How to handle not getting paid?
April 11, 2012 2:03 PM   Subscribe

The people I work with are great but I've now missed multiple paychecks. Has anyone been in this situation before? What is your advice on how to best deal?

I joined a great small company less than a year ago. The work is fun and I'm learning a ton. There's just one giant problem - pay has been inconsistent. We're a professional services firm and the clients just aren't pouring in. I've now missed more than a couple of paychecks in a row and am quickly draining my savings. Plus, I am stressed out knowing that the prospect of the next paycheck is slim. At this point, I've made about 30 percent less total than I was slated to make in the contract I signed. And, I took a significant pay cut to join this firm in the first place.

Do you have any advice for what I should do? I'm guessing that no matter how great the work environment is it is probably time to move on. I have a feeling that I should be documenting things as well but I'm not exactly sure what. Any advice would be much appreciated.
posted by anonymous to Work & Money (33 answers total) 5 users marked this as a favorite
Run, as fast as possible.
posted by DarlingBri at 2:08 PM on April 11, 2012 [12 favorites]

Start looking for a new job ASAP.

No matter how nice they are you still have bills to pay, and they may be nice but the fact that their not paying you means they have problems.

I was in a situation like this once and it took me a while to realize that they were counting on me being to nice to put up a fuss or quit and that a job where I was not being payed consistently would not get better no matter what I was told.
posted by SpaceWarp13 at 2:10 PM on April 11, 2012 [8 favorites]

"Hey boss. I'm going to need a check for $X [whatever back pay they owe you] before I show up for work again."

Even if he or she cuts you a check right then and there, find a new job, ASAP.
posted by Rock Steady at 2:11 PM on April 11, 2012 [37 favorites]

Document all the paychecks you have missed, and if you were paid late in the past, all the times you were actually paid.

What they are doing is illegal. If you want to be nice you can go to them first with a polite request to immediately be paid all your back pay with interest. Either way, you may end up at a lawyer's office.
posted by chickenmagazine at 2:12 PM on April 11, 2012 [5 favorites]

Document your hours/output. Anything you already have (email chains are good for this) to bolster your claims of having met the requirements for $x per your contract is useful.

Start looking for a job now.

Get an agreement from management on when your pay will be current and what to expect going forward, then hold them to that.
posted by batmonkey at 2:14 PM on April 11, 2012

1: Start looking for a new job. The best job in the world is only worth it if you can cover your expenses (through the paycheck or by external means) while you hold it, and you can't.

2: Sit down with the boss and let them know you're expecting to be paid for the weeks you haven't, and that if you can't be paid right now, you'll have to stop working for them and pursue paid work elsewhere -- and that if they'll keep you on the payroll and health insurance in the meantime, you'll seek temp work so that you can return to the job once they're able to make payroll again.
posted by davejay at 2:14 PM on April 11, 2012 [2 favorites]

I've worked for some real fucking monsters, people whose abrupt departure from this world would not exactly ruin my weekend.

And yet, for all of the abuse I have endured in my years in the workplace, I have never had to worry that the checks would bounce, or that my employers could not make payroll.

When you took on this job, you were agreeing to trade your labor power for money. You held up your end of the deal. They didn't.

Terminate the arrangement.
posted by jason's_planet at 2:21 PM on April 11, 2012 [4 favorites]

The fuck?

You aren't freelance, are you, that they'd pay your invoices? You're on payroll and they aren't paying you? If so I'm fairly certain that's illegal in many jurisdictions. It's also one of the surest signs that a company is about to fold. Or maybe they're just criminals. But it doesn't really matter.

I think you should consult an employment lawyer. I also think you should stop soon work, though legal advice will clarify that.

I don't understand why it's relevant that these employers are great and wonderful people, if they're not paying you. Unless you're independently wealthy or supported by someone else, which apparently you aren't; do you work to socialise with people you admire, or are you so dedicated to the work, that the paycheck isn't why you do it? I do think the middle-class mindset of Love What You Do! Income Is For Sissies! is being used against you here. I've spent a good percentage of my career doing meaningless work for vicious bullies, but at least they ALL stumped up a check every payday without fail. The very instant any of them had stiffed me, they wouldn't have gotten anything more from me but a middle finger.

Seriously please consult an employment lawyer, this minute if possible. Don't wait.
posted by tel3path at 2:28 PM on April 11, 2012 [14 favorites]

Bail out now. Run, now. Don't go back until, maybe, you get all of your back pay. Don't worry much about the lawyer bit, if there's nothing there, the lawyer can't retrieve anything for you. Good luck.
posted by caclwmr4 at 2:55 PM on April 11, 2012 [1 favorite]

Does your state have a labor board? That's where I'd be headed.
posted by mollymayhem at 3:00 PM on April 11, 2012

Don't worry much about the lawyer bit, if there's nothing there, the lawyer can't retrieve anything for you.

