If we were paid under the table but then my

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If we were paid under the table but then my

My friend and I worked for a small business. He paid us under the table as he could not afford benefits for full-time employees. When he closed his business, he owed the both of us back pay for over a month. The total amount for both of us was just under 4k. Can we do anything about that or since we were not employees on paper, are we just out of that money?

Asked on October 3, 2016 under Employment Labor Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Even if paid "under the table," if you did the work, you must paid for it. You could sue him for the money (in theory; see below about a possible major issue) under two different, but complimentary, legal theories:
1) Breach of contract: violation of the agreement, even if an oral (that is, unwritten one) pursuant or according to which you agreed to work for pay--if you did your part (i.e. you worked), he must do his part and pay you.
2) Unjust enrichment--the law tends to not allow someone to be "unjustly" (or unfairly) "enriched" (or benefited) by getting the benefit of work you did in expectation of pay without actually paying you.
The potential problem: you write that "he closed his business": while you can sue him personally if the business were a sole proprietorship, if it had been an LLC (limited liability company) or corporation ("inc."), you can *only* sue the business, which is a separate legal person from its owner(s). This means that if the business were dissolved, there is no one to sue; and even if not dissolved, if the LLC or corporation is insolvent (no money; or rather, less money than its debts or obligations), then while you can technically sue, you will likely not be paid--winning a  lawsuit does not make money appear where there is none. So if this was an LLC or corporation and it's closed, it may be impossible for you to get your pay.


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