Category Employment - Fair Labor Standards Act
Title Recouping School Property and Advanced Vacation Time
Preview Recouping School Property

Recouping School Property and Advanced Vacation Time

Schools need to remember anytime they are deducting pay from an employee's paycheck there are potentially state and federal wage and hour law implications.

Lost, Damaged and Unreturned Property (Can be Physical or Intellectual)

Under federal guidance, if a school were to deduct pay from an exempt employee's paycheck, or even require out-of-pocket reimbursement, the school runs the risk of changing the status of that employee from exempt to nonexempt, "It is our opinion that such deductions or reimbursements would violate the salary basis requirements of FLSA..." Dept. of Labor Op. Ltr. FLSA2006-7 (Mar. 10, 2016). Later the Department elaborates on its rationale, "in order for employees to be considered paid on a 'salary basis' they must be paid 'a predetermined amount... not subjecct to reduction because of variations in the quality or quantity of the work performed.' 29 C.F.R § 541.602(a)." Thereby if they could have their pay docked for mishandling then their pay would not be a true salaryl it would be contingent on not losing, damaging or not returning equipment.

It is a different story for nonexempt (hourly) employees. The company can have a policy on reimbursement or out of pocket expenses but when enacting the policy against a specific individual the school must not cut so much that they rake that person below minimum wage or overtime. Miminum wage and overtime are guarantees to the employee when dealing with lost, damaged and unreturned school property.

Beyond federal law there are also state standards. At leas 10 states (AK, AR, CA, DE, HI, IL, KS, MN, NY, and OH) prohibit or limit how an employer can use wage deductions to recover the school's property. At least 5 states (WI, CO, ND, OK, and WY) have statutory standards for how to deduct wages for damages.

Advances of Vacation Time

Schools should realize vacation is typically viewed as compensation and treated similarly, if not the same, as wages. Therefore, in all states but Indiana, which has its own advancement of vacation law, schools should see if there are state laws on how and when an employer can deduct wages from an employee for advances. It should be mentioned the only guidance federal law gives is that it is permissible to take the employee below minimum wage pay if it is to recapture an advancement in wages but not any related cost (interest, or other administrative expenses).

Practical Considerations

The federal guidance on exempt employees is rather unforgiving. It is beyond the scope of this article to determine what a court might do with the Department of Labor's guidance but they have the capacity to ignore it and interpret the law for themselves. It is also possible in attempting to recover the cost of equipment from an employee that you uphold state law but violate federal law or vice-versa.

Usually in the vacation time realm, and often from the school property realm, these issues only come up at the time of separation of employment.  So if the property damaged or missing is significant it may be worth the risk of withholding wages as allowed under state law and taking a wait-and-see approach on whether the former employee will challenge and be reclassified as non-exempt on the federal level. 

Besides deducting wages what other options does a school have?

  • Have a set policy that the school does not advance vacation.  If a staffer runs out, they run out. 
  • If you are going to give out advances in vacation then have a short and to-the-point contract the employee signs stating what they are getting from the employer and if they separate from the school before they earn back the vacation they are authorizing the school to withhold the applicable wages (this does not work in all states but in many it is a requirement).
  • For chronic vacation abuse and property related issues you can look to behavior management through performance reviews and various forms of reprimands for abuse/misuse of school property and/or policy (this only works for ongoing employment relationships). 
  • For property related issues after employment separation there are not many other options beyond litigation so ensure as best you can property is returned before separation or if you are going to give a severance package (not part of earned wages) then make the return of all outstanding property one of the requirements of the agreement.

A higher consideration is the faith-informed one. Have an open hand to some of these issues.  That can be particularly difficult depending on the circumstances surrounding an employee's separation but Ephesians 4:31-32 (ESV) calls us to, "Let all bitterness and wrath and anger and clamor and slander be put away from you, along with all malice. Be kind to one another, tenderhearted, forgiving one another, as God in Christ forgave you".  If you are going to advance vacation then do so with a mindset that you may lose those hours if they separate before earning more; and be OK with that.  If the property issues are minor and infrequent then maybe we should chalk those up to the cost of doing business.  Not every situation can be handled in this way but many more can be than currently are.

LLU 29.1

Notice: This article is designed to provide accurate and authoritative information in regard to the subject matter covered. It has been provided to member schools with the understanding that ACSI is not engaged in rendering legal, accounting, tax, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Laws vary by jurisdiction, and the specific application of laws to particular facts requires the advice of an attorney.  

Association of Christian Schools International
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Colorado Springs, CO 80920
Phone: 719.528.6906

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