Jake had been working from home using a company laptop. He quit without notice, and when his employer reached out to make arrangements to retrieve the company equipment, Jake ignored their emails and voicemails. Upon investigation, there was no documentation that Jake had a company laptop in his possession or that he agreed to return equipment when he left the company.
A printer that Kari’s company provided to her to use while working from home was heavily damaged when the unsecured shelf it was placed on came apart and it fell to the hardwood floor. Can they deduct the cost of repair or replacement from her paycheck without her permission?
Remote work & equipment 101
While many companies have managed a remote workforce for years, COVID-19 tossed others into extending remote options to their employees suddenly, without the opportunity for considerable planning or troubleshooting.
When employees moved offsite, some of the equipment they used moved with them. Unless employees are using their own equipment (more on that a bit later), they now had company property in their possession, introducing a myriad of potential issues:
- What happens if it gets damaged?
- What are the steps an employee must take if it gets stolen?
- How can it be legally reclaimed if an employee quits or is fired?
- Can we make an employee pay for a lost or damaged item out of their paychecks?
Even if an employee primarily uses equipment on company sites, and may only occasionally take it with them while traveling, it is a perfectly acceptable – and advisable – practice to ask them to acknowledge receipt in writing and lay out parameters of its use, care and safe return. This is commonly referred to as a Company Property and Equipment Agreement or an Acknowledgement of Receipt of Company Equipment Form.
These documents generally provide the following details:
- Type of equipment, along with year of make, year, serial and model numbers
- Expectations and guidance if personal use is or is not permitted
- Beware of potential tax implications to the employee for personal use
- Agreement on the employee’s part to properly maintain the item and to report any functional issues or damage to the employer
- Acknowledgment that they understand what will occur if:
- good condition is not maintained
- the item is lost, stolen or damaged
- if the item is not returned upon separation from employment
Signing these documents can – and probably should – be made a condition of their ability use the equipment and/or ability to remote work, or be a condition of employment or continued employment, regardless of their tenure.
What about recouping damages or loss from paychecks? Is it legal?
Really broad is not generally the best approach to policy development. While having an all-encompassing payroll deduction authorization form signed upon hire sounds like an efficient way to handle any future employee paycheck deductions, it probably will not be enforceable, nor may it cover an employer if challenged in court or by a state labor department for unlawfully withholding wages.
A separate, signed payroll deduction authorization is necessary, and it should specifically relate to damage or loss due to negligence. Deductions for normal wear and tear or value depreciation should not be included as many states consider those situations to be a cost of doing business. Deductions should also, per most state laws, not take an employee below minimum wage in any weeks that they are taken from a check. Many states also exclude specific equipment or damage from allowable deductions.
So… what about terminations? Final checks can be tricky.
Employees still must be paid, and be paid on time, for their work in their final days of employment. Final checks should therefore not be held hostage in exchange for company equipment return or reduced by a certain amount pending return of a laptop or phone. While this may seem like a surefire way to get your equipment back, it is not a legal one.
Check state laws to see what, if any, deductions are allowable for a final check. If none are allowed, or they are held to strict limits that won’t cover the costs, employers may attempt to recoup any financial losses for damaged or unreturned equipment outside of the employment relationship, such as a personal repayment agreement with an exiting employee or, in worst-case scenarios, through the civil court system or reporting the employee for keeping equipment that contains trade secrets to local authorities.
This seems complicated. Can’t we just ask employees to use their own laptops and phones?
You can, but with caution and clear expectations.
While this solution may appear to circumvent potential problems of damage or loss to the company, personal equipment that is used for business purposes (commonly referred to Bring Your Own Device), opens the door to other issues, including but not limited to:
- general security and cybersecurity concerns
- data integrity and loss
- lack of uniformity in operating systems, equipment memory, function and ability to access databases
- reimbursement requirements in some states
Having clear expectations for BYOD environments is essential to securing company data and confidentiality.
On the other hand, requiring use of company equipment, and putting in parameters around its use, care and return, will give companies the ability to control the type of equipment used, perform periodic security and employee use checks, and help to provide uniformity in service to clients and customers.
Which method do we recommend?
Either CAN work. Review both options, pick a course of action that is best for your company culture and resources, and have your policies and documentation in place in either case. Your HR team or consultant can guide you through the right processes and policies, including training your managers on how to properly enforce equipment policies and communicate with their team members.
This article does not constitute legal advice and there are subtle variations in employment law as it pertains to this topic, depending on where your business operates. It is strongly suggested that you seek consultation or legal counsel before making decisions about policies.