Josh, This is true, as far as it goes, but courts have imposed some restrictions on the written agreement (such as voluntariness), so the analysis isn't quite as simple as the text suggests. Sorry-this one is not an ah-ha moment. In addition, a majority of states have their own laws on deductions like this. Even deductions that are lawful under federal law might STILL violate state laws.
We discussed this scenario at WISPAPALOOZA during our HR sessions. Keep compensation and discipline in separate buckets. You pay your employees for the hours they work, period. If they lose or damage something through negligence, that's a disciplinary issue, not a compensation issue. If your employee intentionally damages equipment or steals it, you have a criminal and civil case to pursue. It's still not a compensation question. Before you deduct the cost of ANYTHING from your employee's paycheck, talk to me (or another qualified employment counsel) about the issue FIRST. Travis's approach is a great way to address this issue while lessening the risk of federal or state law violations. Doug From: Af [mailto:[email protected]] On Behalf Of Josh Reynolds via Af Sent: Thursday, October 23, 2014 8:10 PM To: [email protected] Subject: Re: [AFMUG] Employee damaging equipment Ah-ha: Found this "Federal law. Under the federal Fair Labor Standards Act (FLSA), a deduction for loss or damage may be made if two conditions are met: The employee signed a written agreement prior to the shortage (at the start of employment or when the policy related to deductions is adopted) by which he or she agrees to such a deduction; and The deduction does not bring the employee's hourly rate below the minimum wage. The second criterion clearly applies to nonexempt employees. Employees who meet the dual duties and salary tests are exempt from minimum wage and overtime laws. For exempt employees, this type of wage deduction is not allowed." Josh Reynolds, Chief Information Officer SPITwSPOTS, www.spitwspots.com<http://www.spitwspots.com> On 10/23/2014 04:52 PM, Travis Johnson via Af wrote: This is the exact reason we implemented "profit sharing". Our employees received bonuses based on how many installs/fixes/pick-ups they did per month... however, the contract stated we could deduct for any missing tools, damage to vehicles, etc. Amazing that all of those type of problems disappeared almost instantly. :) Travis On 10/23/2014 6:47 PM, Josh Reynolds via Af wrote: Federal labor law says you can't hold employees financial responsible for broken/lost tools. (from my understanding) Josh Reynolds, Chief Information Officer SPITwSPOTS, www.spitwspots.com<http://www.spitwspots.com> On 10/23/2014 04:22 PM, Glen Waldrop via Af wrote: How do you guys handle it when an employee damages or loses equipment? This is my baby brother's first job. He tied the ladder and it fell out of the truck, no where to be found. He said he's going to either get me one or pay me back, just curious how everyone else handles this. I've never run into it yet. � Doug Hass Associate 312.786.6502 Franczek Radelet P.C. Celebrating 20 Years | 1994-2014 300 South Wacker Drive Suite 3400 Chicago, IL 60606 312.986.0300 - Main 312.986.9192 - Fax www.franczek.com Circular 230 Disclosure: Under requirements imposed by the Internal Revenue Service, we inform you that, unless specifically stated otherwise, any federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or tax-related matter herein. ________________________________________ For more information about Franczek Radelet P.C., please visit franczek.com. The information contained in this e-mail message or any attachment may be confidential and/or privileged, and is intended only for the use of the named recipient. If you are not the named recipient of this message, you are hereby notified that any dissemination, distribution, or copying of this message or any attachment thereto, is strictly prohibited. If you have received this message in error, please contact the sender and delete all copies. ________________________________________ Franczek Radelet is committed to sustainability - please consider the environment before printing this email
