My Employer Can't Pay Me!

[COlady]

I'll try and keep it short here....

I work as a contractor approximately 20-30 hours per week. The company I work for is undergoing a restructuring and we're expecting 50% of the workforce to be laid off this Friday (O&G company).  I can't make more money elsewhere and have the flexibility I have so I'm just hanging out to see what happens here. We'll be fine if I'm laid off, we have $500k in investment accounts (taxable and tax deferred).  I do have my feelers out and have at least one good option in the pipeline.

I typically get paid on the 12th for my last month's worth of work... I'm due an $8,000 check today. My supervisor just came in and told me that the bank put a stop to all vendor payments and that they called Treasury and told them that I'm not a regular vendor and that I need my check now. They are now promising it on 7/25. I told my supervisor that I will work until 7/25 but that if I don't get my check at that point that I will not be able to work until I am paid. We're in the middle of a tax provision (for people that know what that is) and they really need me right now. I don't want to let the rest of my team down (they are all employees and are still being paid) but I'm not going to work with a promise of payment.

All of the company's assets are collateral on a huge bank loan. They haven't come right out and said they're going through a Chapter 11 Reorg but I can only surmise that this is what's going on. I know that independent contractors don't have near the priority that employees have in receiving payment after bankruptcy proceedings...this scares me a bit. One the 25th, I'll already be $8,000 into my July invoice....Advice???

[Jags4186]

If you are fearful of not getting the $8000 and they truly are going through a chapter 11 I would avoid do any further work period.

[plog]

... we're expecting 50% of the workforce to be laid off this Friday ...  I don't want to let the rest of my team down

Well the good news is you'll probably only be letting 50% of your team down. 

Actually it will be 0%.  Nobody will blame you for leaving, actually, they may even be resentful if you stay.  They may think you are getting paid and the company is prioritizing non-workers over workers.

Do you submit invoices for your monthly work?  If so, I would work until the first one is  30 days overdue or until they tell you it won't ever be paid--whichever comes first.  Yes, that will mean you will work for them a little more in a tenous situation, but you can't really stop just based on speculation alone. 

The small claims court limit in CO is 7,500 and if you submit a monthly invoice, you can file a case for each outstanding invoice.  While you will be out $500 on the current one, you still will have recourse.  Of course, a bankruptcy filing might squash your case and collecting is a different matter, but that's how long I would wait. 
 

[COlady]

If you are fearful of not getting the $8000 and they truly are going through a chapter 11 I would avoid do any further work period.

I just talked to my supervisor further and she's assuring me that they aren't going through chapter 11 at this point. The company has $100M in equity and it's in the bank's best interest to keep the company afloat (they are not in the business of running an O&G company) because if they can help the company through this tough economic time it will benefit them.  I told her I'm here through the 25th but if I do not receive my check on that day I will no longer be able to work on their projects.

[seattlecyclone]

Sounds like a nasty situation. Hope it doesn't come to it, but you should probably prepare to hire a lawyer to make sure their debt to you is fairly considered when the bankruptcy goes through. Meanwhile you should look for a new job ASAP.

[Fishindude]

Stick to your plan, no pay = no work after the 25th.

Meanwhile you might have a conversation with an attorney to see what your recourse is if they drag out or default on payment.
Get your proof and documentation in place.

[GuitarStv]

I've always made it a policy not to work for free.  If you are due money, and it hasn't been paid, don't work again until you are given your money.  This policy has minimized how much I get screwed over.

[KBecks]

They need you, they need to keep up their promises. I'd give them three days to get current or you're taking some vacation days until they get their act together.   If they have the money, they will figure it out. If they can't figure it out in 3 business days, then they have problems.  They can feel that pressure, not you.

7/25 is way, way, way too late. It's not good enough.

If you are laid back and you are OK working for free and possibly being out all the money, stay until 7/25, nag them every 2 days as to where your money is, and find out WTH is going on. 

Get your new job sooner than later.  This company smells.  It's an oil and gas company that is hurting right now, it's going to get worse for them in the future, not better for quite a while.

[COlady]

They need you, they need to keep up their promises. I'd give them three days to get current or you're taking some vacation days until they get their act together.   If they have the money, they will figure it out. If they can't figure it out in 3 business days, then they have problems.  They can feel that pressure, not you.

7/25 is way, way, way too late. It's not good enough.

If you are laid back and you are OK working for free and possibly being out all the money, stay until 7/25, nag them every 2 days as to where your money is, and find out WTH is going on.

I pay a nanny $15 per hour to watch my 16 month old twins while I'm working. If I'm not working that gets expensive really quick.  If I take time off then she would be up a creek too and I don't want to lose her because she's great. At this point, I think I'm going to stick it out until 7/25. There are a lot of feelings involved here too. This company was so great to me when I got pregnant with twins, went out on bedrest and have accommodated me with a very flexible work arrangement so that I could return to work in some capacity.  This is literally THE busiest time of the year so I'm going to stick it out.

