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Employer Agrees to Settle then Stops Payment on Settlement Check

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  • Employer Agrees to Settle then Stops Payment on Settlement Check

    Hello, I had previously requested your help with an employer who refused to pay me sick time promised, vacation pay, bonuses that were all a part of my emploment package. This was back in mid and late June. Your assistance was quite valuable and I thank you.

    My employer did agree to pay me about 70% of the sum owed. I settled for this amount because the end of the month was coming up and I didn't want my new wife to worry about the bills on her own and I wanted to put this behind me and move on with my new job.

    Unfortunately, I have just recently learned that a few days after I had cashed the settlement check, my employer had put a stop payment on it and the check cashing place was left holding the tab. They have been unable to contact him and upon my returning their phone call, they have informed me that they will take both my employer and myself to small claims court. I f you could please offer me some guidance on the following questions?

    1. Isn't it his responsibility to prove his case in terms of why he put a stop payment on the check. Isn't the check establish a legitimate intent to pay?

    2. Isn't he criminally liable for this action. Should I call the District Attorney?

    3. Why would the collection agency go after me for the money just because he won't return a phone call? He's got plenty of money

    4. What if he files bankruptcy?

    5. Also, based on the stop payment and my purported liability to the check cashing place can I still legitimately make a claim with the DIR? Submit my original claim? If anybody should be held responsible for their abuse of their employees it should be this guy?

    6. Most importantly, I need to know how to protect myself for the possibility of him turning this around on me. I have all the documentation neccessary to prove my original claim against him. I'm curious what trick might be up his sleeve, because it makes no sense to me why he would open up this can of worms again. $1600 is nothing to him, so I can't understand hgis motivation. Please help. Thanks!!!!!!!!11

  • #2
    When you said "refused to pay me sick time promised, vacation pay, bonuses that were all a part of my emploment package". was this agreement in your employee handbook? An employer is not obligated to pay sick, vacation or bonus unless it is stated in the handbook. The employer has an obligation under the FLSA only to pay you for time worked.

    Review your handbook again to verify this information. Best of luck

    Comment


    • #3
      In the OP's state, payout of vacation time is mandatory regardless of what is in the employee handbook.

      This is not a criminal case. You don't contact the District Attorney; you contact the state DOL.
      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.

      Comment


      • #4
        I did not notice the individual was in California. Sorry :-)

        Comment


        • #5
          In reply to Needinhelp and CBG: It doesn't matter if the employer originally owed the money. If both the employee and employer had a genuine good faith belief that some money /might/ be owed, and agreed to liquidate and settle the debt, then that settlement agreement is binding even if it later turns out the employer never owed any money, legally. That's kind of the point of a settlement. If it didn't work like this, then you could still litigate the issue of whether the underlying claim is valid in order to try to avoid the settlement agreement, effectively nullifying the settlement agreement.

          This may or may not be a criminal matter depending on factors that I don't feel like listing right now. Suffice it to say that law enforcement is unlikely to take any action against the employer.

          When you gave the check to the check cashing place, you were warranting that the check was going to be paid. When it was dishonored, you owe them the $. It's that simple. Your recourse if you and employer are both sued is to go after employer with a crossclaim in small claims court. This might not seem fair to you, but it seems pretty fair to me and is definitely the state of the law. You are assigning them the right to collect the money and in doing so you make certain warranties of assignment.

          What you should really do is just file a suit against the employer in small claims court for breach of contract, and in the mean-time pay the check cashing place the money that is due to them.

          Technically you have the option of voiding the settlement agreement and proceeding with the underlying claim if the counterparty simply didn't comply with the agreement at all... but you're probably better off just going with a breach claim on the contract - easier to prove and no uncertainty.

          Good luck .
          Last edited by grasmicc; 08-17-2005, 05:49 PM.

          Comment


          • #6
            Actually, I wasn't making any comment at all about the settlement. In fact, I wasn't really attempting to answer the OP's question at all. I was correcting the original responder's mistake in state law.
            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.

            Comment


            • #7
              Ok, sorry.

              Comment

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