Q. Can we legally require employees to reimburse the company for damage to customer or company property (i.e., the full amount of damages or insurance deductible)?

A. An employer should always be aware of state and federal law when seeking reimbursement from an employee for the value of lost, damaged or unreturned property. While an employer may wish to deduct money from the employee's regular or final paycheck to cover the cost of such damages, this implicates federal wage and hour laws under the Fair Labor Standards Act (FLSA). For example, requiring reimbursement from an employee who is exempt from overtime pay jeopardizes an employee's exempt status. Further, employers are prohibited from requiring nonexempt employees to pay for damages to the employer's tools or equipment if doing so would reduce a nonexempt employee's pay below minimum wage or below any overtime pay that is due to the employee. Additionally, under Idaho law, deductions are only allowed where permitted by applicable law or when the employer has obtained an employee's prior written authorization. Montana, Nevada and Utah laws are similar to Idaho's. Check with legal counsel to understand the respective requirements in your state.

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