I would tell him you can only advance something reasonable, like one week’s pay. And that it must be repaid within 4 paychecks. In the future, the loans would only be made when there is an emergency need for such cash. If your dog will die because you don’t have the cash for a surgery, that’s one thing. But if there’s an oh-so-cute pair of shoes and you don’t want to put it on your Visa, that’s something totally different. This could be a new, written, policy.
StG
Because a wedding reception doesn’t really qualify as an emergency, IMO you’d be justified in declining his request. But if this would be your first refusal, I’d worry about the discrimination aspect.
Your thoughts about a 6 month repayment schedule sound very reasonable, and formalizing the policy and distribuing it in writing may be necessary if you wish to continue it.
He makes a 6 figure salary and he can’t come up with $4000? This guy has serious money management issues.
I agree that he is taking advantage, but I also think you need to set up clear parameters or conditions in cases like this. Unfortunately it will seem personal if you set up different conditions for this case, so I think maybe you should let this one go, then hand out a memo that clearly states your rules for using this loan. That way there is no guilt or questioning the next time someone wants to do this - like others have said, he might just think this is a nice perk that other people aren’t using to their advantage or something. Is it clearly known that it is an emergency fund and not a simple loan?
Having 15 employees use it out of 30 seems like a lot to me to be just for emergencies only. I am alarmed that half of your employees with good jobs seem to have no savings at all. Maybe they all could use some financial counseling.
Wait a minute; the guy makes a six figure salary, and he can’t plan out his finances enough to save up $4000 for a wedding reception? This stinks like Martin Scorsese’s chances of winning a Best Director Oscar. If he’s pulling down six digits, either he can or should be able to garner an equity loan against assets or carry the charge on a credit card and pay the interest, if he (for some reason) doesn’t have savings for this. Color me unsympathetic to an extreme for someone who rakes in that kind of dough and doesn’t at least shove some under the mattress.
As for the gay marriage thing, I can see how it could be politically contentious, but on the other hand, this isn’t any kind of personal emergency or unexpected expense, and you note that it is comparitavely large. Again, I’d reiterate–in a congenial tone and manner–the very points you made in your first post. Neither the burden or lack thereof, nor whether he will or will not pay you back is the issue; he can borrow the money from someone else and pay them back, including the interest that comes from spending money you don’t have. And while having offered payroll-backed loans in the past may have generated a perceived expectation of availability, there is no ethical duty, and I don’t think (but will stand corrected if a barred member who is experienced in employment and contract law says otherwise) that you have any legal obligation to do so.
Or (if the money isn’t an issue for you) offer him the money, but make it clear that this is the last time, and stick to your guns. You sound like a great boss and wish to continue treating your employees in a fair and generous manner, but having one perpetual bad egg is going to sour it for the whole carton.
Stranger
This guy’s earning 6 figures and needs $4K?! Methinks he should learn about budgetting et al.
Actually, if he’s that well paid, presumably he’s rather senior, and in your management team. Do you really want someone incapable of running their own life in such a senior position in your own company?
What is wrong with sitting the guy down, giving him this one last loan, and then telling him he’s come to the well too many times and you feel taken advantage of?
While I agree that you should have initiated a policy to begin with, it’s a pet peeve of mine to punish the “non-offenders” when it’s one or two people who have screwed things up. Place the accountability where it belongs.
IMO, if you loan this guy $4000, you’re making a conscious decision to be a pushover.
You’ve got to put your foot down somewhere. Talk to the guy. Tell him exactly how you feel, calmly and without hostility. It’s all well and good to be a nice boss and understand when emergencies happen, but it’s really inappropriate to ask even a nice boss to (even temporarily) finance a party. Discrimination my ass; loaning money for luxuries is mom and dad’s (or Visa’s!) job, not yours.
Also, I don’t think laying down policies about this would be a good idea, because then it becomes an official perk of the job, which I doubt you want to happen. You don’t want people to feel WELCOME to borrow money from you as long they follow rules a b and c. You want them to come to you only in emergencies and after they’ve tried everything else, which they’ll do without you implying that it’s ok.
What’s wrong with sitting him down, telling him he’s come to the well much too often, and thatr’s why you won’t be giving him anymore loans? If he needs a loan for something as paltry as 4K when he makes in excess of 100K, there should be lenders lined up to give it to him.
If he’s constantly in debt to the company because of these loans, point this out as the reason why you simply can’t grant another one. The loans are designated for infrequent use and by granting him this one, you might have to short change someone who REALLY needs it.
I’ve worked with my company since it started 10 years ago, and what the OP describes is exactly how policy manuals come into being. We’re a fairly small software development company (well, now we’re a fairly small branch of a very large company) and it was important to me to keep things as informal and collegial as possible. Need a day off for your son’s graduation? You’ve worked a lot of overtime lately, so don’t worry about it, and here’s a little bonus in congratulations.
But over time there’s always someone who pushes the informal perk. If he got a day off for his son’s graduation, why can’t I get a day off for my wife’s Mary Kay party? That sort of thing.
So you either do away with the perk or codify it. Part of it is being fair to everyone, and part of it is just to cut down on the pains-in-the-ass. And that’s how you end up with a 3-inch-thick policy manual.
