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How to Legally Address Return of Remote Employees’ Company Property/Equipment

February 26, 2022

By Michael Burns, courtesy of SBAM Approved Partner ASE

As remote work becomes more ubiquitous as well as advantageous to employers and employees alike, employers are investing in or supporting workers by providing equipment and property to perform work offsite (at home mostly). This property and equipment still may belong to the company, but as inevitably happens at some time, the employer and employee part ways. How should the employer manage the return of their property without causing more of a problem legally speaking?

Employees whose jobs can be performed anywhere can work out of state or even out of the country. The employer may provide cell phones, laptops, monitors, and other equipment and property to facilitate the remote work being performed by those employees.

Managing the return of company property is not a new problem. Many jobs have always required personnel to be offsite with company equipment to perform the work. Employers have provided them vehicles, tools, or whatever that the employer has purchased and is their property. This includes company uniforms that the employer may require and buy for its employees. In most cases the employer wants its expensive property or equipment back when the employee leaves the organization.  Sometimes, getting the equipment or property returned becomes problematic, and the property is not returned. The employee may keep the property out of a sense of revenge, just simple forgetfulness, or even thinking the property just became theirs and the employer really abandoned it to them.

ASE often gets questions around this situation in some form where property owned by the employer is not returned. The employer calling often asks, “can I just take what they owe me out of their final paycheck?”

Unfortunately, most state laws “govern how, when, and how much an employer can deduct from an employee’s paycheck” and do not permit employer deductions of earned pay from the paycheck without the employee’s authorization upfront.

Before doing any deductions from pay, check your state laws. In Michigan employers may not deduct from wages “directly or indirectly any amount without the full, free, and written consent of the employee.”  “A deduction for the benefit of the employer requires written consent from the employee for each wage payment subject to the deduction, and the cumulative amount of the deductions may not reduce the gross wages paid to a rate less than Michigan’s current minimum wage.” The current minimum wage is $9.85/hr. (Sec. 408.477 as amended by H.4152,L. 1995)

Alternatively, rather than first trying to use employee pay to recompense the company, it is recommended employers start with straight on prompting and reminding the employee return the property. Give notice to your employees at the start of employment that this is company property that they are responsible for returning it. Remind them again when it becomes clear that one way or the other the employment is ending. This starts with a written policy and a formal acknowledgement the employee may sign that includes:

  1. “The equipment is company property and must be returned when separation occurs or if in the future the job works from the office again.”
  2. “Express authorization to deduct the value of any unreturned equipment from a paycheck or final paycheck.” Again, check state law. Often state law may require a date specific authorization to deduct from pay from a paycheck.
  3. That any remaining amount (i.e. if available funds above the minimum wage on a final paycheck is less than the value of the equipment) will be paid by the employee or will be deducted from the severance amount.”

The above should be communicated by policy as well as individual acknowledgement and authorization.

On the positive employer-employee relations side of this situation it is suggested employers make it as easy as possible to return the property. Provide a prepaid and prelabeled box that can be returned by post, UPS/FEDEX, or other shipping service. If the equipment is more valuable, it is suggested that the employer have the property picked up directly. One other concern around using deductions from pay is that if a state allows for it, this may only be for unreturned equipment, but not to pay for damaged or broken equipment. Again, check state law.

It is also suggested that a “carrot” be used to encourage return of property. The employer may consider providing a gift card within the pre-paid shipping container. The incentive might be “wrapped” around the suggestion “have lunch or coffee on us while returning the [whatever].”

On the “stick” side of this situation, the employer can advise and notify the employee it will use civil or criminal complaints if the property is not returned, or the company is not fairly reimbursed for its loss. If this approach is to be used, realize in many cases that it may cost more to pursue legal redress than the value of the property. But if the unreturned property includes trade secrets, confidential, or otherwise valuable information this course of action may be compelled.

ASE recently worked with one of its members that was having trouble getting back uniforms and other property from its workers when separation occurred. The company implemented an upfront policy that included a signed inventory of property and a stiff warning that the employer reserved the right to seek civil and criminal penalties if the property is stolen or lost without reimbursement.

With the explosive growth of remote work and its advantages, employers will have to be both proactive and more adept managing off-site property. Employers could consider having employees purchase the equipment upfront with the promise of paying them back after a period of employment. This would put the responsibility of care and cost on the employee until the employer pays them back at some future specified time or where the property is returned. This probably will not work for large expense items but for items worth a less than say $250 it can give the employee enough concern as to try to get their money back, and if this low value property is kept, it may be written off by the employer as a cost of doing business at that point.

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