Results 1 to 6 of 6
  1. #1

    Default Imposing a Penalty for Not Following Company Policy

    My question involves labor and employment law for the state of: Arizona

    I am not sure if this is the appropriate category for my posting.

    My daughter and her business partner owns a retail Flat Iron / Hair straightener kiosk and a retail women's apparel store within a mall location. The retail store just recently opened and they are currently in the process of hiring hourly employee's.

    The Kiosk employee's are commission based only. If the employee's commission's and hours worked do not meet the minimum hourly wage the employee's are compensated appropriately. (The employee's always exceed minimum hourly wage) Each employee is provided a weekly work schedule. The employee's are required to come to work on time. Employee's are not allowed to stand around, mingle or gossip or having personal non business conversation's with people walking by in the mall. The employee's are not permitted to use their cell phones during their work schedule unless it's an emergency. Naturally, employee's are permitted to use their phone's during their personal time during periodic breaks or while on their personal lunch and dinner breaks. The employee's are given 3 verbal warning's for not following these policies. However, after these verbal warning's the company has implemented a $25.00 penalty fee which is deducted from the employee's commission earning's for being late for their shift, standing around talking and not being productive and for using their phone's for personal business. The employee's sign and agreeing to the companies policies and receiving a penalty fee for not following the company policies. My daughter and her business partner feel it is more appropriate to impose this penalty fee each time the employee does not following the company policies rather than just sending the employee'a home. Essentially sending employee's home would be more of a severe loss of earnings for the employee than imposing this penalty fee each time, including being short staffed. The company retains the penalty fee's collected throughout the year then donates the money to a non-profit charity or a religious organization at the owner's choice. The company does not need to retain this money withheld from their employee's to put it into their pocket.

    So, the question: We are curious if the implementation and imposing this penalty fee being deducted from their employee's earnings is allowable by law or legal?

    It should be noted this penalty fee being imposed is generally an acceptable and standard practice for kiosk business's of this type.

    Thanks for reviewing and responding.

    DDSA

  2. #2
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Imposing a Penalty for Not Following Company Policy

    I've lived in AZ for over 40 years and I've never heard of any laws prohibiting the practice you describe. However, your daughter would be wise to run this by the AZ Dept of Labor or an employment law attorney.

    Meantime, I make the following observations:

    The employees are required to come to work on time. Employee's are not allowed to stand around, mingle or gossip or having personal non business conversation's with people walking by in the mall. The employee's are not permitted to use their cell phones during their work schedule unless it's an emergency.
    Those limitations should be in a written document with signed acceptance by the employees.

    The employee's sign and agreeing to the companies policies and receiving a penalty fee for not following the company policies.
    You must include a specific statement by the employee that the employee consents to the penalty being deducted from pay. Otherwise you cannot deduct from pay. And regardless of how many deductions you still must pay minimum wage.

    The employee's are given 3 verbal warning's for not following these policies.
    No good. Warnings should be in writing even if they don't result in the financial penalty. That precludes any argument "You never told me." And there is a written record of the warnings. Warnings should be signed by the employee that the employee acknowledges receipt of the warning.

    My daughter and her business partner feel it is more appropriate to impose this penalty fee each time the employee does not following the company policies rather than just sending the employee home.
    There should also be a limit to how many financial penalties are imposed before an employee is terminated for misconduct. Your daughter should study up on misconduct as it's defined for unemployment compensation because misconduct will make an employee ineligible for unemployment compensation.

    It's not a good idea to retain misbehaving employees too long.

    The company retains the penalty fee's collected throughout the year then donates the money to a non-profit charity or a religious organization at the owner's choice. The company does not need to retain this money withheld from their employee's to put it into their pocket.
    That's nice. But it's irrelevant with regard to the penalty practice itself.

  3. #3
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Imposing a Penalty for Not Following Company Policy

    Quote Quoting adjusterjack
    View Post
    I've lived in AZ for over 40 years and I've never heard of any laws prohibiting the practice you describe. However, your daughter would be wise to run this by the AZ Dept of Labor or an employment law attorney.

    Meantime, I make the following observations:



    Those limitations should be in a written document with signed acceptance by the employees.



