Instead of focusing on one topic, it seemed like a good idea to do a bit of an HR Q & A.  So, I’ve gathered some of your Qs, and here goes my As.

After one of our former employees left the company, we found out that she used the company card for hundreds of dollars of personal charges.  My CEO is fuming.  Recently the former employee applied to the 401k plan to withdraw her funds so she can roll them over into her new plan.  But my CEO won’t approve releasing the funds with the 401K carrier.  She says, until we get every penny of our money back, she’s not approving anything.  Is that OK?

Alright, while I can certainly understand the frustration and even anger – unfortunately just like you can’t hold someone’s final pay hostage, you can’t hijack their retirement plan money.

All 401Ks are governed by the Employee Retirement Income Security Act of 1974 (or ERISA) – and it’s a federal law that sets minimum standards for almost all retirement, and even some health plans.  The primary job of ERISA is to protect individuals that are in the plan.

It mandates things like requiring notices to participants about plan features and funding.  Setting minimum standards for participation, vesting, the responsibilities of the fiduciary (by the way, if you have a retirement plan, and don’t know who your fiduciary is – it’s probably you.  And you should really look into that).

So, all that to say – ERISA is federal, and it’s not kidding around.  And it also isn’t concerned whether or not your former employee owes you money.  The two issues are completely separate – one is how the retirement funds are managed; and the other is an issue for the court (either small claims or criminal).

So, if you’re tagged with holding on to someone’s retirement account – well, let’s just say Big Trouble is around the corner.  Both the IRS and DOL will be really unhappy with you, and they will make their unhappiness known in the application of penalties and fines.  Honestly – it’s just not worth it.

So, call your attorney, have them write a letter, or even file a police report for theft if you have to – but give Stealing Sally her 401K funds.

Next Q –

My employee came in for his shift, but things were really slow so we sent him home.  We tried to call him while he was on his way, but couldn’t reach him.  Now, after he got his paycheck he’s complaining that he didn’t get paid for that day.  How can he expect to be paid for a day he didn’t work?

California, and 8 other states, have some form of a Reporting Time Pay requirement.  They are all a bit different, but California’s law says that if the employee ends up not work (do to no fault of their own), then they have to be paid.

Now, how much they get paid depends.  They have to get ½ their scheduled shift.  But if ½ of their shift is less than 2 hours – well then they get 2 hours.  And if ½ their shift was more than 4 hours – then they get 4 hours.  And the time the employee actually worked counts – so if they were clocked in for 30 minutes, it’s counted toward the reporting time pay.

Now, there are some bells and whistles around how and if any of this counts as overtime (generally not); so be sure to check the specific law.  But yes, you should go ahead – calculate the Reporting Time Pay you owe Went Home Wally, and pay it to him right away.