Agreed. I used to have a very liberal policy about taking time off for family events. But then the guys started taking time so that they could set up their game boxes for a gaming weekend and stuff like that and I stopped allowing unearned time off.
To the OP. Tell him you are sorry, but you cannot float so large a loan and that he will have to start living within his means. It is uncomfortable, but it needs to be done.
As an HR person, one thing I would suggest you look into is whether or not homosexuals have employment protection under your state or city law. There is no federal law providing that protection, but some localities do provide it. IF such legal protection exists where you are, then you are at some risk of appearing to discriminate by picking this situation as the first time you say no to a loan request. IMHO, it’s a risk that you should know whether or not exists before making your decision.
This is not an unanticipated expense, so it seems like the kind of thing you can politely suggest he access another line of credit for. You can kindly offer to provide verification of employment if he gets a loan from a bank or credit union.
I worked for an employer once that operated its own small credit union, with loans on slightly more generous terms repaid through payroll deduction. Saved my bacon when my car was crushed by 4 trees in a hurricane! </war story>
I’m curious as to what the largest amount loaned out thus far was and what preiously reasons for borrowing were? (not from him, just from a sampling of the office).
He strikes me as utterly clueless. I doubt he’s trying to be a jerk, he just seems to view it as borrowing against his future earnings and doesn’t see any issue with that. He needs to know now that this is a fund that’s limited and for emergencies only.
I’m very curious as to why he can’t come up with 4K himself. I’m far from rich, but if I really had to I’ll bet I could find 4K. He doesn’t have 401K to borrow against? Has credit so bad that he can’t take out a personal loan? Something smells really fishy.
I’d do it this one last time for him, and then institute a “once a decade” loan policy or somesuch.
Nothing wrong with leaving yourself the option to save an employee’s bacon in a bad pinch, while simultaneously putting a very effective limit on abuses.
I would tell him that a $1000 cap has been put on including a 3 bites at the apple policy.
You have already exceeded the 3 bites policy so this is the last time 
, however you cannot possibly exceed the new $1000 cap. 
Tell him these policies have actually been being crafted for a very long time. Tell him as he has used this to his advantage several times, you’re sure he’ll understand the need for a codified policy.
I would also do something similar:
Payroll advances will be set up to deduct a minimum of $100 a week from your check or be paid off in a maximum of six months.
Payroll advances will be limited to a maximum dispersal of $XXXX.
Payroll advances will be limited to one at a time, not to exceed three over five years. Your previous payroll advance must be completely paid off before you request a new one.
Payroll advances are at the discretion of the owner and will depend on factors, including the current cash position of the business.
You must be employed by the company for six months before requesting a payroll advance.
Should you leave the company, all advances must be paid in full immediately. The company reserves the right to hold your paycheck if you do not pay back the loan.
(I suspect this employee of yours is pretty bright. If my boss were willing to give me interest free loans, I’d be all over them - that’s free money).
Where as the small company I worked for gave out advances sometimes to people, It was not taken advantage of like you have run into. They did it only in emergency type situations. Being a small compny they had periods when the money was tight, and having thousands out of circulation could be the difference between everybody being laid off or working one more week. Money you tie up in personal loans, is money you don’t have to operate on, and are not investing into making money. I would let this person know that loans in the future will not come so easy. You know better than us, what to do with this guy. You may wish to advance or withhold this time, but let him know you will limit loans in the future. Think out your policy and hold to the same one for everybody.
Like the policy Dangerosa was describing, my husband works for an employee-owned company, and they have extremely clear rules for buying stock in the company and paying it back through payroll deductions (when you can start buying, how much stock you can buy, how it will be deducted, how it will revert when you stop working there, etc). There’s nothing wrong with setting financial rules down on paper. Everybody’s ass is covered and everyone is on the same page.
I would very gently explain why this loan is out of the question, and I would be sure to mention that it has nothing to do with him personally, so much as what he does in his off time, but I would point out that he has in the past abused this policy of your’s and you have to begin to set boundaries.
I have to agree with everyone else that you’re an awesome boss for loaning out interest-free money for emergencies. As a future company minion, I’m sure that if I had a boss like you, I’d love my job.
I also have to agree with some of the Dopers in saying that he shouldn’t come to you with this loan. You stated that you want to loan out money for emergencies, and this guy has come to you consistently for a while now. Emergencies happen, but he shouldn’t count on you always being around to fund his needs. In addition, he’s planned this party so he should have anticipated this for the future. It sounds like he was planning on asking you for money for a future event which is NOT an emergency, it’s a party.
I’m also wondering, were you invited to his wedding? It would be rude to ask to borrow such a large sum of money and not invite the benefactor of the reception.
What is the largest amount that you have loaned before to
a) him
and
b) any worker?
Because if those amounts are significantly less than the $4000, you can say there’s always been a ceiling on loans of $1000 or $1500 or whatever, it just hasn’t come up before because he hadn’t asked for more than that. Agree to loan him the ‘established’ maximum, and let him borrow the rest elsewhere. So long as he can’t say “But you loaned $5000 to Joe for a heterosexual wedding” the gay marriage aspect shouldn’t come into it.
Then wait a couple of weeks, and then put whatever restrictions you want into writing ‘just to clarify’ the situation: only for emergencies (and you are the judge of what’s an emergency); at least two years must elapse between loans; loans must be repaid within X months; etc.