Many owners or managers get angry when an employee unexpectedly quits or when they are forced to fire an employee for misconduct, so they take it out on the employee by deducting as much as they can from that final paycheck. This behavior is rife with risk, so keep the following in mind before you start tallying those deductions:
First, former employees are alumni of your organization, for good or bad, so sometimes it may serve you better to let little things go and take the high road. This could reduce the chances they'll do damage to your employment brand by telling all their friends how horribly they were treated while working at your organization; and might minimize the chances that they'll file a complaint with the Department of Labor if you get too aggressive.
Second, make sure you're on solid footing when making those deductions:
1. Don't hold their check! Some employers will hold the employee's final paycheck until all their "stuff" is returned. In most states (including NC, SC and VA) employers are required to pay the employee for time-worked by the next regular pay day. But know the laws in your state, as some require final pay as quickly as immediately for terminated employees, and the rules may be different for employees who voluntarily leave versus those who are terminated or laid-off). While you can't hold their entire paycheck, it is legal to withhold any preauthorized amounts from that final check so long as they don't run afoul of certain rules.
2. Have a signed document on file allowing the deductions. The employee must authorize deductions for damaged or lost equipment and uniforms, so make sure you have a signed document on file that gives you permission to take those deductions. It is best to specify the deduction amounts in the original document that the employee signed (Cell phone deduction = $150, for example). If there is no document on-file authorizing the deductions, you can't just arbitrarily hold $50 out of their check because their truck was returned dirty.
3. Understand who benefits from the deduction. The state of NC, for example, differentiates the rules for deductions that benefit the employee (savings plans, parking fees, employee loans, uniforms that are not required, etc.) and deductions for the benefit of the employer (lost or damaged equipment, keys, uniforms which are required, etc.).
4. Watch for minimum wage and overtime. It is not permissible to take deductions to the employer's benefit that drop the employee's final pay down below minimum wage for actual time worked. Plus, you can't deduct anything to the employer's benefit from overtime wages. This makes it difficult to recover virtually any costs from minimum-wage workers, even with signed authorization forms.
5. Be reasonable. If you issue an employee a new laptop in 2017 and they quit in 2020, deducting the full purchase price of that laptop (if not returned) is not going to seem reasonable to the investigator. The state of NC allows the deduction authorization to be non-specific in the case of depreciable assets like laptops, but the company must notify the employee, in-writing, the calculated value of the deduction per their authorization. (Here's a link to a document that spells that out in more detail).
6. Vacation or PTO. Your employee who just quit had taken 5 vacation days this year but only accrued 3 per your policy, putting them 2 days in arrears. Those 2 days are considered pre-payment of wages in NC and not a deduction from wages. Therefore those two days of vacation or PTO can be adjusted on their final paycheck without regard to the minimum wage or pre-authorization limitations (at least in NC).
Final thoughts: if you are a small to mid-sized employer who makes his or her living leveraging the efforts of lower paid hourly workers, you're going to experience a certain amount of lost and damaged equipment. Some of the time you'll be able to recover the costs of an employee's negligence, but other times you won't. But don't make the mistake of going overboard in looking for ways to decrease that departing employee's final pay. When that $25 deduction for a lost tool or uniform shirt ends up costing you hundreds or even thousands because a regulator determined you were out of compliance in the way you handled it, you've really only outsmarted yourself.
Sunday, June 18, 2017
Essentials of a Strong Culture
Organizational culture is defined by former MIT professor Ed Schein as the set of shared, taken-for-granted implicit assumptions that a group holds that determines how it perceives, thinks about and reacts to its environment. In other words, it determines how we dress, speak, act, interact and perform our jobs. It is often the glue that holds employees to the mission and the goals of the organization.
Peter Drucker has been attributed with saying, "culture eats strategy for breakfast," but it was Mark Fields, CEO at Ford who made the slogan popular in 2006.
There are 3 levels of organizational culture:
1. Visible Artifacts - these are the acronyms and vocabulary your organization uses, the uniforms or manner of dress that is allowed/required, your org chart, the layout and vibe of the office, the myths and stories about the organization that are repeated formally and informally, and observable rituals and ceremonies, both formal and informal.
