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Employer cannot pay/IC misclassification/hostile work environment/More

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  • Employer cannot pay/IC misclassification/hostile work environment/More

    Hey guys, trying to keep this concise but it's hard with all the details to this ordeal. Here goes. Thanks in advance.

    Main Details:

    -Worked in CA for 2 years for a "friend" (w/ signed contractor agreement) but when he couldn’t pay on time last year, let him slide due to our personal relationship.

    -Employer now cannot pay past due wages (approx $80,000) due to exorbitant personal spending which has put the corporation into near-bankruptcy.

    -Was classified incorrectly (possibly intentionally) as an IC w/ contractor agreement indemnification clause basically stating that if DLSE finds out, i'm responsible for any fees or damages.

    -Have witnesses who saw him personally threaten me with physical violence while on the job

    -Employer has breached contract by not paying within 30 days of invoice. Employer claims that that is nullified because of the [presumably illegal and unenforceable] non-compete clause I have violated. They claim that the noncompete bypasses california's anti-noncompete laws because it instead says that, "contractor cannot ADVERTISE or PROMOTE services.")

    -Employer has demanded I return "company property" (computer equipment used for work) but has refused to pay owed wages. I have in turn refused to return equipment.

    -Employer drives a leased exotic car ($200k), is still making payments on another $100k vehicle, and has almost zero assets aside from his failing business. His house currently has several liens on it and is about to be repo'ed. His only assets worth anything to me are consumer goods (TVs, etc.), the partially-paid-off 100k car, company equipment he claims is proprietary (electronics), intellectual property (customer lists), and about $50k worth of firearms.

    -Owes me and a handful of other ex-employees money to the tune of over $100k. Also owes money to business affiliates and for fraudulent real estate purchases in another state. Employer is near-broke and has destroyed credit.

    -Employment/Labor Attorneys have advised me NOT to take him to court because of inability to collect due to lack of any real assets.

    -I have personal information about him and company (including reasons i resigned) that if released, will likely destroy his reputation in our industry and probably put him out of business. However, there's a good chance he doesn't believe i can do it until it happens. Much of the information he doesn't know that i know.



    Questions:

    -He's agreed to try to pay me a bit at a time in excess equipment or firearms but does not own enough to cover what he owes me. He still believes that financial success is "right around the corner." Will likely retract that offer if I file a claim with the DLSE or take other action. Is it worth it to try to get as much equipment/trade as possible and then file a claim?

    -Knowing that his business's failure is near certain, perhaps it would be worth it to try to settle the entire debt for pennies on the dollar before he loses it all? I don't see many other options considering the scenario. Possibly asking for him to pay me in intellectual property (domain names, client lists, etc.) and threatening to bankrupt him when he won't negotiate?

    -Is it worth it to file a DLSE claim knowing that he'll probably never be able to pay, and if the labor board goes after him for back-payroll/SS taxes, he'll probably declare bankruptcy? Even if they don't, he'll probably declare bankruptcy once a judgment gets placed on him for my wages.

    -Isn't it unenforceable/illegal to make your employee responsible for DLSE penalties due to IC misclassification? It almost looks like an intentional misclassification to avoid payroll, SS, and other taxes.

    -Read on a CA Non-Compete Law website that I'm breaking the law by keeping company equipment (even though he refuses to pay) and that it damages any leverage I have if he tries to enforce the noncompete clause. Is this true? Should I give him eqt back (worth around $1000) even knowing that he has no intention of paying or of enforcing the non-compete?

  • #2
    So, what makes you think if attorneys can't get anything out of him, the DLSE could? The DLSE doesn't pursue settled claims anyway; individuals are generally responsible for getting a judgment and collecting. Not such a "friend", IMHO.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      Definitely NOT a "friend." I was thinking that at least with the DLSE, i could win a relatively easy judgment and then go to a judgment recovery company?

      And won't a wage claim with the DLSE make them go after him for penalties and interest because of the IC misclassification?

      Comment


      • #4
        Possibly. How much are we talking about in wages?

        Oh, one other thing. Is this a corporation, partnership/sole proprietorship, or an LLC? With an LLC, it's exactly what it says "limited liability". With a partnership or sole properietorship, I think you can get a judgment against the individual(s) assets. With a corporation, you're limited to the assets of the corporation, pretty much.
        Last edited by Pattymd; 08-03-2009, 08:14 AM.
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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        • #5
          Wages he owes me are around 80k. Total wages owed to all of us is easily 200k+.

          It's a corporation, but an attorney I talked to said that he could pierce the corporate veil due to sloppy paperwork and practices or something. He basically has a corporation but he uses it like his own personal piggy bank.

          Comment


          • #6
            Then, I'd definitely go with a civil suit instead of the DLSE. That's a LOT of money to be counting on the state with the budget problems they have now.
            I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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            • #7
              Yeah i'd like to... but no attorney will take it on contingency (for good reason), and most of them want a 10-15k retainer (which i cant afford seeing as how i'm in debt from this whole thing) and estimate that it may run upward of 40k with no guarantee i'll actually ever see the money. There's a HUGE chance he'll declare bankruptcy so most attorneys are advising NOT to take him to court.

              Which leaves me at my other alternatives:

              a) Negotiate and settle on partial payment in equipment

              b) Threaten to bankrupt him with various leverage if he doesn't find a way to pay me

              c) File with the DLSE, hope that i win a quick judgment, and then go to a judgment collector and have him go after him on contingency.

              Comment


              • #8
                The biggest issue is probably going to be the "quick judgment" from the DLSE.
                I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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                • #9
                  Do i have any other choice?

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                  • #10
                    Originally posted by enigma1772 View Post
                    -I have personal information about him and company (including reasons i resigned) that if released, will likely destroy his reputation in our industry and probably put him out of business. However, there's a good chance he doesn't believe i can do it until it happens. Much of the information he doesn't know that i know.
                    I wouldn't threaten him with that. It's called extortion and is a felony.

                    Comment


                    • #11
                      Give the equipment back. It's not yours. You want to be able to go before the judge with "clean hands".

                      File a determination of worker status with the state. If you win, meaning the EDD has determined that you were an employee, not an IC, you have more laws in your favor for pursuing your pay.

                      If you win the Determination of Worker Status, and are no longer working for him, the statute allows for you to get attorney's fees if you win against him, thus taking care of the contingency problem. http://www.leginfo.ca.gov/cgi-bin/di...0&file=200-243 Section 218.5. Also see http://www.dir.ca.gov/dlse/faq_waitingtimepenalty.htm.

                      Um, also note the penalty for not paying - full pay for each day not paid, up to 30 days.

                      Next time cut your losses a whole lot sooner, if the guy's broke, you're going to have trouble collecting, and also have trouble finding an attorney to take it even if he can get attorney's fees, if there's no way to collect.
                      I am not an attorney, and don't play one on TV. Any information given is a description only and should be verified by your attorney.

                      Comment

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