"Nothing there," in the context of an insolvent business, is a term with a bunch of nuances. Strangers on the Internet are not going to be able to tell you anything useful about the specifics of your situation. Absolutely do not rule out a consultation with a lawyer.
posted by AkzidenzGrotesk at 3:00 PM on April 11, 2012 [2 favorites]

When a legitimate business is struggling, it's the OWNERS who don't get paid. You aren't a partner, are you? If they can't pay their employees, they're cooked. Stop being their life support machine.
posted by jon1270 at 3:03 PM on April 11, 2012 [11 favorites]

When I was in this situation, after the second or third late paycheck, I started looking for a new job. It doesn't matter how nice they are, how great the work is, how much they promise that things will pick up. If you are not getting paid, they are not entitled to your work.

In terms of documentation, you should make sure you have something that shows how many hours you've worked and what pay you are owed. Check with your state's labor board to see what your options are in terms of getting your wages.

Also, I don't know what your work environment is like, but in my experience, as soon as paychecks start coming late, the atmosphere takes a turn for the tense and poisonous. Where previously my coworkers seemed okay enough with their jobs, other than the usual expected annoyances and dissatisfactions, as soon as our pay schedule took a turn for the distressingly erratic, things got bad. More arguments, endless complaining and panic during our lunch hours, and a general lack of motivation to keep working quite as hard, because hey, we haven't even paid in a week and a half. Save yourself the stress and get out before it turns disastrous.

Protect yourself, and start looking for a new job.
posted by yasaman at 3:10 PM on April 11, 2012 [1 favorite]

You have my sympathies; I was in a similar situation 2 years ago. Run, do not walk out the door. It may be that if you stay, you will ultimately be compensated, but it's just as likely, perhaps even more so that you will just get deeper and deeper in the hole.

Document when you should have been paid and how much. Keep a running tab of what you are owed and every time a pay day passes, you should send an email to whomever (head of the company, person who does payroll, HR if there is any, perhaps your immediate supervisor) detailing how much you are currently owed and asking what is being done to rectify the situation. Yes, you will be deemed "not a team player" or worse. But sometimes it's the people who make the most noise (and potential trouble), who do get paid first when funds become available. Save any emails that you receive from them that reference the cash flow problems (although typically people do not like to put this kind of proof in writing and orecowardly about owning up to these sorts of issues, so I wouldn't be surprised if you haven't received any written documentation regarding this issue). You want to document all of this information because come tax time next year, if you get a W-2 for what you should have been paid rather than what you were actually paid, you want to be able to substantiate it as best you can (this happened to a few people where I worked). Double and triple check that W-2; if they can't pay people, they also can't afford good accountants.

As a cautionary side note, if you have health insurance through this company, I would check directly with the insurance company to make sure that your coverage is still active. Another thing that happened where I worked is that they didn't have enough money to cover the insurance, missed three months payments, and everyone's health insurance was canceled. No one knew until they got a letter from the insurance company in January stating that they hadn't had coverage since October.
posted by kaybdc at 3:11 PM on April 11, 2012 [2 favorites]

I have to add to the growing crowd: It's time to find another place to work. I've been through this a few times. If it has gotten to the point you're missing paychecks consistently or you're down more than one, that's a pretty sure sign the company is in a downward spiral and things are just going to get worse and worse until they close down completely. And when they close, forget about the back pay you're owed.
posted by barc0001 at 3:19 PM on April 11, 2012

Don't put in another hour for them until you've been paid in full for all of your back pay. You need to be looking full-time for a new job now anyway. Personally, that's one of the few situations where I would have no hesitation at all resigning without notice. I guess if you want to leave the door open if they pay you your full arrears and start paying you timely again, that's up to you, but frankly I don't think that's going to happen anyway.

A professional services firm that can't meet payroll for multiple pay periods is very late in a death spiral. When you make widgets, your factories and your inventory can't walk away and go work for your competitors, but when all you're selling is the services of skilled people, the whole thing can evaporate very quickly if your talent doesn't want to work for you anymore. Anybody running a professional services firm with half a brain knows this and isn't going to start shorting payroll until the very end.

