Paper Trails

What to do when an employee destroys company property

People can be careless. This is especially true when it comes to items that they do not own. Many businesses provide their employees with company owned items such as uniforms, cell phones, laptops, vehicles, etc. But, what happens when employees are careless with these items? Let’s take a look at what to do when an employee damages company property.

Company property that is given to employees

First off, before actually distributing company property to employees, make sure to have a clearly defined policy in your employee handbook. This is an important first step. Your policy will be what you and your employees refer to when issues arise. Your policy should include, but may not be limited to, things such as:

  • What company assets will be given to employees
  • How assets are expected to be used for business purposes
  • When assets must be returned to the company
  • Condition assets must be returned in
  • What to do when damage occurs

Additionally, it is important to somehow track what assets have been given out, to whom they have been distributed, and the condition they were in when given out. Many HR systems, like isolved, have tracking capabilities for company property. Using and updating these tracking tools frequently provides insight to who is using company property and the condition of the property when given to employees. This way, when company property is returned, managers can know if it has been damaged by an employee beyond the normal wear and tear of regular use.

Can employers deduct an employee’s pay for damages?

When you provide company owned property to employees, damage is bound to happen at some point. You may be wondering how to handle this situation. Damage to company property can result in unwanted costs to the business and a potential decrease in production.

Your initial reaction may be to deduct your employee’s pay to make up for the cost of the damage. However, this is not a legal course of action in most cases. Many states have laws on employer deductions from employee wages and, often times, employers can not just automatically take deductions without employee consent. In Maine, deductions for company property damage is illegal, even if the employee has given consent.

Most deductions that would take an employee below minimum wage would violate federal and state wage and hour laws. Further, deducting from an exempt employee’s salary in such an instance violates the salary basis requirement under the Fair Labor Standards Act (FLSA).

So, what should employers do when employees damage company property?

Instead of deducting employee wages for damages, addressing the carelessness as a performance concern is a more appropriate response. Remember to follow your company policy regarding company assets. Disciplinary action, such as a verbal warning or work suspension may be necessary. Be sure to document the damage itself and any actions taken against the employee in case of future legal action. If an employee is repeatedly damaging company property, termination of employment may be required. As with any employee and employer interaction, it is extremely important to be consistent with company policy and document everything!

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