Sticky situation with final pay in FLA

Lori B

Hi all

I think we all know not to screw around with an ee's final paycheck...but here's one with a twist for you. As we are cutting the final paycheck we learn that ee has gone out and set up a competing business while on our payroll. (Confirmed by public records with Secretary of State).

Employee has been actively soliciting our customers and steering them to the new company, again, while on our payroll. Absent a really tightly drafted employment agreement, we realize that what an ee does after our employ, is not up for debate. What the ee does while supposedly on our clock though, is another story.

We put a hold on the final pay check to investigate further. We realize this is risky. In light of the confusion over what he was doing while on our clock, we're willing to take the risk, at least for awhile.

I presume that FLA, like most states, has tight rules in place about final paychecks, improper deductions, etc. At what point though, do you get to question whether someone was really working for you? There is a common law theme that an unloyal ee forfeits compensation although it has never been clear to me how that plays against a wage payment reg. Any thoughts or analogous situations out there? We already have counsel on the matter, I'm just more curious about your own experiences in such a twisted situation. Thanks

Margaret Morford

Ask your attorney what your employee's "fiduciary duty" is while being employed by you.

Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]

Rockie

I agree to consult an attorney, but he or she is more than likely to tell you that you will have to pay the employee for the time they "worked" for your company. The DOL is very "cranky" about holding paychecks, regardless of how much of a bum the employee is.

Pork

Given that this, most likely, is an exempt employee and hours worked does not play a part. Assuming the individual simply did not quit but was on personal time off and setting up a competiting company then you might have an argument that the individual was on your payroll but "he/she was not permitted to work during the last pay period"; which could mean that your company did not owe the individual for work not accomplished. If it is a non-exempt employee I would make the payment and have my legal counsel file for recovery and damages in violation of your "no compete" written policy. Given no written "no compete policy" violation pay the money and go "hell bent for election" to regain your lost business and customers with better service and a friendly attitude for competition. The customers who jump ship with the x-employee were obviously more loyal to the concerned employee rather than your company and the products you represent. There is something good to learn from this event: "where did you company and product go wrong in the eyes of the customer that their loyality was oriented to the representative of the company and not the company or the product?" If I'm the customer now doing business with your x-employee and you come after my friendly vendor, you can bet I will be a lost customer for ever. Best thing to do is quietly win back the customer with discussions of "where you went wrong and what can we do better to regain your business". Forget about your x-employee pay him/her the last week's income. Good luck, Pork

Crout

Wow....this is a really interesting one, Lori. Please let us know how it resolves. I agree with Pork, however, Margaret's suggestion could yield an interesting angle. Man, I probably get a request from one of our supervisors every other week to withhold a final paycheck. It's almost always a retaliatory gesture on our part, and I almost always deny the request. Take care.