My strong suspicion is that whatever back pay you do see from is only going to come to you after a bankruptcy liquidation, so just walk away now. Right now what you're doing is effectively both doing volunteer work for somebody who is cheating you and lending more money to a debtor who is in default.
posted by strangely stunted trees at 3:27 PM on April 11, 2012 [1 favorite]

N-thing everyone who says it's time to move on. My brother worked for a really nice guy who ran a TV/VCR repair business some years ago. He stuck around until the owner of the building the shop was in, sick of unpaid rent, changed the locks. Some of my brother's personal tools were inside and it took years to get them back.

Don't be my brother. The ship is sinking and it's time to bail.
posted by weathergal at 3:37 PM on April 11, 2012

I have been in this situation a couple of times, and each time, this was treated like a Big Deal. The CEO personally announced why payroll could not be made, what steps were being taken to make it, and when we could expect to be paid. We received frequent updates until the situation could be fixed and we were paid.

Managing cashflow for a small business is really difficult, and having worked for small firms for most of my career, the dirty reality is that a missed payroll or two can happen. Sometimes it's an income issue where revenue is simply not enough to cover expenses, but sometimes it's just a cashflow issue, where, for instance, a major client is late on an invoice.

That said, there are good and bad ways to handle a situation like this. Has management clearly communicated why these missed payrolls happened? Have then been clear on the timeframe to pay back wages, and stuck to it? Have they communicated a plan to fix the issue? If you don't know why payroll has been missed, and what steps are being taken to fix it, that's a much bigger issue than the missed paycheck in itself.

Also, in this situation, it matters tremendously whether you are a W-2 wage employee or an independent contractor. If you are a contractor, it will be much more difficult to recover your money, should the company eventually go under, than if you are an employee. State labor boards take a very dim view of companies that do not pay wages, and employee back pay is one of the first claimants in a bankruptcy situation. Invoices to other companies (which is what you are as a contractor) are treated with less priority. This is obviously US-specific advice, if you're located elsewhere it won't apply. Do your own research and/or seek legal advice.

Bottom line, multiple missed paychecks is obviously a very bad sign and you should be examining other employment options with some vigor. However, if you're an employee, I wouldn't necessarily walk away immediately, so long as you do know there's a clear plan to fix the situation, and you have confidence in this plan. If you're a contractor, I would not dig yourself further into this debt hole, and would politely let management know that you cannot do further work for them until outstanding invoices have been settled.

Best of luck...I know this can be very stressful, and create divided loyalties. Just remember that ultimately, your are responsible for your own financial health, and this company for theirs. Sacrifices to coworkers and a company you believe in are good, but make sure that you're not opening yourself to a really dangerous financial situation.
posted by psycheslamp at 3:42 PM on April 11, 2012 [1 favorite]

Another vote for vote with your feet, and find another job ASAP. Also: make damn sure that any money they deducted for state for federal taxes have actually been paid to your state and the IRS! (My own boss is currently on a short minimum-security 'vacation' because the money he & the company comptroller withheld from our checks? They used our withholdings to pay themselves, instead of turning it over to the IRS.... naughty, naughty!)
posted by easily confused at 4:06 PM on April 11, 2012 [2 favorites]

Do not run from the company - just not yet at least.

Your greatest likelihood of getting paid is if you stay there, and "guard your money." Document everything.

Use this time to secure a good job elsewhere. But stay employed while you do so (it will help in interviews and giving reason for departure). Others in the wonderful company are doing exactly this.

Finally, the ugly truth: there are employees that *are* getting paid. Not all are treated equally unfairly. Those with the most pressing obligations are getting some portion of their paycheck. This will never be public knowledge - but it's 99.9 % true.

Therefore, if you might side into debt, meet privately with the management, whichever one you might be on best terms with. Likely, they will pay you enough to cover what you need on the bills for the immediate moment.

Keep an eye on subtle signs, and do not be afraid to speak up and ask them.
posted by Kruger5 at 5:43 PM on April 11, 2012

If it helps you deal with any misplaced guilt about leaving, remember, _only_ likeable people get away with this: if they were dicks you'd have left with the first missed check. Don't make this about personalities; keep it about the money.
posted by Ys at 6:07 PM on April 11, 2012 [2 favorites]

Mod note: This is a followup from the asker.
Thank you all for the advice! This is the reality check I needed.

I've got a couple of solid job leads and after reading all of your comments it's obvious that I need to pursue them. I feel like an idiot for not realizing this sooner.

To answer some of your questions:
I'm not a freelancer but I am technically a contractor, as is almost everyone I work with.
While one of the owners explained earlier missed paychecks, I had to initiate a discussion to get him to acknowledge that he hadn't paid me recently. I just kept waiting and hoping that my bank had screwed something up.
There is no timeline set for paying back wages.
There is also no concrete plan for avoiding the cashflow problem is the future other than encouraging us all to work harder.

