Can my employer legally force me to pay off a customer's bad debt?
I am employed in Texas. I work in a sales position, which allows customers to charge purchases to their account, with a 2 week payment window. Because my supervisor and I disagree on the some of the finer details of a handful of accounts, he has said I am now responsible for paying off any bad debt these accounts might incur in the future. I don't believe the law could make me pay back something that is completely out of my hands, plus we have credit applications and personal guarantees signed by each of these customers. How could I be held responsible when there is no way for me to know the inner financial dealings of my customers?
First of all, I am paid 100% commission. However, I am not paid on a sale until the invoice is paid. Therefore, there is no commission to chargeback to me.
Second, I was not insubordinate or overstepping my bounds in any way. We have COD and charge accounts, which we apply at our discretion. The "disagreement" originated when a customer who has been charging for 3 years was suddenly hit with a credit limit this week. We have never had credit limits, and they have been assigned almost randomly. I thoroughly explained the limit to the customer, but theirs isn't even high enough for 1 order, essentially making them COD (without being COD). Needless to say, the customer was irate, as they pay last minute, but never late and never with bad checks. The customer then took it upon themselves to contact the owner of our company. This is when the problem started.
The owner raised the limit, we both notified the customer, and my supervisor went behind him and lowered it back down.
Maybe I haven't explained enough. I am a full-time employee of the company, not an independent contractor.
I did not extend credit to the customer. That was done by our A/R department and my supervisor. 99% of our accounts are on credit, and this was no exception. Of that 99%, none had credit "limits" until this week. When the limits were imposed by my supervisor (with no knowledge of the owner), they didn't notify the customer or even the salesperson. When I had angry customers calling, I called my supervisor and requested they customers be given a week or so to adjust before the limits were enforced.
The angry customer called the owner of the company, my boss' boss, and I had no knowledge of this until the owner called me. Until that point, he had no clue we were using this tactic.
- demos_jonesLv 61 decade agoBest Answer
That's not only a blatant violation of federal labor law, but Texas labor law, as well. The ONLY items he can legally withhold from your paycheck are:
Taxes & SS/Medicare, as mandated by LAW
Garnishments as supported by court order (by LAW)
and those agreed upon with you, such as 401K, stock purchases, insurance deductions, etc.
Anything else is an outright violation of law and he can find himself severely penalized by the Dept of Labor to the tune of thousands of dollars.
However, there is nothing to prohibit him from terminating your employment if he believes that you have incorrectly carried out the duties of your job. If he is the top boss in a small company, you have little option, but if he has bosses above him, you can appeal your termination above his head.
In no case, though, can he even demand, let alone take, any recompensation of your paycheck. And, under the law, you do not assume the obligation for anyone's debts unless you have signed a CONTRACT as a co-borrower.
- Anonymous1 decade ago
No... He can't do that...
Legally he has NO STANDING to force other peoples debt on to you.
Why doesn't he just cancel the credit of the 'Iffy' people?
Secondly... YOUR BOSS SETS UP THE DETAILS OF THE RULES.
YOU ARE IN A SALES POSITION... To be blunt... What you feel about the rules has no bearing on the reality of what the COMPANY means when they set out the guidelines in regards to credit.
If you don't like how the business is run, you bring your issues to the attention of management...
If they tell you that they have their rules and you need to abide by them... Then you need to either shut your mouth and go along to get along or FIND ANOTHER JOB.
As long as the rules don't violate any laws, why do you feel you have the right, as a simple employee, to dictate to the company how they should run their company?
I can understand why the boss would get pissed off to the point of telling you something as stupid as what he told you if you are attempting to dictate to him what the 'details' actually mean.
You need to contact the owners and have THEM tell both you and your boss what the REALITY of the situation is... PERIOD.
What YOU think the details mean is, literally, meaningless... YOU ARE NOT AN OWNER.
I believe that he said what he said out of anger at you pestering him... BUT... If he attempts to deduct anything other then Taxes, Garnishments, or 401K from your paycheck... Contact the department of labor and file a complaint.
You are not powerless to fight back if he actually debits monies from your paycheck... But I doubt he will... He will most likely fire you for insubordination.
- 1 decade ago
You do not work for the company and your "boss" did not authorize it, since you do not really work for the company you should consider your self a contract laborer and you did not have the right to extend credit to anyone, you have assumed the responsability of the debt and can be held responsable for repayment of the debt. As far as I can tell by what your description of the situation the only documentation that was in writing by the company was that the credit line was at its limit. You may be able to try and fight it in court and say that the owner gave you authorization but he could always say he did not,,,, your word againt his, that is if he wants to be that way.Source(s): This is just my opinion, i used to own a company that made over 400,000 in commisions every month. fyi Good Luck
- 1 decade ago
Was he serious? No, he cannot hold you financially responsible for your customer's irresponsibility if you are an hourly employee.
However, what he can do is this: is your salary on commission? If so, then if your customers do not pay their bill, then you can receive what is called a chargeback and lose commissions you may have received.
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- rickinnocalLv 71 decade ago
No, he can't 'force' you to pay them off. If he believes that the company has incurred a loss because of your negligence then he can sue you for that loss. It would then be up to the court to determine whose fault it was.
Since Texas is an "Employment at will" State, however, he can "ask" that you repay the debts, and if you say no he can fire you.
- Anonymous1 decade ago
I once worked for a company that took money out of your check if your cash register was low more than .30. They got hit with a big suit a few years later.
- MLELv 71 decade ago
Absolutely not! If he tries to make you pay or takes the money out of your check file a complaint with the department of labor, keep all proof of what he is doing and any documentation that you have.
- gcbtradingLv 71 decade ago
Sometimes I wonder how some people even have jobs. Read about the "Peter Principle". Your boss has reached his level of incompetence
- jsmack19Lv 61 decade ago
You can't be, talk to someone at the department of labor.
- Anonymous3 years ago
I was wondering much the same thing