I Am Your Boss, Not A Bank.

In My Humble Opinion
41

Some thoughts for a future policy (which I think you need, just for clarity’s sake), taken from the way “adelantos” are set in the Spanish General Labor Law. This law applies to every worker and sector; then each sector and those companies that are big enough may have more-specific “convenios” but I’ve never seen one that modified the “adelantos”. So it’s something that’s been working for a whole country for more than 80 years.

  • Cap, set up as “$XXXX or Y% of employee’s yearly salary, whichever is smaller.” This is actually intended as a protection for the employee, to keep people from digging themselves in.
  • Cap can be raised (to other levels that must be set by the company) on Finance’s approval. This is intended for things like “a truck without brakes struck my house, we’re all alive although shaken but it will be a while until insurance comes through.” In cases like that one, what some companies do is pick the bill directly (which counts as a business expense) rather than give the money to the worker, the worker repays it long-term.
  • Repayment as “$XXX or %Z of the loan, whichever is larger but up to M% of the worker’s salary.” This is intended to get the money back where it belongs as fast as possible without leaving the worker on PBJ sandwiches.

$4000, paid back on $100 installments, is over 3 years! So definitely if you loan it to him the payment has to be bigger than that.

42

I’m assuming that Foxy40 is female - sounds like it - but I can’t be sure.

Bailing out worthwhile cases makes perfect sense, people are unbelievably grateful when they hit the wire and get saved from sharks.

Foxy40 cannot invent corporate rules, everyone knows that she makes the rules, also financial stability of a smallish company gives employees peace of mind. I once worked for a company that kept one years running costs on deposit - if our area dipped we were guaranteed 12 months to pull our fingers out.

In this case the guy has been there 6+ years, is earning well and is obviously pushing the envelope.

Being male I would take him out for a heavy drinking session and explain to him that he is pushing things and making it embarrassing.
’Yo Sam, don’t you realize that we’ll have the IRS crawling over our books, emergency lending has got to be low profile - or I have to point to a shark and give a personal and very unofficial guarantee’

Actually, under the circumstances, assuming he is seriously good at his job, I would be tempted to tell him that since he is inviting all the staff, we can slip a good $2k under the radar as a corporate conference.

@Foxy40, I approve of your policies, charging interest is gross and periferal to a normal business. You can’t ‘invent’ rules yourself, but you can point to a ‘higher god’.

In this case, I suspect that there is another motive, if he is as I guess in sales, then he is probably insecure and trying to get some sort of ‘approval’ from you. That $4k is not cash, it is some form of token.

It would be interesting if you would keep us informed of the outcome.

43

Whilst you are a great boss for setting up these loans, it does look like you’re making a rod for your own back. Given the fact that you’ve set up loans so often in the past and that this particular person has had so many of them, you’d need a good reason not to advance that kind of money this time round.

It would be fair to tell him that your company can’t afford that kind of outlay at present or perhaps offer to loan him half what he wants as a conciliatory gesture. After that, I think you have to sort out a definitive loans policy for your company and have all the employees abide by it in future. Otherwise, you’ll end up feeling they’re taking advantage of your good nature.

It’s not nice to have to turn someone down when they’re requesting a loan, but in all fairness you have tried to restrict loans to hardship cases, times when money is tight and the unexpected has cropped up. The wedding’s not at all unexpected, he knew it was happening and should have planned his own finances better. Perhaps you could politely tell him that this will have to be his last loan for some time?

44

You’ve been very good to your employees and would be well within your rights to decline this loan on the basis of it being big, and a frequent event for this employee, and not being an emergency - your reasons as I understood them.

I don’t think you should have to institute policies, or claim that you can’t afford the loan or make other excuses that aren’t true.

If you do have to create policies or stop the practice completely, it would be a shame - and an example of the law forcing sad decisions needlessly.

Also, the employee in question should be embarrassed for his behavior, though perhaps he just hasn’t gotten it.

45

I know this makes me sound disorganized but I really don’t recall what the greatest amount was. A couple of years ago, a secretary needed a few thousand to make up the downpayment of a house she was trying to buy. I don’t think it was quite $4000.