Lastly, Ys, that is a brilliant observation.
posted by cortex (staff) at 6:56 PM on April 11, 2012

My experience with this was like Kruger5 says--some people were getting something. Those of us who were single and/or had no kids were not.

Before I found that out, though, I had a paycheck bounce, and they cut me a new check immediately, including enough to cover the fee my bank assessed. The next two pay periods were late; the two after that, those of us who were single/no kids were asked to hold our checks for a week before cashing/depositing them. I only cashed them after that so I didn't have to pay a fee if another one did bounce (different banking rules may apply now). We started asking for our checks weekly then instead of every other week, which they did, but at one point I was holding 3 checks. I left soon after that (which provided a brief financial respite for others, so I'm told), and then the company went under. Since the owners hadn't done anything close to a good job keeping their personal finances and business finances separate, they ended up bankrupt, too.

I wouldn't leave the job yet because it will probably be easier to get money from them while you're still there, but I would definitely start looking for another job.
posted by BlooPen at 6:58 PM on April 11, 2012

Remember, it's not about "the money:" this is about *your* money. You did the work. That money belongs to you now. Start treating it that way as opposed to letting them think they're doing you a favour by paying what's owed. Nice people don't skip payroll. Ever.
posted by runningdogofcapitalism at 7:04 PM on April 11, 2012 [2 favorites]

Why are YOU going into debt? They should have a business line of credit; the owner should be taking a second mortgage, etc. etc. If they've done all this and STILL not smoothed out cashflow, they are unlikely ever to. If they haven't done all this, in a situation where it's their fortunes to be won, then why should you? Either way, time to go!
posted by salvia at 7:10 PM on April 11, 2012 [1 favorite]

I wouldn't leave the job yet because it will probably be easier to get money from them while you're still there, but I would definitely start looking for another job.

I get what people are saying here, but I saw what happened at the place that I worked. People got further and further into the hole and then felt even more compelled to stay to try to recoup that money. The place --it was a non-profit institution--eventually closed down and the few remaining employees were furloughed. Some were unemployed for over a year. I have no idea if they ever recouped all the money owed them; I sincerely doubt it. But I saw how it became a set of handcuffs that tethered them to the place for far too long and the director knew that's why people were staying and kept dangling that big payoff to "the faithful." I think that most of them would have been better off financially, never mind emotionally, if they had walked away a year before they were forced to.

As an aside, and with the proviso that this his goes 100% against how I normally operate and what I would usually advise, but I'd say if you do stay on site to try to recoup your money, spend as much of that time there as you can on your job search (and for what it's worth, I had a grant funded position and the funding agency told me that I should feel free to spend my remaining time at the institution looking for another job. I eventually did because the funding agency conducted an audit, which scared them enough to make paying me a priority, but others weren't so lucky).

Here's another caveat for you. The place where I worked hadn't paid taxes since the 2nd quarter of the year I started (in October, the third quarter). When I went to file for unemployment there was no record of my ever having worked for the organization. I needed that documentation (my offer of employment letter, copies of checks, copies of the letter that stated I was separating due to a lack of funding, etc) to appeal the original denial of unemployment. Eventually I was successful, but it took 8 weeks to get my first unemployment check.

Honestly, as destitute as I was and even though I eventually got all my money, if I had to do it over again, I would have listened to my gut and left when things first got hinky (a mere 3 weeks into the job). It got really ugly. Hopefully your employers are truly good people going through bad times and they will handle things more transparently. But I'd be very suspicious of promises that everything will be back on track once (fill in magical solution to all their problems here) happens.
posted by kaybdc at 7:56 PM on April 11, 2012

All the above advice is good. Just a question - are the paychecks bouncing or just not getting cut at all? If they're bouncing, do what my fiance did in this situation, and as soon as you get your check, head to the company's bank and get it cashed immediately.
posted by radioamy at 8:01 PM on April 11, 2012

I worked for a start-up who never paid me at all (hello, VinoVisit!). I finally quit after 6 weeks of excuses, contacted a lawyer, and months later, after much work and annoyance, finally got the CEO of my former employer to sign a payment agreement that allowed him to pay what I was owed over several months. They owed me about $12k but I used up almost $3k on lawyer's fees.

There are several important things I learned from this experience:

1. You are FUCKED if you are a contractor, as I was. There is no government agency, either federal or state that you can turn to. You are on your own, and will have to incur all legal fees IF you can get a lawyer to take your case. This makes being an employee more attractive than it would otherwise be, to me.

