Supervisor Borrowing Money From Direct Reports

Question to Ask the Workplace Doctors about “borrowed money” by employee:

As an employer, is there anything that we can do to a supervisor who has borrowed a substantial amount of money from a direct report and has not paid the money back?

Signed, Concerned

Dear Concerned:

We primarily provide advice about workplace communication issues rather than HR issues such as this. However, we can provide a quick overview of options. Since it is such an unusual situation, if you are considering demotion or dismissal, you may want to talk to an attorney to ensure you are on the right track.

1. You most likely can take the action you consider appropriate for a situation of this nature–from a warning to other sanctions, including dismissal. However, if you are in a business with a contractual agreement with employees you will need to be guided by the contract. Or, if there are other guidelines for disciplinary action, you will need to follow those.

2. Consider separating the two issues: One issues is borrowing money, the other is not paying it back. Would it matter that he or she borrowed money if the money had been paid back, or was borrowing money wrong, no matter when it was paid back?

3. An investigation should be done, with an emphasis on finding out the exact facts about the situation. (You may have done this already.) How much was borrowed and under what circumstances? Were other employees involved? Did the supervisor know there was an expectation that the money be paid back in a certain time line? Is there anything about this in writing? Does the supervisor have access to organizational funds and if so, what is the status of those things? (That may sound excessive, but you never know until you check.) Are there other issues that may have a negative effect on work? (Gambling problems, alcohol or drug problems, etc.) What efforts have been made to get repayment? Are there work issues that have developed because of this, either positively or negatively? (Favoritism, increased conflict, etc.) What is the impact on work, in general?

Whatever you decide you will want to clearly draw the link to work. What is it about this that has hurt the workplace?Once you have established that, you can decide how harmful it has been and if that can be repaired and still keep the supervisor as an employee. There will probably be a policy in place before long that says supervisors and employees should not borrow money from each other! I hope these thoughts are helpful as you decide how to handle the situation. If you have the time and wish to do so, we’d enjoy knowing how you handled it. Your insights would be useful for when we are asked similar question in the future.

Tina Lewis Rowe

Tina Lewis Rowe

Tina had a thirty-three year career in law enforcement, serving with the Denver Police Department from 1969-1994 and was the Presidential United States Marshal for Colorado from 1994-2002. She provides training to law enforcement organizations and private sector groups and does conference presentations related to leadership, workplace communications and customized topics. Her style is inspirational with humor.