What options does an independent contractor have to collect wages from a business that may go bankrupt?
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What options does an independent contractor have to collect wages from a business that may go bankrupt?
I am an independent contractor that has been working for a small manufacturing company in California. The business is not doing well and while I do get paychecks periodically, the amount is not enough to cover wages owed, nor enough to reimburse equipment purchases made for jobs for them. They now owe me over 10K in reimbursements and wages. I know the owner would pay me if he had the money but I am worried the business is going under soon. What are my best options for recovery before or after the business goes bankrupt?
Asked on June 27, 2012 under Employment Labor Law, California
Answers:
Cameron Norris, Esq. / Law Office of Gary W. Norris
Answered 11 years ago | Contributor
If they are behind on payments you could sue and try to collect, but that might "push" them into bankruptcy. If you still have a decent relationship with the company I would refrain from suing for now, but periodically check public records to ensure they have not filed for bankruptcy without giving you notice. You may also want to consider negotiating a settlement with them. Tell them you will accept something like $4,000 now and they will be paid in full. Four thousand dollars now is better than nothing later if they do end up filing for bankruptcy. In the future--you may want to write a contract for companies to sign that includes the personal guarantee of the main owner of the business. That way they have more on the line--and both the owner and the corporation would have to file for BK to get out of paying you.
If they do file for bankruptcy you will need to file a claim using the federal form B 10 (proof of claim) so that your claim can be considered during the bankruptcy process.
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