2. What matters is not just the legality of the situation, but whether the lawyer thinks you can win AND whether you can collect. If your employer simply doesn't have the ability to pay, no matter how clear your contract with them and how egregiously they have not held up their end of the bargain, you probably won't find a lawyer to take your case.

3. There are a bunch of escalating steps that have to be gone through before a law suit can be filed. These steps in themselves are expensive, and a lawsuit is mega ultra expensive. And if you do go to court, you cannot always get the opposing party to pay your legal fees, which sort of amazed me to find out. If we had not finally gotten my former employer to pony up after a series of escalating threats, I probably would not have been able to afford to actually go to court (except maybe small claims court--and even if I'd won that payment would have been capped at less than half of what I was owed).

3. Do not put up with this shit ever again. Do not be "nice" in the business realm. What that gets you is a big serving of nothing. If this ever happened to me again, ONE missed paycheck would be more than I would tolerate.
posted by parrot_person at 8:40 PM on April 11, 2012 [1 favorite]

Oh, and don't quit. That will make it harder to collect unemployment, though you could probably still do so with a fight. Send a certified letter to the powers that be stating that you are owed X amount for Y work, and that you will be unable to complete any additional work until you are payed under the terms of your contract. But stress that you aren't quitting and can be back on the job as soon as you are paid what you are owed. In the meantime, look for a new job.
posted by parrot_person at 8:44 PM on April 11, 2012

Also, no matter what, keep every pay stub and pay record. I had this sort of thing happen to me in the early 90s, and in addition to everything else, they gave me paperwork about my payments for federal and state tax and SSI and unemployment, and when I tried to collect unemployment was told I'd quit a year before.

Yeah. Imagine the face when I was told. Ended up getting a lawyer and going to a bunch of state and federal offices with my pay stubs, to prove that I had in fact had all the withholdings removed. The IRS was amazingly helpful and pleasant about things, whereas the NJ State Department of Taxation's attitude was that I should pay up and they might send me a refund when/if they claimed it from the former employers. The Unemployment people were cheerful and gave me all sorts of credit for time worked that should have been paid into the Unemployment fund, and SSI took the information and thanked me.

But you must cover your ass first and foremost, and I would assume at all times that if they're having trouble covering salaries, they are having trouble paying taxes and SSI and unemployment and all of that and they will drop it on you and let you clean up your issues with glee.
posted by mephron at 12:42 AM on April 12, 2012 [1 favorite]

While I generally agree with the "stay and guard your money until you find a new job", as a contractor, this might not get you anywhere.

What I would do is go to the unemployment office and tell them your story. There is a thing called constructive dismissal where the company creates a situation (purposefully or not) where they basically force you to quit. Since usually quitting means no unemployment checks, this is a bad spot. So a constructive dismissal is this situation: they haven't fired you, but they might as well have as far as the unemployment office is concerned.

Anyway, talking to the unemployment people will help you get your ducks in a row. They will tell you whether the company has been paying unemployment insurance on you (as a contractor, they may not have to), and further whether not paying you counts as a constructive dismissal.

(You may even be able to collect unemployment insurance almost as a loan- you'll get the checks, and if you ever get the back pay, you just pay the unemployment people back.)

Same thing for mephorn's advice to talk to the IRS and SSI people to make sure they have paid them what they owe on your behalf.

If you find out that they haven't, talk to your employers and directly ask them what the plan is.

In the meantime, as long as you stay working, document everything, follow the rules exactly with regards to taking sick time and vacation time. When you leave, give them customary notice. They may not "deserve" this treatment, but it keeps your record clean. If you have to go to some kind of arbitration to get your money, you don't want to end up in a situation where they can say "yeah, we didn't pay them for 6 weeks, but they didn't show up for work on days X, Y and Z, and then quit with no notice!" It will muddy the issue.
posted by gjc at 7:07 AM on April 12, 2012

Regarding your "we're all technically contractors" comment -- this may very well be illegal too. Lots of places misclassify employees as contractors in order to avoid payroll taxes and other requirements. If the IRS or the state finds out, your employer could face major liability for this. Definitely agree that you should go to the labor board (or again, if you feel the need to be nice about this, go to your employer with a demand letter first).
posted by chickenmagazine at 7:11 AM on April 12, 2012

I've now missed multiple paychecks

The people I work with are great

These are mutually exclusive (cough, cough).
posted by John Borrowman at 2:00 PM on April 12, 2012 [1 favorite]

« Older Who is this Seattle eccentric?   |   How Do I Quit Working For A Friend and Stay... Newer »
This thread is closed to new comments.