Can a company that goes out of business not pay you for the last 2 weeks of work or your earned vacation?

UPDATED: Feb 19, 2012

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Can a company that goes out of business not pay you for the last 2 weeks of work or your earned vacation?

My fiance’s employer went out of business suddenly this past week. He did not receive a paycheck for his previous week’s work. There was no notice that the company was shutting it’s doors; he went in on Thursday and was told Friday would be the last day, There was no further instruction about when they would receive their final paychecks or accrued vacation. It’s also rumored that the company hadn’t been paying their health insurance for about 4 months, even though the employees had been paying their portion. At this point, we don’t know when/if he’ll be paid for the last 80 hours he worked.

Asked on February 19, 2012 under Employment Labor Law, Maryland


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Legally, the obligation to pay employees for all work done does not end because a business shuts its doors. Practically, however, it often may as well end--that's because if the business is a corporation (inc.) or limited liability company (LLC), when it goes out of business, there may be no money or assets left to collect from; the owners are shielded from most liability, so they generally can't be personally sued, which means that if they simply drain the bank accounts and stop operations,  there is no one and nothing to recover money from.

If the business was a sole proprietorship, on the other hand, the owner would be personally liable and you could sue him or her for the money owed your fiance.

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 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.

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