Can you withhold wages when an employee quits and they have company property?

By: Melanie Geddes

An employee suddenly quits. They don’t give any type of notice. They just never show up to work and never provide an explanation or reason for doing so. This type of behavior can have a much more devastating effect on small business than an enterprise organization, but no matter the size of the company, it can often feel like a bad break-up.

It creates hard feelings and a lot of  wondering “what do I do now”  and “How do I get the company property back?”  If the employee was assigned company property or equipment, such as a phone and/or laptop, it’s not uncommon for business owners to assume that they can withhold wages like an employee’s final paycheck until all company equipment has been returned.

However, that’s not the case in many states.

For example, in North Carolina and South Carolina, employees are due ALL of their final and accrued wages on or before the next payday. So when that aforementioned employee does finally resurface, asking for their last paycheck, you cannot threaten to withhold it until they return company equipment.

Also, that final paycheck should not only include wages earned but also any and all accrued but unused PTO or vacation time and/or sick time, depending on your specific policy, and any commissions earned. North Carolina wage and hour laws specifically address accrued, unused vacation time and commissions, and states that these should be paid on the next available paycheck after termination unless you have a written policy of forfeiture.

In order to protect yourself from having to pay unused, accrued time off to employees who don’t give the professional courtesy of a two-weeks’ notice, a written policy must be in place and made available to the employee, most commonly in the form of an employee handbook. For example, “if employee offers a two-week notice prior to separation, accrued but unused PTO will be paid to the employee. If no separation notice is given or if the employee is terminated involuntarily, accrued but unused PTO will be forfeited.”

The best protection for the return of company property, upon separation, is to be well prepared during the employee onboarding process. Employees should be presented with a Company Property Form that has a list of all company equipment they received and an explanation of their responsibilities related to the used and return of the equipment as well as any consequences related to violations of the agreement. Having the signed statement protects the company’s assets and sets a clear expectation for the employee about the company equipment.