Return of Company Property Clauses in Employment Agreements

Why Return of Property Clauses Matter

When an employee leaves, they need to return everything that belongs to the company — laptops, phones, access cards, documents, and any data stored on personal devices. A return of property clause creates a clear contractual obligation for the departing employee and provides the company with a legal basis for demanding return of its assets.

Without a clear provision, recovering company property can become difficult and contentious, especially if the employee believes certain items were a gift, if data is stored on personal devices, or if the departure is adversarial.

What Should Be Returned

Physical Equipment

The agreement should cover all physical items provided to the employee:

• Computing equipment — Laptops, desktops, monitors, docking stations, keyboards, and mice
• Mobile devices — Company-issued phones, tablets, and hotspots
• Access devices — Keycards, security tokens, hardware authentication keys (like YubiKeys)
• Office equipment — Printers, scanners, and other peripherals
• Company vehicles — If applicable
• Uniforms and branded materials — Company apparel, signage, or marketing materials
• Credit cards — Corporate credit cards and purchasing cards

Documents and Files

The return obligation should extend to all company documents in the employee's possession:

• Physical documents — Files, notebooks, printed reports, contracts, and correspondence
• Copies — Any copies (physical or digital) the employee made of company documents
• Customer and vendor records — Contact lists, account information, and correspondence
• Financial records — Budgets, invoices, expense reports, and financial analyses
• Strategic documents — Business plans, marketing strategies, and competitive analyses

Digital Assets

In today's workplace, digital assets are often more valuable than physical property. The clause should address:

• Files on personal devices — Any company data stored on personal laptops, phones, tablets, or external drives
• Cloud storage — Files stored in personal cloud accounts (Dropbox, Google Drive, iCloud) that contain company information
• Email — Company emails forwarded to or stored in personal email accounts
• Source code — Any company code stored in personal repositories
• Credentials — Passwords, API keys, and access credentials

Intellectual Property Materials

Related to the IP assignment clause, the return of property provision should cover:

• Invention notebooks and lab records
• Prototypes and samples
• Design files and specifications
• Research data and analysis

Timing of Return

Upon Termination

The standard requirement is that all property must be returned on or before the employee's last day of work. For employees on garden leave, return may be required at the start of the garden leave period.

During Employment

The clause should also address situations where property must be returned during employment:

• When equipment is upgraded or replaced
• When the employee transfers to a different department
• When the employer requests return for maintenance, audit, or investigation

Failure to Return

The agreement should specify the consequences of failing to return company property:

• Withholding final paycheck (only permissible in some states, and often only if the employee has signed a specific authorization)
• Deducting the value from final compensation (subject to state wage deduction laws)
• Legal action to recover the property or its value
• Referral to law enforcement for theft of company property (in extreme cases)

Digital Data Deletion

Personal Devices (BYOD)

If employees use personal devices for work (bring your own device or BYOD programs), the agreement should address:

• The company's right to remotely wipe company data from personal devices upon termination
• The employee's obligation to delete all company data from personal devices
• Whether the employee must submit their device for inspection or verification
• How personal data will be protected during any wipe or inspection process

Cloud and Online Accounts

The agreement should require the employee to:

• Remove all company data from personal cloud storage accounts
• Transfer ownership of any company-related online accounts or profiles
• Provide login credentials for any company accounts the employee managed
• Delete company data from personal email accounts

Social Media

If the employee managed company social media accounts, the agreement should address:

• Transfer of account credentials back to the company
• Whether the employee's personal social media posts related to the company must be removed
• Ownership of social media connections built on behalf of the company (this is a developing area of law)

Equipment Purchase Options

Some companies offer departing employees the option to purchase company equipment (like a laptop) at fair market value rather than returning it. If you want to offer this option, the agreement should specify:

• The process for requesting a purchase
• How fair market value is determined
• Data wiping requirements before the employee takes ownership

Offboarding Checklist Integration

The return of property clause works best when integrated with a comprehensive offboarding process. Key steps include:

1. Inventory — Review what was issued to the employee at hiring and during employment
2. IT access revocation — Disable accounts, revoke VPN access, and change shared passwords
3. Physical access revocation — Deactivate keycards and collect keys
4. Equipment collection — Physically collect all hardware and devices
5. Data review — Check for company data on personal devices and accounts
6. Certification — Obtain the signed certification of return and deletion
7. Exit interview — Review return obligations and ongoing obligations (confidentiality, non-solicitation)

Remote Employee Considerations

Returning property from remote employees requires additional logistics:

• Shipping — Who pays for return shipping and what carrier/method should be used
• Packaging — Whether the company provides shipping materials
• Insurance — Whether items should be insured during transit
• Timeline — Allowing additional time for shipping compared to in-office employees
• Tracking — Requiring tracking numbers for shipped items

Best Practices

1. List all categories of property that must be returned — physical, digital, and documentary
2. Require a signed certification of return and deletion
3. Address BYOD and personal devices explicitly
4. Specify the timing for return — typically on or before the last day
5. Integrate with offboarding — Connect the clause to your operational offboarding process
6. Address remote employees — Include shipping logistics and timelines
7. Comply with wage deduction laws — Do not withhold pay for unreturned property unless legally permitted
8. Coordinate with IT — Ensure IT revokes access simultaneously with the employee's departure

A thorough return of property clause is a practical necessity in every employment agreement. Combined with a structured offboarding process, it ensures the company recovers its assets and protects its information when employees depart.