What options does an independent contractor have to collect wages from a business that may go bankrupt?

Get Legal Help Today

secured lock Secured with SHA-256 Encryption

What options does an independent contractor have to collect wages from a business that may go bankrupt?

I am an independent contractor that has been working for a small manufacturing company in California. The business is not doing well and while I do get paychecks periodically, the amount is not enough to cover wages owed, nor enough to reimburse equipment purchases made for jobs for them. They now owe me over 10K in reimbursements and wages. I know the owner would pay me if he had the money but I am worried the business is going under soon. What are my best options for recovery before or after the business goes bankrupt?

Asked on June 27, 2012 under Employment Labor Law, California

Answers:

Cameron Norris, Esq. / Law Office of Gary W. Norris

Answered 10 years ago | Contributor

If they are behind on payments you could sue and try to collect, but that might "push" them into bankruptcy.  If you still have a decent relationship with the company I would refrain from suing for now, but periodically check public records to ensure they have not filed for bankruptcy without giving you notice. You may also want to consider negotiating a settlement with them.  Tell them you will accept something like $4,000 now and they will be paid in full.  Four thousand dollars now is better than nothing later if they do end up filing for bankruptcy.  In the future--you may want to write a contract for companies to sign that includes the personal guarantee of the main owner of the business.  That way they have more on the line--and both the owner and the corporation would have to file for BK to get out of paying you.

If they do file for bankruptcy you will need to file a claim using the federal form B 10 (proof of claim) so that your claim can be considered during the bankruptcy process.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption