Auto Dealer Monthly, Q4 2020

or deductions They should also explain the consequences of non payment by a departing employee Use the Right Implementing Documents In addition to having the right general policies you need to use documents in each situation to protect against employees who do not voluntarily pay back money to your dealership upon their departure Among the other implementing documents dealers should consider using formal loan agreements promissory notes receipt forms for property such as electronic devices tools equipment or clothing deduction authorization forms or language embedded in other forms non disclosure or other agreements imposing post termination requirements such as the return of property and stand alone memos memorializing the specific terms and conditions of the arrangement Comply with State and Local Laws An increasing number of state and local laws apply to deductions from wages or salaries or impose other limitations on an employers ability to charge for or collect money from an employee Before adopting a policy and implementing documents you should review and comply with these applicable laws For example some states require an employer to get a written authorization prior to making any deduction from an employees paycheck Some states also require you to itemize the specific amounts to be deducted from the employees paycheck and the reasons for the deduction Moreover you can be assessed punitive or liquidated damages for improper pay practices Comply with The Fair Labor Standards Act The Fair Labor Standards Act FLSA can come into play in several ways in making deductions from the employees pay For example the pay of a non exempt employee should generally not be reduced below the minimum wage for Compliance 28 auto dealer today Q4 2020all hours worked in the weeks of the final pay period Thus it would be a violation of that law to reduce a cashiers pay below the applicable minimum wage because of cash shortages unreturned uniforms or tools On the other hand a dealership could reduce the pay of a non exempt employee below the minimum because of a cash advance assuming compliance with other applicable laws of course such as one requiring all deductions to be in writing In addition one of the conditions of the executive and administrative exemptions is that the worker be paid on a salary basis of pay Certain deductions can potentially destroy the salary basis of pay thus making the worker ineligible for those exemptions Consider All Your Options Several options exist when trying to collect money from a departing employee including among others Ask the departing employee to voluntarily repay the money owed Deduct the money owed from the final paycheck to the maximum extent permitted by law and in compliance with any state or local laws requiring written authorizations or other conditions Enter into an installment agreement with the employee requiring them to sign a binding promissory note Threaten to sue or actually sue the employee in court to collect the money owed or Forgive the employee save collection expenses and write off the money as an uncollectable debt Fix Any Problems That You May Discover If the employee left owing money that was a result of a mistake such as an erroneous overpayment or a failure to get a wage deduction or property receipt form the most important thing is to fix the problem so it does not occur again When faced with a collection situation your dealership should always reflect on the circumstances and see if there are any process improvements including shoring up or adding new documents to the process Consult Your Counsel We cannot overstate the importance of quickly consulting your labor and employment law counsel when a collection situation arises You should have your counsel on speed dial to help when you are confronted with a situation where an employee owes money and need to deal with the aftermath if any Every situation is different and laws are constantly changing Always consult your counsel to help you make decisions that are appropriate under the specific circumstances of each situation Many scenarios exist where employees can leave an employer owing the dealership money Hopefully these guidelines serve as a starting point for situations where your dealership needs to recoup money from a departed employee Matthew R Simpson is a partner at Fisher Phillips a national workplace law firm representing employers where he co chairs the firms Automobile Dealers Industry Group In his practice Matt provides workplace advice and counseling and regularly defends auto dealers against class and collective actions brought under various federal and state laws He may be reached at msimpson@ fisherphillips com Always consult your counsel to help you make decisions that are appropriate under the specific circumstances of each situation