For the record, I did turn someone else down once. She started the same borrow as soon as repayment attitude and she wanted it to redo her kitchen. I told her she would have to get a home depot credit card because that isn’t an emergency.

I am so saddened by the advice to get a “policy” about this. “A few bad apples…” I think my policy would have to be that I will no longer loan money. If I put it out there, I will have everyone coming to be for interest free loans and i don’t have the resources to keep track of this venture.

In the meantime, I have yet to give him a decision and am truly agonizing over it. I am inclined to say no but you dopers have such good points about avoiding any possible trouble by doing it one last time.

Also, yes, he has budget problems no doubt. He is well compensated and as far as I know, saves nothing but a couple of hundred dollars payroll deducted to his 401K each month. Several months ago he came for a $2500 to make up the shortfall on his property taxes. I can’t imagine him not having credit cards but perhaps he doesn’t have good credit. Perhaps he just digs the interest free, liberal repayment terms, loans I have been giving.

46

I am indeed female. He is not in sales but is a medical professional and I will leave it at that. He has a guarenteed income with very lucrative bonuses which often top an extra $1000 per month. (This would be on top of his six figure base salary).
Yes, I have been invited to the wedding. (This was asked up there somewhere). No, I am not going to give him any more money and call it a bonus. If I give him this, he will be paying it back. He once asked me for his Christmas bonus early which I gave him and then he seemed annoyed that he did not get his envelope during the holidays. I guess he expected me to give him a little something extra.
The more I think and write about it, the more I feel he has some nerve! If I do give it, I will certainly make it clear that this is the last time.

47

No offense, but you are now.

Another vote for give the guy his loan, and then put together a policy covering the terms and conditions of all future loans of this nature. And show it to a lawyer before implementation.

Famous last words.

Regards,
Shodan

48

Then it would seem that you have precedent. A wedding is also not an emergency. I think you’d have excellent grounds for refusing this loan on the same basis as that one. I am not, of course, a lawyer, nor do I play one on TV.

So, at a minimum, and figuring 45% gone in taxes, insurance, etc., he’s bringing home $5000 a month? Plus bonuses? Our little family of two has been known to survive on $1000/month when necessary, and I’m sure there are lots of people out there who have it much worse than that. He ought to be able to save up $4000 in two months without sweating. Especially if it’s for something that’s important to him.

You sound like a generous person. I’m sorry one bad apple is creating problems for you.

49

Having read the overall context of the situation, and considering his income and ability to pay I would go ahead and loan him the money, but tell him seriously and politely in a one on one that the intent of this loan perk is really for emergencies, and this is pushing the envelope, and that you’re going to tighten up giving these loans out in the future. Leave it at that.

The risk of not being repaid is (according to you) very small, so IMO it’s not worth a line in the sand moment, especially surrounding the context of the wedding which people tend to get nuts about anyway.

I’d then wait a month or two and start phasing this program/perk out. Human nature being what it is, regardless of income, people will often live to the limits of what their income can allow, and it’s way too tempting for people to use you like a bank when you are (effectively) acting like a no-interest bank.

You created this, and you need to fix it.

50

I must say I have been know to “gossip” with my friends and family about his inability to save money. He shares his condo with his boyfriend who is also a professional. He doesn’t have kids. However, he travels often, drives a high end BMW and brags about partying the weekend away. To not have a few bucks put aside is just dumb and maybe it is time for this bad behavior to bite him in the ass.

51

Draft more policies and practices. Document them and stand behind them.

52

I don’t know many people who would be as circumspect as you are, I, for one, am impressed.

I can understand not wanting to institute or codify policy.

Some good points have been made here, in my opinion, he earns well - there is little concern it won’t be repaid, he may feel he is being made an example of, you are not a bank, after this time may be a better time to make the break in procedure, etc. All worthy of consideration.

