Frequently, employers will refuse to issue a final paycheck to a terminated employee. Usually, this occurs because the employee has caused damage of some kind (property or financial) to the employer. The Eleventh Circuit Court of Appeals recently held that holding a final paycheck does not convert an overtime-exempt employee into a “non-exempt” overtime-eligible employee. Pioch v. IBEX Engineering Svcs., No. 15-10845, 2016 WL 3254138 (11th Cir. Jun. 14, 2016).
In Pioch, the employee was paid by the hour, but was exempted from overtime by the FLSA’s “computer employee exemption.” Over a four-year period, the employee collected $147,230 in per diem payments for time allegedly traveling from IBEX’s main office in Nevada to a location in Florida. In actuality, the employee had purchased a house in Florida, was not traveling from Nevada and was not eligible for the per diem payments. Thus, IBEX withheld his pay for the last three weeks prior to his resignation.
The employee sued and argued that withholding his pay converted him to a non-exempt, overtime-eligible employee during the three weeks his pay was withheld. After an extensive analysis, the Eleventh Circuit held that an employee’s exempt status “does not evaporate simply because the employer withholds a final paycheck.” Pioch, 2016 WL 3254138 at *6.
In short, holding a final paycheck does not magically confer overtime eligibility on an employee. Nevertheless, this does not mean that employers are immune from all types of liability. In fact, the Eleventh Circuit’s Pioch opinion repeatedly emphasized that Pioch might possess a breach of contract claim against his employer. Such a claim is resolved in state court instead of federal court.