Employment contracting/legal options
March 27, 2006 5:57 AM   Subscribe

Should I continue working for them?

I am under a consulting contract until the end of April. The contract started in the beginning of January, and I have yet to be paid. My first invoice is due from the company on 3/28, and I have a feeling that I will not get a check (as the company is waiting on funding). If I stop working (if I don't get paid), is the company still liable for the remainder of the contract, or do I forfeit that? I don't want to keep working for them if they haven't paid, but I don't want to lose the remaining portion either. I know the best thing to do is to keep working and hopefully they will pay up, but I'd rather get out immediately and have them still on the hook for the rest, if it is possible.
posted by anonymous to Work & Money (10 answers total)
It makes no sense to hold them to it if the money simply does not exist, i.e. they're flat broke. Therefore, keep something to bargain with, i.e. whatever it is you have done for them.

It'll come down to "I now have the only copy/version/part of the deliverables here on this CD, and unless I get paid, you do not get them".
posted by bhance at 6:11 AM on March 27, 2006

I think you break the contact if you bail out now, so you wouldn't get paid through April. But what kind of agreement did you enter into that has not given you a dime in nearly 90 days, and may still not. I hope you have other sources of income. You must.
posted by terrier319 at 6:13 AM on March 27, 2006

If you go and break the contract you could be on the hook for some sort of penalty, or, you could be entirely within your rights to do so. It all depends on what your contract actually says.

What does the payment schedule look like? Are you just billing them monthly? Are you doing some sort of milestone-based payment schedule?

For now, I'd keep up your end of the bargain and wait to see whether they'll pay you or not. If they do, then you're fine. If they don't then you can start exploring other options.

Remember that if they decide not to pay you you are still owed the money and will almost certainly be well within your rights to take them to court to collect on the debt.
posted by bshort at 6:13 AM on March 27, 2006

A) Learn how to negotiate. Companies without money need to pay early and often. You can accept a delay in getting paid from Citibank or the government, but not startups.

B) You don't think you're going to get paid tomorrow, the first (apparently) payday in your contract. Well, wait and see. Should no money be forthcoming, you need to immediately halt all work. Preferably, you'd still be possession of the work you've done to date and refuse delivery until payment is made. You can ignore anything anyone says about collecting your money in court - if they don't have it, you'll never get anything, and court is simply a waste of time and money.

C) "I'd rather get out immediately and have them still on the hook for the rest, if it is possible." Unless I'm reading this wrong, you want to quit working for them and have them pay the full amount of the contract. Don't be a jerk. You're in the complete right so far, being screwed by the company, and you want to clutter the discussion by trying to get them to pay you for work you haven't done?
posted by jellicle at 6:23 AM on March 27, 2006

Echo those who say carry on until such time as they may miss a payment deadline. You say they haven't missed a deadline yet, so you should take no action yet. If they do so, hassle them.

Your contract is with them, not with any client/funding body/rich relative of theirs. If they don't have the money then they should find a line of credit in order to pay their contractors, otherwise they should not be in business.

(hoping this makes you feel better, and knowing it won't change the situation if they don't pay! Freelancer here, and familiar with such insecurities)
posted by altolinguistic at 7:57 AM on March 27, 2006

I know the best thing to do is to keep working and hopefully they will pay up

This would not be the best thing to do. You should schedule a meeting with whoever is responsible for your invoices, talk to them frankly about your concerns, and find out what the story is. I assume that you have more reason to believe that you won't be paid than simply "the company is waiting on funding" -- if not, then wait until they actually do fail their obligation before scheduling that meeting.

Are you the only contractor in this situation? If not, then you should schedule that meeting as a group.

If there are serious signs that the company is going under, bring a tape recorder to that meeting. (Openly, not surreptitiously, I mean.) Documentation is your friend. If they're late but offer a new payment schedule, get it in writing. If they're late and don't offer a new payment schedule and start talking about we'll pay you if we get our funding... that's when it's time to lawyer up. (I assume the amount you're owed is substantial enough that this will be worth the (enormous) hassle of going to court over it. If not, all of this is moot, you lose, game over.)

And next time, don't agree to any contract for which the first payment isn't due until months after you've started work. That's just begging for trouble.

Bill early, bill often. I learned this lesson the hard way, and I suspect that most contractors make the same mistake early on... but you can't simply sit back and hope you'll get paid someday, unless you plan to forfeit a third or so of your billable hours. You've got to be proactive about it from the start, make sure the payment schedule is clear, and make noise (politely, but clearly) if there's any delay or hint that something's not going right. Get it out in the open immediately.

(This is different, of course, if you're contracting through an agency rather than as a solo operator, in which case your first call should be to the agency to make them deal with it.)

Realistically speaking, if you simply stop working at this point, you'll be giving up on any hope of getting paid for past or future work, regardless of what your contract says; if they're underfunded, then you're going to drop to the bottom of the list of people who will get paid even if the company has the best possible intentions. (Which they may or may not have.) At best you'd have to get into a hostage situation, where you'll release the work only if they release the money... that's a bad plan; it's unpleasant, likely to backfire, and unlikely to work anyway.

I'd rather get out immediately and have them still on the hook for the rest

This doesn't reflect well on you, frankly. Be a hardnose about what you're owed, yes. But fill your end of the bargain as well.
posted by ook at 8:13 AM on March 27, 2006

I'm pretty sure he meant "the rest of the work," not the money. Which would be valid if he didn't get paid.
posted by beerbajay at 9:39 AM on March 27, 2006

That's not how it reads to me, but I guess it's possible. And, yeah, if so, stopping work if it's clear the company isn't making its best efforts to pay for it is the right thing to do (unless the work is essential to the company's day-to-day operations, in which case anonymous should cut back to bare minimum life-support levels until they've got an agreement worked out.)
posted by ook at 10:03 AM on March 27, 2006

Print out copies of all your emails and invoices. Write down a timeline for the project and everything you've done so far (phone calls, work done, work delivered, etc). Deliver any work you've done. You want to deliver the work, so that you have not breached the contract. However, it helps if your contract says you're being paid for your time as opposed only to delivery of a finished piece -- still, you can win here.

If you're really worried, send it signature required. Keep copies of everything. Invoice in accordance with the contract. Make sure all payment terms are spelled out. If you aren't paid within a reasonable amount of time, send a demand letter. Then file in small claims court. Now you are considered one of the creditors, so you can get in line. Put everything in a binder. Any business cards you received, contracts, NDAs, paperwork, emails, phone call records, faxes, etc. Get organized now. Judges are more likely to favour someone who's organized.
posted by acoutu at 11:19 AM on March 27, 2006

By the way, if it doesn't say it in the contract, specify fees or interest for late payments on the invoice. This will help if it takes a year to go to court.
posted by acoutu at 11:21 AM on March 27, 2006

« Older Anchovy, Anchovy, the Flower of Fish   |   Building With Climate Change in Mind Newer »
This thread is closed to new comments.