Late Payroll, Employees Breaking Things, and Reducing Hours

Welcome back to another edition of HR Basecamp Roundup! This week, we tackle some interesting and common issues that come up in workplaces more often than you think. If you haven’t joined our HR Basecamp Facebook group yet, be sure to join so you can participate in these discussions in real time! 

FREE Resources in this Roundup:

• State Payday Requirements 

• CEDR Payroll

• Progressive Corrective Coaching

1. What do I do if I run payroll late?

The question: I was speaking to a colleague about payroll being run a day late and they said that when that happens the business owner is required to cut employees their checks so they don’t have to wait for delayed direct deposit. Is this true? It seems drastic for a slight delay.

The legal side:  It might feel drastic, but your colleague could be right depending on where your business is located.

Federal law, under the Fair Labor Standards Act (FLSA), requires that employees be paid on their regular payday for all hours worked. The law doesn’t set a specific schedule for how often you must pay employees, but once you do establish a regular payday, you’re legally required to stick to it. A delay—even by a day—can technically be considered a wage violation under federal law.

Some state laws take this a step further. Employers have to meet state payday requirements, and some states have strict penalties for late pay, including daily fines and even interest owed to employees. In other states, a late paycheck might not result in an automatic fine, but it could still open the door to wage complaints or audits. 

Does that mean you must handwrite checks and drive them to every employee’s doorstep? Not necessarily. But if you know your direct deposit won’t land on payday, some form of immediate payment—such as a manual check or expedited pay card transfer—may be necessary to stay compliant, especially in stricter jurisdictions.

The human side: A “slight” delay on your end could feel like a financial crisis to your employees. For folks living paycheck to paycheck (which is more common than you might think), even a 24-hour delay can mean a missed rent payment, overdraft fees, or a whole lot of stress.

You may also consider polling your employees individually, saying that payroll is expected to be one day late, and letting them know that if there is an issue, you can write them a check.

If you’ve already missed the deadline, the best course of action is to communicate clearly and quickly. Let employees know what happened and when they can expect their pay. Offering a same-day paper check or partial advance can go a long way in preserving trust.

Going forward, build in a buffer. Set your internal payroll process to run a day or two before it’s actually due. Many payroll services also offer emergency checks or next-day payment options—worth checking if yours does. 

At the end of the day, late pay isn’t just a compliance issue. It’s a culture one. Employees who know they can count on their paychecks will show up with a lot more confidence in your leadership.

Did you know CEDR has a partner payroll provider who can help you deal with being late? Learn more here.

2. Can I charge an employee for broken equipment?

The question: An assistant dropped a very expensive tool, and it broke. It’s about $2000 to get it fixed. Can I make the employee cover the cost? This is not their first time breaking something, although it is the most costly. 

The legal side: No, you almost certainly cannot deduct the cost of the tool from the employee’s paycheck. The Fair Labor Standards Act (FLSA), doesn’t allow employers to pass business expenses like this onto employees—especially when the equipment is used primarily for the benefit of the employer. That’s the law’s way of saying, “This is the cost of doing business.”

State laws often go further and even written agreements allowing deductions for breakage are void. Some states do allow voluntary deductions with very specific, signed documentation from the employee—but we’d strongly caution against even thinking about that route unless you’ve consulted with legal counsel and reviewed all the state-specific rules.

One tiny (and rare) exception: If you can prove that the employee acted with intentional or malicious negligence, then you might be able to recover damages—but that bar is very high and would likely involve legal proceedings. Simply being clumsy or careless doesn’t cut it.

The human side: Just because you can’t charge them doesn’t mean the situation doesn’t need to be addressed. This kind of error, especially if it’s part of a pattern, could point to a lack of care, a need for training, or even a bad fit for the job.

Here’s how to move forward:

1. Have a one-on-one conversation: The first step is to have a private, calm, and candid talk. Lead with facts, not feelings.
   
   “This is the third piece of equipment that’s been damaged. This last one is particularly serious, and we need to talk about how to prevent this from happening again.”

2. Identify the root cause: Was the tool being used improperly? Is the employee rushing or skipping steps? Do they fully understand how to handle the equipment? This is your chance to determine whether more training is needed or if the issue is more about carelessness.

3. Set expectations moving forward: If retraining is needed, do it. If the behavior is the issue, document the conversation and be clear that continued breakage will result in disciplinary action, perhaps including termination.

4. Keep documentation: Every incident and every conversation should be documented, especially if you’re building toward potential termination. That paper trail is what protects you legally and gives you clarity as a manager.

It’s frustrating to eat the cost of expensive equipment, but legally speaking, that’s your responsibility. What you can control is how the employee moves forward—and whether they stay on the team at all.

Extra Credit Reading: Progressive Corrective Coaching 

3. Does an employee lose their benefits if they reduce their hours?

The question: Most of the benefits I provide (like vacation and holiday pay) are for full-time employees only. If an employee stops working full-time do they immediately lose access to full-time benefits? One of my employees has been working less hours the past month due to personal reasons and is now asking to take vacation. Are they still eligible?

The legal side:  While you can tie benefits like vacation or holiday pay to full-time status, it’s not as simple as flipping a switch when someone’s hours dip. Some benefits, like state-mandated paid sick leave, have their own eligibility thresholds. These laws usually define eligibility based on the average number of hours worked over a set lookback period (commonly 90 days, 6 months, or even a full year), not just a recent drop in hours.

Before you make any changes to an employee’s benefit eligibility, be sure to:

• Review any applicable local or state laws to make sure your benefit policies aren’t in conflict with them.
• Consider whether any of the reduced hours were due to protected leave, such as FMLA, ADA accommodations, or state-protected time off. Protected absences can’t be used as a reason to strip benefits or alter their classification.

Even if there’s no legal protection involved, best practice is to create and communicate that there is a look-back over 6 months to assess whether someone has shifted from full-time to part-time status and is therefore no longer eligible for certain benefits. That’s the same standard CEDR handbooks use, and it keeps you from making hasty or unfair classification decisions based on short-term schedule changes.

The human side: In your case, the employee’s hours have dipped for just a month due to personal reasons. That’s not long enough to justify reclassifying them or revoking benefits, especially if they’ve been a consistent full-time contributor until now. So yes, they’re still eligible for full-time vacation benefits.

Also bear in mind that if they do drop to part-time status, that doesn’t wipe out their existing benefits. If benefits such as PTO have already been earned and accrued, the employee continues to be able to use those benefits. 

Make sure any decision you make is documented and applied consistently. If one employee gets more leeway than another in a similar situation, that can lead to claims of unfair treatment or favoritism.