[Axecleaver]

What are the payment terms of your contract, net 15? I think you've set the right boundary. If your terms allow you to impose interest or penalties, do that immediately, in writing. Sometimes the penalties will bump up your priority in the payment queue. Obviously find another job ASAP, but work up until the 25th as you promised. The person you're talking to probably doesn't know anything beyond what they're being told, so be careful about assuming what they're telling you is true. You'll know in a couple of weeks.

I had a company I worked for as a 1099 go bankrupt kind of out of nowhere. This happened to me in 2002, not long after I had spent a year unemployed, so I didn't have a cushion to fall back on. There were a whole lot of us surprised by it. I had ~$20k in billings outstanding, and never collected any of it. I spent a few hours filling out forms for the courts to claim the debt over the next couple of years. The bankruptcy paid off full time employees first, and the money that was left didn't go very far.

IANAL, but ghere's a link to the chapter 11 rules - (a)(1)(4) says up to $10k per individual, earned within the last 180 days. It doesn't distinguish between employee or corporation. This takes priority over government debt, such as tax debt. Hopefully, it doesn't come to that!

https://www.law.cornell.edu/uscode/text/11/507

[KBecks]

That's all very nice, but it doesn't matter how nice they are if they can't clear their checks. You know oil and gas is in very rough shape.  Good luck with it!  I would job hunt aggressively. 

[COlady]

But like I said in my original post, I have my feelers out and a few different opportunities are in the pipeline. Problem is...they all pay about 65% of what I'm making now (I realize if they aren't paying me, it's actually 100% more than I'm currently getting paid). I guess 7/25/16 will be the day it all comes to a head. My contract also states that they owe me 30 days notice before severing the contract so technically they'd owe me for that too. Obviously that would be hard to collect on though...

[Captain FIRE]

That's all very nice, but it doesn't matter how nice they are if they can't clear their checks. You know oil and gas is in very rough shape.  Good luck with it!  I would job hunt aggressively.

+1

They're already late paying you, and you're offering them 9 more business days of work which you may not get paid (in addition to the $8k).   That's risky.  Add in the fact that it IS their busiest time period, they desperately need you - and yet they aren't paying you?  That would make me more concerned rather than less of whether you'll get paid or not.  You're also out $15/hr in costs and increasing your expenses each day.  I'd put more pressure on them to get you a check sooner than the 25th.

p.s. to avoid confusion, you may want to consider changing the title of this thread to "my client can't pay me" or something similar.  You don't have an employer/employee relationship and it can confuse people.

[KBecks]

But like I said in my original post, I have my feelers out and a few different opportunities are in the pipeline. Problem is...they all pay about 65% of what I'm making now (I realize if they aren't paying me, it's actually 100% more than I'm currently getting paid). I guess 7/25/16 will be the day it all comes to a head. My contract also states that they owe me 30 days notice before severing the contract so technically they'd owe me for that too. Obviously that would be hard to collect on though...

then keep looking, aggressively, for something that pays better if the total $ is what is most important for you.  You are very very likely going to need a new job. Don't let this bite you more than it already is.   

[Lunasol]

posting to follow, what a nasty situation, I agree they might not pay the extra 9 days but you'll have to keep paying the nanny...

[bacchi]

Work from home during these potentially free days.

You might be able to reclassify yourself as an employee. It doesn't sound like your work relationship passes the "behavioral control" rules, anyway.

[COlady]

But like I said in my original post, I have my feelers out and a few different opportunities are in the pipeline. Problem is...they all pay about 65% of what I'm making now (I realize if they aren't paying me, it's actually 100% more than I'm currently getting paid). I guess 7/25/16 will be the day it all comes to a head. My contract also states that they owe me 30 days notice before severing the contract so technically they'd owe me for that too. Obviously that would be hard to collect on though...

then keep looking, aggressively, for something that pays better if the total $ is what is most important for you.  You are very very likely going to need a new job. Don't let this bite you more than it already is.

Just lined up 2 additional lunches this week to network! Go me. I'll keep you all updated.

[beltim]

I typically get paid on the 12th for my last month's worth of work... I'm due an $8,000 check today. My supervisor just came in and told me that the bank put a stop to all vendor payments and that they called Treasury and told them that I'm not a regular vendor and that I need my check now. They are now promising it on 7/25. I told my supervisor that I will work until 7/25 but that if I don't get my check at that point that I will not be able to work until I am paid. We're in the middle of a tax provision (for people that know what that is) and they really need me right now. I don't want to let the rest of my team down (they are all employees and are still being paid) but I'm not going to work with a promise of payment.

