Employer Withholds Last Wages To Compensate It For Training Costs: Is This An Employer Expense?

Fox Rothschild LLP

Fox Rothschild LLP

A thorny issue for employers is training newly hired people, then having those people quit (for whatever reason) and being stuck with the training costs. What can the employer do? I think there are few options, but one option, a risky one, is to not pay the employee or withhold their pay when they leave. A recent case is testing whether that strategy is legal. The case is entitled Barker v. K. Dolan Conveyor Co LLC et al. and was filed in federal court in the Western District of Pennsylvania.

An ex-employee, a technician for a conveyor company, filed such a suit, seeking two weeks pay he claims was illegally withheld to “pay” for the costs of the training. He claims violation of the Fair Labor Standards Act, the Pennsylvania Minimum Wage Act and the Pennsylvania Wage Payment and Collection Law. He alleges that “as a result of not having paid any wage whatsoever to plaintiff for his final week[s] of employment with defendants, defendants failed to pay the plaintiff all wages due and owing.” The worker earned $14 per hour.

The employee claimed that when he quit, he did not receive his last two weeks’ worth of pay. He claims the Company’s position was that he had to compensate the Company for the costs of his training. He is suing the Company, an affiliate as well as the owner, personally. He seeks back pay for the lost wages, plus liquidated damages.

The Takeaway

This might be a problem for the Company. The costs of training are costs that a Department of Labor or a court might well conclude are business costs that the employer must bear and cannot be passed along to the employee or deducted from his wages. If the employer has been doing this all along, there may well be a class action brewing. One solution may be to have the employee sign a statement where he acknowledges that the training is for his benefit and he is voluntarily acknowledging that he is learning skills he might take with him, thereby giving a deduction or pay back policy some legal foundation.

It’s worth a try…

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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