I terminated a work contract 30+14 days ago and need some free legal advice

[tridim]

The contract is worth $34,000, I was on a "deferred payment" plan (which turned out to be complete BS) so I terminated the contract and am now only working if I get paid up front. There is a clause that says the contract must be paid after two weeks and one month. That was yesterday, and I've yet to be paid.

Now, I'm dirt poor (because they're so behind on paying) and can't really afford a lawyer. I can't even afford a retainer. What's my first step? Should I threaten my employer with legal action before taking that step? Are there any cheap or free legal services I can use? What percentage should I expect to pay a lawyer to recover my money?

I should mention that the company will probably be forced into bankruptcy if I win, and therefore I'll lose my current job. I also fear they'll file before paying me and manage to define me as a typical creditor and thus pay me only pennies on the dollar. It's kind of a catch 22 situation and it doesn't feel good that I might ruin my boss' family, but dammit it's MY livelihood and I worked hard for that money.

Thanks for your help.

[Lerkfish]

1. not a lawyer, but I had a question for clarification...

when you say "so I terminated the contract", its not clear if you completed the contract as stipulated and the terms of the contract ran out, or if you prematurely broke the contract by unilaterally walking away from it.
What a lawyer would ask you first is that. If you did not honor the contract, you're in a heap of trouble trying to sue them for the contract.

[tridim]

2. The contract specifically states that either I or the employer can terminate at any time.

I sent a termination letter to my boss and his lawyer, per the contract.

[Lerkfish]

3. oh, ok, thanks.

well, then you're in better shape.

[Old Codger]

9. Still

Haven't answered the question in my mind. Did you complete the contract as agreed? Is there a clause that says you do not have to complete the contract but will still get paid the full agreed upon price? Is the money you mention a full payment or a partial payment based on the percentage of work completed?

If you had a contract to complete a project of some sort for an agreed upon price and you did not perform as agreed, regardless of the termination agreement saying either party can terminate at any time why would you expect to get paid a full price for a partially completed project?


Main thing I see is you haven't given me enough information to be able to make any sort of determination.

[tridim]

10. It was open-ended and doesn't say anything about projects or completion of projects.

I worked for 8 months of delayed compensation (the dollar amount per month is spelled out explicitly) at which point I realized I wasn't going to ever get payed unless I terminated the contract. Simple as that.

There are other problems with the "delayed compensation" clause that will help my case. It says the company must pay "some" of the contract each month, but they only paid me $4000 the first month and nothing after that. They've paid me $4000 for one month of work since the termination, but that was not under the old contract.

I also made sure before the termination that I had hard documentation from my boss that states exactly what I have been paid and what I'm owed on the contract. He gave me a monthly breakdown chart showing exactly what they owe me.

[Old Codger]

14. OK

That makes more sense then.... Thank You Hope you come out ok, I have lost money on work completed and not paid for myself and know how it feels, hope they don't go belly up before you get at least some of your money.

[The_Casual_Observer]

4. I am in a situation where the business is having trouble paying

my invoices for consulting services. They are paying me partially & stretching it out longer. It's better than getting nothing & wasting legal fees. In the mean time I have cut way back on doing things for them.

[tridim]

5. I'd be happy with that, but they haven't offered so I have to take action.

I'm just sick of living in poverty while I should have 34 grand of my own money in the bank. I'm two months away from losing my house.

I'm also sure the lawyer already knows about the 30 day clause and they're not making any effort to remedy the situation. Probably hoping that I'll bend over.

[rfranklin]

6. Look up the small claims limit in your state and file now...

Unfortunately, it usually takes longer than a two months.

[tridim]

8. I think small claims is $7500 or less.

I've found some resources for almost-free legal advice at my local dept of labor. Checking them out now. I'm just trying to avoid $200/hr legal advice right off the bat. That would kill me.

I also found a really nasty pdf form letter RE: failure to pay wages. I think I might send that out right away. It's a pre-legal action letter that spells out potential damages, penalties, court-costs, legal-ramifications, etc. It should scare them pretty good.

[JDPriestly]

7. Write a time line of what happened.

Include quotes from the most relevant portions of the contract. Edit it to make it clear and succinct.

Then call the local bar association and get the names and phone numbers of lawyers who do litigation in the area of contract law.

Start calling lawyers where you live and the surrounding area. Tell those that will hear you out a brief, condensed version of your story -- starting with what happened first and on (brief is key here) -- and tell them what you want. Listen carefully to what the few who will talk to you say.

Some won't talk to you without payment up front. Some will tell you that your case is too small. Some of them may give you a little advice. Somebody might offer just to write a letter for you. If your case looks really good to a lawyer, you might find he or she will take your case if you agree go give the lawyer a pretty hefty part of what you get. The lawyers may tell you that you have no case and just need to learn from the experience.

