Many professional practices and other small businesses give staff and family member discounts on products and services. In medical practices, dental practices and veterinary practices, to name only three service-related businesses, the doctors often carry balances for employees that are not paid with any regularity.

Unfortunately, without a specific policy on this practice, the doctor can be left holding the bag – literally – if the employee suddenly quits. It is worse when the doctor must terminate the employee, and learns in the process that there is several hundred dollars owing.

We’ve seen this issue in several practices lately. Usually we find out this is happening when the doctor calls and asks us if it is okay for him or her to deduct the balance from the employee’s final paycheck. Sometimes, of course, even that paycheck doesn’t cover the balance.

The unfortunate response we have to give is “no” – unless the doctor obtained an authorization to deduct the money before the decision was made to terminate or separate the employee. It is always possible – but unlikely – that the employee who is informed she is being fired will agree to have the money deducted.

It is really important to have each employee, as part of the hiring process, sign an authorization that allows the owner to deduct amounts owing both during, and at the termination of, the employment. By having a policy that specifies what percentage of any outstanding balance will be deducted from paychecks, you can assure that the balance never gets out of hand.