Missing paycheck can cause some work.
This week's column concerns lost paychecks, and what an employer's responsibilities are in regard to them.
Question: My business issues the employees' payroll checks on the fifth and 20th of every month. Mr. Lewis, who is also known as the "absent-minded professor" in the office, came in this morning and reported that he had misplaced his paycheck. He asked for a replacement check to be issued. I have several questions on how to deal with his request. First, am I legally required to issue a replacement check to this employee?
Answer: Almost all employers do, even though it is not a legal requirement. If an employer does not and the lost paycheck never surfaces again, it becomes an unclaimed check.
Employers are required to hold the wages for three years, then send the unclaimed payment to the state Department of Lands. Go to www.oregon.gov/DSL/UP/index.shtml to learn more about how to report unclaimed property.
Question: Holding the wages for three years is too much trouble for my accounting department. I will issue a replacement check, but I don't want to make duplicate payments when and if the original paycheck is found. I plan to ask my bank to make a "stop payment." May I require the "absent-minded professor" to reimburse my business for the $25 "stop payment" fee charged by the bank?
Answer: It depends. If the "absent-minded professor" is a nonexempt employee, he must be paid no less than the applicable minimum wage rate for all hours worked. He may not be required to pay for business-related expenses which would have the effect of reducing his pay below the minimum wage. The "stop payment" fee is considered a business-related expense.
For example: If the "absent-minded professor"is paid $8.50 an hour, your business may not recoup the bank fee from him because his paying the fee will have the effect of reducing his pay below minimum wage.
If he works 40 hours a week and is paid $9 an hour (assuming your business pays the nonexempt employees weekly), his total earnings for the week will be $9 x 40 = $360. The corresponding minimum wage amount is $8.50 x 40 = $340. In this case, your business may only recoup a maximum of $20 from the "absent-minded professor." If he works 40 hours a week and is paid $10 an hour, his total earnings for the week will be $10 x 40 = $400. The corresponding minimum wage amount is $8.50 x 40 = $340. In this case, your business may recoup the entire $25 from the employee.
Question: Wonderful! To minimize the internal paperwork and ensure a smooth reimbursement process, may I ask the employee to sign an authorization for my payroll department to deduct the $25 fee from the employee's replacement check?
Answer: No. It is legal to make deductions from wages when the employee has voluntarily signed an authorization for the deduction, the deduction is for the employee's benefit and the deduction is recorded in the employer's books.
In this case, stopping payment on the original payroll check is not for the employee's benefit. It is for the employer's benefit. So the deduction would be unlawful.
For more information about topics of interest to Oregon employers, consider attending an upcoming seminar. For registration information go to www.oregon.gov/BOLI/TA.