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Question on Final Paycheck for Employee

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  • Question on Final Paycheck for Employee

    The following situation is in California:

    If an employee has advances given to him/her for tradeshows etc. and has not turned in his/her expense reports are you allowed to withhold his/her final paycheck until they turn in their expense reports for the money that was advanced to them.

    Maybe I should explain it this way:

    Currently based on not receiving his/her receipts technically they owe the company back the money that was advanced to them. The employee's final paycheck that is due to them is less than the amount that was advanced, which is why it has not been given to them. However, if the employee were to turn in receipts that equaled the amount that was advanced to them, then they wouldn't owe the company any money.

    The reason I am bringing this up is because this employee has been gone for about 3 months now. Every attempt to contact the employee has been ignored. What I am worried about is that this employee is purposely holding the receipts and then will turn them in later down the road and then say that the company unlawfully withheld his/her final paycheck and then try to collect penalties and interest on it.

    Any input on this would greatly be appreciated. I just started working for this company a little bit ago and trying to make sure that everything is being treated properly.
    Last edited by Haroldw987; 03-25-2005, 08:52 AM.

  • #2
    Withholding Pay Until Expenses Reports are Submitted

    Under California regulations, you cannot withhold the pay until the expense reports are submitted. My suggestion is this: you should pay the employee as soon as possible (because there is a penalty for willfully withholding pay). Also send a letter via certified mail, letting the person know that he/she must submit expense reports within one week. If you do not receive those expense reports, then you will have no choice but to assume that there are no additional monies owed by the company. Keep a copy of that certified mail receipt.
    Lillian Connell

    Forum Moderator


    • #3
      Thank you so much for you help!


      • #4
        One More Note

        I just thought of something else...add the statement saying something like, "Therefore, we will not accept expense reports after this week nor will we be responsible for any liability or moneys that you perceive as being owed to you in the future. By not responding to this letter with an expense report, you are accepting this policy."
        Lillian Connell

        Forum Moderator


        • #5
          Well we know that we don't owe the employee anymore money due to the expense reports. The issue is that the EMPLOYEE owes the company money. For Example the employee took a $1000 advance for expenses for a trade show or travelling etc. If the employee didn't use the $1000 for company expenses, the employee is required to return the money or the money less what was spent for business purposes. So in this example the employee didn't turn in any expenses therefore the employee Owes the company $1000. Now the employee has left the company and the employee's final paycheck is $800. Because of the fact that the employees paycheck was less then the amount that was advanced to him the employer has withheld the final check.

          Thanks again for your time..
          Last edited by Haroldw987; 03-25-2005, 01:47 PM.


          • #6
            Debt to the Company

            You must still pay the employee. However, you can also send a letter letting the employee know that the he/she owes the company X dollars. Give as much information as you, such as date, reason, etc. Le them know that you require immeidate repayment of the advanced monies or complete expense report by (name a day a week away) and that or you will pursue it the full extent available to you under the law.
            Lillian Connell

            Forum Moderator


            • #7

              Thank you again for your help.. You are awesome. I have one more question. Where is the best place to go to find out what penalties the company could incur for withholding an employees paycheck.


              • #8
                Information on Penalties

                You can read about withholding of pay at:
                Lillian Connell

                Forum Moderator


                • #9
                  Question on Last Paycheck

                  We are trying to establish a policy for our sales force state wide.

                  I need to find out where could I find information for all the states regarding wether is legal or not to withhold the last paycheck if the employee doesn't turn their expenses report to the Company.

                  In other words, the employee has a Company Credit Card that he uses for Company expenses, if the employee is terminated he/she should turn his expenses before we give him the last paycheck.




                  • #10
                    It isn't legal in any state to hold an employee's paycheck. It may be legal to have the employee sign an authorization to have certain debts deducted from their final pay, but that will depend on the state.

                    And secondarily, if the employee receives an expense advance and does not account for it in your required time frame (which must be reasonable), such advance becomes taxable wages, subject to all tax withholding, and goes on the W-2 form.
                    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


                    • #11
                      Thank you for your help Patty


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