Q. Our company recently terminated an employee for violating company policy. At the time of his termination, he had a company laptop, which he refuses to return. Can we withhold his final paycheck pending the return of the company equipment? Or, can we deduct the value of the equipment from his final paycheck? —S.F.
A. Don’t do it. Indiana law is clear that you must pay terminated employees any unpaid wages by the next regular pay date for the pay period in which the separation occurred. The courts have taken a dim view of companies holding the final pay of employees, regardless of the reason for the termination. Under Indiana law, employees can pursue legal action against their ex-employers for up to three times the amount of the unpaid wages, plus attorneys’ fees.
Unfortunately, Indiana law also prohibits the deduction of the value of company property retained by employees after termination. The law limits employers to a small number of reasons to withhold any portion of an employee’s paycheck, whether or not that employee remains employed. Unfortunately, deductions to compensate the company for the value of the equipment remaining in the employee’s possession are not among those exceptions.
In such a situation, your only recourse generally is to sue the employee in small claims court for the value of those items.