Regardless of what might have been the "best" strategy to start, the best strategy now is to follow through on you plan.  No pay on the 25th, no work on the 26th.

[COlady]

I typically get paid on the 12th for my last month's worth of work... I'm due an $8,000 check today. My supervisor just came in and told me that the bank put a stop to all vendor payments and that they called Treasury and told them that I'm not a regular vendor and that I need my check now. They are now promising it on 7/25. I told my supervisor that I will work until 7/25 but that if I don't get my check at that point that I will not be able to work until I am paid. We're in the middle of a tax provision (for people that know what that is) and they really need me right now. I don't want to let the rest of my team down (they are all employees and are still being paid) but I'm not going to work with a promise of payment.

Regardless of what might have been the "best" strategy to start, the best strategy now is to follow through on you plan.  No pay on the 25th, no work on the 26th.

That's the game plan!

[beltim]

I typically get paid on the 12th for my last month's worth of work... I'm due an $8,000 check today. My supervisor just came in and told me that the bank put a stop to all vendor payments and that they called Treasury and told them that I'm not a regular vendor and that I need my check now. They are now promising it on 7/25. I told my supervisor that I will work until 7/25 but that if I don't get my check at that point that I will not be able to work until I am paid. We're in the middle of a tax provision (for people that know what that is) and they really need me right now. I don't want to let the rest of my team down (they are all employees and are still being paid) but I'm not going to work with a promise of payment.

Regardless of what might have been the "best" strategy to start, the best strategy now is to follow through on you plan.  No pay on the 25th, no work on the 26th.

That's the game plan!

Sounds good!  I'm looking forward to seeing updates as well.  Best of luck with whatever comes your way.

[frugaliknowit]

Work from home during these potentially free days.

You might be able to reclassify yourself as an employee. It doesn't sound like your work relationship passes the "behavioral control" rules, anyway.

I second this!

[jim555]

no pay = no work - period.  I would give them no consideration in this matter.

[Threshkin]

...Snip... This company was so great to me when I got pregnant with twins, went out on bedrest and have accommodated me with a very flexible work arrangement so that I could return to work in some capacity.  This is literally THE busiest time of the year so I'm going to stick it out.

Interesting to see the responses on this thread.  Many are extremely mercenary.

I fully agree that you need to protect yourself.  BUT this statement stood out for me.  I believe that if a company supports you during hard times and if you have a decent reserve that they deserve a little consideration in return.  Yes, it is a risk but life is all about taking (managed) risks. 

[COlady]

Companywide video call tomorrow morning at 8 am mtn for everyone in the company to learn their fate. Our department (tax) is worried at this point that they don't care if they blow the audit (and therefore don't care about the tax provision). The company is privately held and the audit is done solely for the bank loan. The bank has taken over operations at this point anyway so maybe an audit is not necessary for this fiscal year....

I'll let you all know what I hear.

[KBecks]

Good luck!

[Lunasol]

Good luck!! Hope whatever happens is for the best

[With This Herring]

Tell us how it goes!  Best case would be that the company has been purchased, and everyone is getting paid.

If they are having trouble paying, you should work on retainer (they pay you in advance) or require that you are paid at the end of each day.  Nothing about the situation sounds good.

[2Cent]

I would say try to look for alternative ways to pay you. In case it goes under you will get nothing. Think laptop, phone, office chair, etc. Also there might be a petty cash fund which is not frozen from which they could give you some money for expenses which would normally be included in your fee.

[zolotiyeruki]

Replying to hear the conclusion of this gripping tale.

[ohsnap]

I'm waiting with bated breath...hoping for some good news for OP.

[COlady]

Companywide video call tomorrow morning at 8 am mtn for everyone in the company to learn their fate. Our department (tax) is worried at this point that they don't care if they blow the audit (and therefore don't care about the tax provision). The company is privately held and the audit is done solely for the bank loan. The bank has taken over operations at this point anyway so maybe an audit is not necessary for this fiscal year....

I'll let you all know what I hear.

50% of work force laid off. Our entire office was canned effective today. The Director of my group has been with the company for 15 years....he ugly cried (50 years old) because he feels responsible for us. I assured him that he shouldn't lose sleep worrying about me, we will be just fine. I can't say the same for others in my group. The other two recently bought brand new cars and are/were living the high life. This is a good lesson in all good things must come to an end. I'm grateful for the sweet money I made while I was there....pretty sad to see it go....just glad it has been padding the ol' bank account for the last 3 years. I didn't get too down...hit up a networking get together tonight and have some great contacts lined up and a lunch meeting for Monday. People repeatedly asked me why I wasn't crying. I told them it's business. Sure I'm sad but it'll be just fine. I'm not sad because we have enough in savings to live for a very long time. I've  never been through this before and man is it nice to know we can pay for our cheap house and drive our paid off cars. Today was proof for me people....financial security brings great comfort.

