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Independent Contractor whose employer is holding and bouncing checks California

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  • Independent Contractor whose employer is holding and bouncing checks California

    I have been working for a boutique spa for about 9 months. about 5 months ago my paycheck bounced, and it took the owner 3 weeks to reimburse me. due to my threatening and anger about the situation the owner got a loan in order to pay the therapists on time and not hold checks, but that loan ran out after 2 months. now all of the therapists checks are bouncing and our paychecks and tips are being held. one therapist who quit went to the bank today to deposit 3 checks which were owed her from the last 6 weeks, and was told there were insufficient funds in our employers account to support the deposit. now I am sitting here with my paycheck not able to deposit it and rent is due in 3 days. I know as an independent contractor we are due our tips in cash daily and our checks on time. who can we go to or report the owner to in order to get this situation in hand? and get our money!

  • #2
    You sort of have two different issues.
    - All workers are legally either employees or independent contractors (IC). Employees are subject to labor law and can file wage claims with CA-DLSE. IC are not subject to labor law and cannot file wage claims with CA-DLSE. IC are legally considered to be vendors. IC have customers, not employers. IC are subject to contract law only. IC need to go to court to resolve problems with their customers.
    - Legally the government has rules on which workers are IC and which workers are employees. It is possible that you have been misclassified, and could file a wage claim (and UI claim) stating that you were really an employee. CA would then review your classification.
    - Since there are a number of workers involved, it might be worth to collectively see a lawyer.
    - One last problem. You are describing an employer with apparently no assets and no ability to pay you even if they wanted to. "Winning" a judgment may not be worth anything. If you want to file a wage claim or talk to a lawyer, fine. But I am going to strongly recommend that your very first action should be to find a real job (not IC) with a real employer who actually pays their employees.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)


    • #3
      thanks, i am currently looking for other employment thankfully i only work there 2 days a week but others rely on it more. i know it would be pointless to seek legal action because she doesnt have any money to pay up. i do want to know however if i and my coworkers can report her to the bbb or osha or anyone...


      • #4
        You can file a wage claim with CA-DLSE. It works or it does not, and it pretty much forces CA to take a look at the employer. But at some point trying to get even with a failing employer is just plain pointless. Time to move on. And stop working for "employers" who want to treat you like IC.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)


        • #5
          apblndp1: I want to know if i and my coworkers can report her to the bbb

          Absolutely, and here is a link to the BBB website

          apblndp1: i know it would be pointless to seek legal action because she doesn't have any money to pay up.

          If the business is being run as a Sole Proprietorship vs. Corporation or Limited Limited Liability Company (LLC), the business owner can be held personally liable for paying you the "wages" that are due. This means you have the ability to garnish her personal bank accounts, put a lien against her house, etc. Also, California law provides that recipients of NSF checks can obtain punitive damages of up to three (3) times the amount of the bounced check from the person/business that wrote the check.

          If you do not know how your company is organized (sole proprietorship, corporation, LLC, etc.), a good starting point is to check the CA Secretary of State Business Portal website Tyoe in the name of your company in the Corporation & LP/LLC boxes. If nothing comes up, you have good odds that the business is a sole proprietorship.
          Barry S. Phillips, CPA

          IRS Circular 230 Disclosure: This response is intended to provide general information and written for educational purposes only. It does not establish a client relationship. This communication is not intended to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to any party any matters addressed herein.


          • #6
            BTW, while nothing prohibts you from going to the BBB, they are not a regulatory agency. They are a consumer agency. They do not generally get involved with pay issues.
            The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.


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