Q. After an employee quit, he failed to return certain company property (badge, access card, etc.). Can we legally withhold his PTO balance because of this? — Nichelle, Tennessee
A. Generally, no. If unused PTO is considered the equivalent of wages owed under your state law or company policy, the law generally requires you to pay those wages within a certain time after termination, regardless of whether the employee timely returns company property.
Many states, however, will allow you to enter into a written agreement at the time of hire to withhold the value of items not returned at the time of termination. If your state permits such an agreement—and the value of the items is large to justify the administrative burden—you may want to enter into such an agreement at the time of hire.
(Note: Tennessee law allows such an agreement, but the state’s labor department says employers can’t deduct the costs of uniforms or equipment on final paychecks. I’m unsure whether access badges would be considered equipment in this case.)