    You must include a specific statement by the employee that the employee consents to the penalty being deducted from pay. Otherwise you cannot deduct from pay. And regardless of how many deductions you still must pay minimum wage.



    No good. Warnings should be in writing even if they don't result in the financial penalty. That precludes any argument "You never told me." And there is a written record of the warnings. Warnings should be signed by the employee that the employee acknowledges receipt of the warning.



    There should also be a limit to how many financial penalties are imposed before an employee is terminated for misconduct. Your daughter should study up on misconduct as it's defined for unemployment compensation because misconduct will make an employee ineligible for unemployment compensation.

    It's not a good idea to retain misbehaving employees too long.



    That's nice. But it's irrelevant with regard to the penalty practice itself.
    The bolded is really important. It would be seriously illegal to pay someone less than minimum wage and if a penalty or penalties were to take them below minimum wage you could get seriously dinged for that. Its also a big no-no to take money out of someone's pay without their written consent.

    Also, when you consult with the employment law attorney you might want to ask whether or not you can fire someone for refusing to give written consent for deducting money from their pay.

    On a purely personal note, I am not sure that prohibiting employees from having non-business conversations with potential customers is all that wise, PR wise. That type of friendliness can be what gets a kiosk noticed and can bring people back when they want to buy what you sell.

  4. #4
    Join Date
    Oct 2016
    Posts
    4,301

    Default Re: Imposing a Penalty for Not Following Company Policy

    If the deduction reduces them below the federal minimum wage it is illegal.

    This law. https://www.law.cornell.edu/cfr/text/29/3.5. will tell you the deductions that are legal under federal law.

    Personally I think the entire discipline plan is very poorly put together. A good employee discipline plan should be...

    1. Verbal warning (documented)
    2. Written warning.
    3. Suspension
    4. Termination

    If for no other reason than it gives the employee a chance to correct the error and the UI agencies love it.

  5. #5
    Join Date
    Nov 2013
    Posts
    7,056

    Default Re: Imposing a Penalty for Not Following Company Policy

    Why have you set up your business that your so-called employees are paid on a commission bases in the first place? Do you withhold taxes, do you provide workman compensation, do you pay ss tax for them, and do you pay for unemployment insurance? If your answer is no to any of the above, you have more of a problem then your discipline policy.

  6. #6

    Default Re: Imposing a Penalty for Not Following Company Policy

    Quote Quoting budwad
    View Post
    Why have you set up your business that your so-called employees are paid on a commission bases in the first place? Do you withhold taxes, do you provide workman compensation, do you pay ss tax for them, and do you pay for unemployment insurance? If your answer is no to any of the above, you have more of a problem then your discipline policy.
    As indicated above within the our industry all Flat Iron / Hair Straighter business owner's (excluding the women's apparel business) compensate their employee's always on a commission basis. In this industry experienced sales representative will not work for minimum wage. There is no reason to pay minimum wage even to non or semi experienced person's either. As part of the business the owner's conducts the sale so the commission is paid to the employee while training. However, in the past there has been employee's who have been hired strictly to open or close the business on time and just to have a body as a physical presence at the business location as required by mall management. The person is not required to sell.

    Yes!, we are a licensed legitimate business. Yes! we withhold and remit all taxes. Yes!, we are also required to have business general liability and workers' compensation insurance.

    1. Sponsored Links
       

Similar Threads

  1. Denial & Appeals: Violation of Company Policy
    By awow7 in forum Employment and Labor
    Replies: 7
    Last Post: 06-19-2012, 01:16 PM
  2. Getting Fired: Fired Due to Unknown Company Policy
    By SaraJetlag in forum Employment and Labor
    Replies: 2
    Last Post: 08-01-2011, 11:29 PM
  3. Job Benefits: FMLA: Company Policy vs. Law
    By NLDude in forum Employment and Labor
    Replies: 1
    Last Post: 02-26-2011, 01:44 PM
  4. Unemployment Benefits: Violated Company Policy
    By kmsparty in forum Employment and Labor
    Replies: 1
    Last Post: 02-20-2010, 10:35 AM
  5. Getting Fired: Fired for Breaking a Company Policy
    By rustyboy in forum Employment and Labor
    Replies: 6
    Last Post: 01-18-2010, 06:23 AM
 
 
Sponsored Links

Legal Help, Information and Resources