2. Espoused vs. Enacted Values - these are the values we say are important. Words and phrases like integrity, trust, do it right the first time, always good ships, etc. Unfortunately, sometimes the espoused values conflict with enacted values or actual behavior. It's fine to have integrity on a plaque or on the first page of the employee handbook, but if the owner or a manager frequently acts in observable ways that conflict with that (such as frequently lying to customers, suppliers or employees), then the culture is going to be defined by the enacted values, not the espoused values. Enacted values are essentially defined by what managers choose to reward, condone and condemn.
3. Basic Underlying Assumptions - these are values that are taken for granted over time. These are more deeply held beliefs that employees have about their company and are the most resistant to change.
Is your culture helping you achieve your goals or is it hindering it? Can you define your culture and do your employees agree with your assumptions about what your culture really is? Is the culture that got you where you are the same culture that's going to get you where you want to go?
I once worked with a company that reached a stage where it determined it needed to significantly change its culture to achieve its next growth phase. It had grown from 4 employees to 400 as basically an adhocracy (adaptable, creative, agile, decentralized, externally focused and flexible). Many of its managers were quite entrepreneurial and had been hired because they were. But executives felt that in order to grow the company to the next level it needed to become more of a hierarchy (internally focused with more formalized and rigid systems and controls). This culture shift resulted in more than a little turbulence over several years and cost the company quite a few of its long-term, loyal employees, but the shift did position the company to achieve remarkable growth and reach the goals of the owners, which ultimately included selling the company at the right time.
There's a lot more involved in culture change than buying some tee shirts and adopting a new slogan. So if you decide you want to investigate your organization's culture, how it is helping and/or hurting, contact a professional who understands organizational behavior and how to change not only artifacts, but systematically resetting those basic underlying assumptions.
Peter Drucker has been attributed with saying, "culture eats strategy for breakfast," but it was Mark Fields, CEO at Ford who made the slogan popular in 2006.
There are 3 levels of organizational culture:
1. Visible Artifacts - these are the acronyms and vocabulary your organization uses, the uniforms or manner of dress that is allowed/required, your org chart, the layout and vibe of the office, the myths and stories about the organization that are repeated formally and informally, and observable rituals and ceremonies, both formal and informal.
2. Espoused vs. Enacted Values - these are the values we say are important. Words and phrases like integrity, trust, do it right the first time, always good ships, etc. Unfortunately, sometimes the espoused values conflict with enacted values or actual behavior. It's fine to have integrity on a plaque or on the first page of the employee handbook, but if the owner or a manager frequently acts in observable ways that conflict with that (such as frequently lying to customers, suppliers or employees), then the culture is going to be defined by the enacted values, not the espoused values. Enacted values are essentially defined by what managers choose to reward, condone and condemn.
3. Basic Underlying Assumptions - these are values that are taken for granted over time. These are more deeply held beliefs that employees have about their company and are the most resistant to change.
Is your culture helping you achieve your goals or is it hindering it? Can you define your culture and do your employees agree with your assumptions about what your culture really is? Is the culture that got you where you are the same culture that's going to get you where you want to go?
I once worked with a company that reached a stage where it determined it needed to significantly change its culture to achieve its next growth phase. It had grown from 4 employees to 400 as basically an adhocracy (adaptable, creative, agile, decentralized, externally focused and flexible). Many of its managers were quite entrepreneurial and had been hired because they were. But executives felt that in order to grow the company to the next level it needed to become more of a hierarchy (internally focused with more formalized and rigid systems and controls). This culture shift resulted in more than a little turbulence over several years and cost the company quite a few of its long-term, loyal employees, but the shift did position the company to achieve remarkable growth and reach the goals of the owners, which ultimately included selling the company at the right time.
There's a lot more involved in culture change than buying some tee shirts and adopting a new slogan. So if you decide you want to investigate your organization's culture, how it is helping and/or hurting, contact a professional who understands organizational behavior and how to change not only artifacts, but systematically resetting those basic underlying assumptions.
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