Being that I'm a contractor they pretty much said nothing to me regarding what's happening with me, they only directly addressed the employees. The Director informed the CFO that my contract requires one month notice of separation. There were a couple hints about helping finish the tax provision. My answer: show me the money!!!! I took my computer, speakers, monitors....pretty much anything of value. I should know more on Monday and will update then.

sorry this is so random, it was a rough one.

[MrDelane]

Sorry it was such a rough day.
Glad to know you'll be alright.

Hang in there.

[Adventine]

Hey COlady, hang in there. You're awesome and you're benefiting right now from all the good frugal choices you made over the years :)

[TaxChick]

The company for whom I work has had many layoffs recently also.  It sounds like you have legal recourse to get your pay and potentially the one month of "severance."  Were the employees offered severance?

[2Cent]

The company for whom I work has had many layoffs recently also.  It sounds like you have legal recourse to get your pay and potentially the one month of "severance."  Were the employees offered severance?

You do have a right, but in case of bankruptcy you can get in a very long line. But it sounds like they just cut costs, which means they need to pay their bills. Do be fast in going for legal options in case they don't pay. They may just be months away from going under.

[FIREby35]

Sorry to hear about the company. I'm glad to hear about the power of FU money and a real world example of why the MMM path is the correct path - in the face of others who say to live in the moment but end up shocked when their income stream blows up.

Go get your money! If you can.

I had a similar situation where a much smaller company held up 10k of mine due to liquidity issues. I was gone within a couple of months. If a company can't pay the bills, that is trouble.

[KBecks]

Good for you for demanding payment before future work.  You need to be made whole on the $8k before you can "help".   

My husband has been through 2 layoffs and it is so hard on people and stressful.  We were OK but it still is a toll on the ego for many people. 

Best wishes as you move forward and good for you on having a cushion to protect yourself.

[Axecleaver]

Sounds like you're dealing with it really well! Financial security is so worthwhile in situations like this.

In your situation, I would absolutely require them to pay what I was owed before I did any more work. This should be super obvious to your Director.

I would also recommend you request that they pay you in advance before you do any more work. It's easy to get a purchase order approved for something like that in your company's situation. If the work is important, they'll find a way to pay it ahead of time.

[COlady]

UPDATE: I received my check for all my June and first 2 weeks of July billings yesterday. The check cleared the bank this morning, I was worried that it would bounce. The former director of our dept. has requested that I work 120 hours on a contract basis under my existing contact for the month of August to get things wrapped up. He negotiated a two week retainer for himself and the former employees but not for me (I've been contact the last 1.5 years) and wants me to work under my existing contact.  I sent a strongly worded email this morning stating that I will not be performing any work going forward without at least a 60 hour retainer. I am supposed to start work on this project on Monday.

I have 3 different finsurance that are willing to contract with me at rates between  $60 and $75 per hour. Working on hammering out the details currently.

[Axecleaver]

Congrats on a pretty decent outcome. You played it right. Definitely stick to your guns on requiring up front retainer before working any new hours. Those are intensely high-risk hours that are not likely to be paid after the fact.

Best of luck with your new gigs.

[LeRainDrop]

Congrats on a pretty decent outcome. You played it right. Definitely stick to your guns on requiring up front retainer before working any new hours. Those are intensely high-risk hours that are not likely to be paid after the fact.

Best of luck with your new gigs.

+1

[Jack]

UPDATE: I received my check for all my June and first 2 weeks of July billings yesterday. The check cleared the bank this morning, I was worried that it would bounce.

Technically, it still could. That's how a lot of mail fraud works: the fraudster sends you a check, you cash it and the money shows up in your account the next day so you think it clears, so you send the Western Union payment or whatever, then two weeks later or so when the antiquated ACH system finally actually tries to clear the check it bounces and you're SOL.

I'm not saying it's likely to happen in this case, just that you're not 100% safe yet.

[FIRE me]

UPDATE: I received my check for all my June and first 2 weeks of July billings yesterday. The check cleared the bank this morning, I was worried that it would bounce.

Technically, it still could. That's how a lot of mail fraud works: the fraudster sends you a check, you cash it and the money shows up in your account the next day so you think it clears, so you send the Western Union payment or whatever, then two weeks later or so when the antiquated ACH system finally actually tries to clear the check it bounces and you're SOL.

I'm not saying it's likely to happen in this case, just that you're not 100% safe yet.

If COlady's pay checks are drawn on a bank with a local branch, I would cash the check at the bank it is drawn on and then deposit the cash at my own bank.

[COlady]

My bank and the bank the check is drawn on are the same bank.

[Ladychips]

Great news.  Thanks for the update (I always want to know how the story ends...or progresses...).