A manager walks into your office and declares that the time has come to part ways with an employee. As you work through the termination process, a beancounter in Accounting informs you the employee owes the Company $500. After asking a few more questions, you learn part of the money owed is for Company products the individual bought on credit, and another part is for reimbursement for a training session the Company paid for. Accounting suggests you just take the debt from the employee's final paycheck. While this might seem like a clean and simple solution, it could create problems for you under the Fair Labor Standards Act (FLSA) and/or the Kansas Wage Payment Act (KWPA).
The reconciling of the books on the final paycheck is a very common mistake made by Kansas employers. This simple step of deducting money for obligations owed to the employer directly from an employee's paycheck seems fair and simple. The problem is the FLSA and the KWPA--and the government agencies that enforce them--don't necessarily agree with that concept. The KWPA prohibits employers from deducting money from an employee's paycheck unless the deduction accrues to the benefit of the employee. You can be assured that the collection of a debt by the employer won't be viewed as a deduction for the benefit of an employee. Anytime you find yourself tempted to hold money directly from an employee's paycheck, it would be wise to consult with your attorney to ensure the propriety of the action. Finally, even if a deduction does not violate the KWPA, keep in mind that there may also be an issue under the FLSA if the employee does not receive at least minimum wage for the hours worked. As a general rule, taking deductions from wages is a bad idea and prone to lead to complaints and potential penalties for an employer.