At any rate, it's worth the calls unless your time would be better invested trying to find other work. The problem is that when you feel cheated as you must, your feeling just eats away at you until you do something. Trying to find a lawyer who will at least hear you out is a good idea. Even if the lawyer can't help you, you may feel better after talking for a time about the whole thing.

Layers bill in tenths of an hour usually. That's how they charge their clients, so time is money. Don't waste a lawyer's money. Have all your facts clearly organized and practice telling the story. Be prepared to fax a copy of your contract if a lawyer asks for it. Good luck.

[happyslug]

11. Were you an "Employee" or an "Independent Contractor"

Delayed compensation (i.e. "wages") for employees are NOT permitted by law in most states. You have to be paid.

If NOT paid file a claim with your state Department of Labor, Wage and Hour Division (Or whatever it is called in your state). Now the Wage and Hour Division may do nothing, but since this is a contract you have a four year statute of limitation issue (You must file within four years of the time the wages were due). Now if wage and hour does nothing you will have to file in your Court of Common Pleas (Or whatever your state calls its county courts) for the $34,000. This has to be filed within four years of the date the money was due, but I would file it within the next six months. I strongly recommend you get a lawyer to file the action. Many lawyers will take such cases on a Contingency basis, i.e. 30% of whatever your win, which is 70% more then you are getting now. Shop around, check any local unions for names of lawyers who takes such cases (The Union reps may even know something about your state's law as to this type of compensation so ask them for they are a good source of information of such subjects).

As to Bankruptcy, if this is "wages", you are behind any "Secured Creditor", but you are ahead of any "Unsecured Creditor". Under the Bankruptcy Code, you have three types of Creditors, "Secured Creditors" who have a claim against a particular piece of property. Then you have "Priority, Unsecured Creditors" which include wages owned to wage earners and then on the bottom of the list are "Unsecured Creditors". If what we are talking about are wages then you have a priority over any other unsecured creditor.

Now the above presumes what you are asking for is "Wages", but different rules kick in if you are an "Independent Contractor". When it comes to an "Independent Contractor" then deferred payment is permitted, for you agreed to perform services and be paid later then paid at the time the work was actually done. The difference between an "Employee" and an "Independent Contractor" is how much control the Employer has over you. When you start work, when you take a break, when you stop work and HOW the work is done if determined by your Employer are signs you are an employee, on the other hand if those decisions are up to you then you can be an "Independent Contractor". Often this is on a case by case basis but the issue is how much control over how you do the job is the major factor. The more it is your decision the greater you are an "Independent Contractor", the less you have the right to make these decision the greater chance you are an employee. Now, "Independent Contractors" HAVE to work with the General Contractor (i.e the employer) to a degree, a degree which varies from job to job thus no firm rule as to what is an employee and what is an "Independent Contractor". The issue is as one views the job as a whole. I suspect you are an employee, but your Employer wanted to treat you as an "Independent Contractor" so you have to pay 13.9% Self-employment tax instead of just 7$ Social Security Tax (with the Employer also paying 7% Social Security Tax). Cheaper for the employer but only permitted if you have near total self control over what you do for him. File with wage and hour to get an independent decisions on this matter,

The only way to get paid will be to file a lawsuit against the company and see what happens (again I advice getting a lawyer, many lawyers are hungry right now, Real Estates sales are down and thus their income, ask around especially with Union Reps about the name of someone they recommend).

[tridim]

12. Thanks for the response..

I'm technically an independent contractor (1099) but treated like a standard employee, just like you said. I'm sure they did it that way to avoid paying my employment taxes.

The contract was meant to be temporary as my boss told me several times verbally that the goal was to eventually make everyone an employee with benefits. :eyes: At the time I had no idea this would go on for 8 months, but by then I was trapped. I was also promised MANY times that funding was secured and paychecks were just around the corner. Of course all these broken promises were excused with a simple, "The economy crashed and funding has dried up" statement. While that's probably true, it still amounts to a series of lies as far as I'm concerned. Excuses don't pay the mortgage. Unfortunately all of these statements were verbal.

[happyslug]

13. Check your state law as to what is an Independent contractor

I do NOT know what your state law is, but just calling someone a "Independent Contractor" and issuing a 1099 does NOT make that the case. The issue if HOW much independence do you have? Is it like an Employee, then you are an employee, if your independence is like a person who contracts to build your house for you, then you are an "Independent Contractor". The real issue is people in between, and often the courts have ruled that given the lack of independence a person had he was an employee even if both parties called him an "Independent Contractor" and was issued a 1099 instead of paying unemployment tax and Social Security Tax for the Employee. Check with your wage and hour division and see what happens.

[rfranklin]

15. This is a tax matter too. If you report them to the IRS they will...

be howling in pain with the penalties and interest for not filing withholding for you and others who were obviously employees, not independent contractors. You could use this threat to get your money. Of course, I do not recommend it one way or the other...wink, wink.