Can we withhold double the cost of unreturned equipment from employee’s final paycheck?
Q. Our employee handbook states, “If you do not return a piece of property we will withhold from your final paycheck the cost of replacing that piece of property.” One of our employees recently quit on the spot. My boss wants to almost double the actual replacement cost of the item. Can we do this?
A. No. The provision in your handbook may be unlawful under the Fair Labor Standards Act if the employee is exempt, because exempt employees must receive their full salaries free-and-clear for any week in which they perform work, subject to certain exceptions not applicable here.
For nonexempt employees, it would be permissible to take the deduction from the employee’s paycheck if it would not cause the employee’s pay to go below the minimum wage or required overtime premium.
However, under the Pennsylvania Wage Payment and Collection Law, the employee must specifically authorize deductions like this. Even if the handbook provision is construed as employee authorization, it does not authorize a double charge.