Is it legal for a company to withhold my 1099 payment if my LLC has outstanding advertising debt with it?

UPDATED: Sep 30, 2022

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Is it legal for a company to withhold my 1099 payment if my LLC has outstanding advertising debt with it?

I am a contracted 1099 worker for a weekly magazine but I am also a small business owner and my LLC advertises with that magazine. I have communicated to them that I am not the sole proprietor of the LLC, and that the LLC pays for it’s own business and advertising separately, not from my wages as a contracted contributor. however, they have continued to withhold each month until I make my payment to them, then they pay me immediately. This

month, it’s the 22nd and they still haven’t sent me payment, but they did send an email to my business demanding to know when we would be paying them. I make payments to them regularly on a monthly basis, and have never missed a payment, therefore this behavior feels really aggressive. I would like to quit but I suspect I’ll never get the rest of what I’m owed and frankly I need the extra income.

Asked on September 22, 2016 under Employment Labor Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

No, your LLC's obligation to pay for advertising is separate and distinct from their obligation to pay you for the work you do, unless and only if you have a contract for you work which states that they may offset any a business you are involved in owes them against amounts they owe you. Without some explicit authorization like that, however, becasue the LLC and you are separate legal persons (e.g. it has its EIN; you have your SSN; it is not you), the debt of one has no effect on debts owed to the other. If they do not pay you for the work you did, you could sue them (e.g. in small claims court, as your own attorney or "pro se") for the money.

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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