I think I might be tempted to make him the loan. But I would take a moment and offer him my sincere thanks for making you do something you have been putting off - examining this employee advance thing. It’s always been so casual between you and your employees and you’d never really given it much thought really. Having never been approached previously by anyone either so often, or for such an amount, or for less than an emergency. All of which is true, you are only being honest, after all. This sounds like it would be more your style to me.

Make it clear you are more than happy to offer him this loan, but until further notice, the bank is closed. Be sure to tell him that you are indebted to him for making you face something you have given little thought to over the years.

Don’t say you’re instituting new policy, it doesn’t sound like you want that.
If he asks, tell him you haven’t decided anything yet, but at least he’s got you thinking about it.

Finish up by giving him the cheque, and telling him you’re looking forward to seeing him at the wedding.

It’s sincere and honest, he gets his money, but knows the banks closed, no policy is actually codified, you are still on great terms with your employee.

53

This is called “growing up” and is probably something a medical professional earning six figures plus a monthly bonus should probably do sooner or later, preferably the former.

If you decide to deny him the loan (the course I think you should take, but it’s your call) can you roleplay this with someone else first in order to get your rationale straight and prepare to answer any objections? I’ve never done this personally but this seems to have worked well with a few people I’ve known, especially when facing a confrontational situation in which you have to remain firm but don’t want to create a dramatic scene.

Stranger

54

My my real concern in this context is that, after the history of giving out loans, she denies him this loan for his wedding, he’s going to be sullen or have a huge hissy fit, neither of which is conducive to the smooth functioning of the office. In addition either the hissy or or the sullen mode could very, very easily turn into an unpleasant, emotionally charged “It’s really because I’m gay, isn’t it?” scenario."

If he has the ability to (apparently) easily repay the loan. I do not think this is necessarily 'the hill you need to die on" as an employer. Make the loan, get re-paid, correct policy for the future.

55

You, my dear, have given me the best advice so far. I love these boards. :wink: I am going to give him the loan and word it very similiar to your statements. I refuse to be forced to do a policy on this. I think I should be able to help and use my discretion as to when and how much. I do not want to embarrass him but I do want him to walk away knowing that I don’t feel good about this loan and it will be the last one. (Perhaps offering up that other people should have a chance to take advantage of a loan during their hardships.)
It has been a bit uncomfortable around here the past couple of days since I didn’t just hand him a check right off the bat but told him I would consider his request. I think that in itself shocked him. I really don’t want any bad feelings among the staff that work together as a family. I will do anything I can to avoid the squeeky wheel. I need to draw the line at being taken advantage of, however.

56

I wouldn’t go there - it would unnecessarily muddy the waters, and his co-workers’ finances are none of his business.

In my opinion, he’s been taking advantage of you for awhile. It’s time to stop being taken advantage of.

57

Kudos to you, Foxy, for being such a decent human being.

How about just going with the truth? I’m just not getting all of these responses where they are suggesting that you lie about some $1000 cap or whatever.

Tell him that you feel like he is taking advantage of a very generous policy and that it is personally hurtful to you.

Explain that the loan policy is supposed to be for emergencies only, that half of the employees have never taken even one of them, that those who have have almost all taken only one and that those who have taken more than one have had at least months between loans. This shows him that he is not being singled out.

You could apologize for the policy not being as clear as it should have but that you intended for this to be a nice perk and didn’t want it codified in a manual. This saves him some face.

You already told him that you are inclined against it so he knows what to expect. If he throws a major hissy fit, compromise by raising the repayment amount or lowering the total and tell him that this will be the last one for a while.

58

It has been my experience that people who make so much but are always in need of bailing out have an addiction (drugs, gambling, shopping, whatever). If he makes so much, and contributes so much to his 401 (k) let him take out a loan on that instead.

59

Thanks everyone again. I need to talk to him in an hour and a half and I keep going over in my mind what I should say. I am a bit resentful that my time is being wasted on this nonsense. He is a grown man and should know better. Unfortunately, I have too much confidence in people which is how I got in this mess in the first place.
As far as borrowing from his 401K, I have never had an employee do this and would have to check with my accountant on how to go about giving such a loan. I probably will not go there this time.

60

Good luck to you.

Stranger