic HR inc. help you navigate the employment law minefield. Ask us for assistance with any of your Legal Compliance needs. Please visit our Compliance page for more information or call us if you have a specific question or need.