Bounced Payroll Check, Company Out of Business

My former employer laid off the entire company and closed the company office on 10/9/01. The company also filed for bankruptcy. My employer promised to pay me for my wages for the work I did on October 1st - 9th (I was paid monthly).

I received my check, but it bounced several days later. How should I proceed? Should I take him to court? Will I see any money now that the company is out of business?

2 answers  |  asked Nov 20, 2001 11:17 AM [EST]  |  applies to New York

Answers (2)

Outten & Golden LLP
Bounced Payroll Check

Dear Ms. King:

Under New York State Labor Law, wages are protected under the law and bankruptcy will not shield a company from liability to pay its employees for time worked. However, it might be difficult for a person without representation to succeed in obtaining a judgment for lost wages from a bankrupt company. An experienced employment lawyer could assist you in that endeavor.

Moreover, under certain circumstances, the company has an obligation under a statute entitled the WARN Act to give notice to its employees of planned layoffs and you have not indicated that such notice was given in your situation. Therefore, the company could be liable to you for damages under this Act.

Our firm has extensive experience with wage and hour claims and can offer services of this type on an hourly fee basis or, perhaps, through a contingency fee arrangement. If you are interested in retaining our firm, please telephone us at 212-245-1000 and ask to speak to our intake personnel.

posted by Outten & Golden LLP  |  Nov 30, 2001 09:57 AM [EST]
David M. Lira
Getting Paid by a Bankrupt Employer

Your question is really less of an employment law question and more of a bankruptcy question.

Under NY State common law and statutory law the employer certainly owes you the money, but, once an employer files bankruptcy, whether you get paid will depend on what happens in bankruptcy court. If your employer filed bankruptcy after your salary became due, your employer should have listed you as a creditor. As an employee who is owed wages, you should be entitled to priority treatment. If you are listed, you should expect to hear from the bankruptcy court.

You can go down to the bankruptcy court and check your employer's file to make sure you are listed as a creditor. If you are not listed, I suggest that you contact a bankruptcy attorney, particularly if your employer filed a Chapter 7 petition, or a Chapter 11 petition where it looks like it will eventually be converted to Chapter 7.

posted by David M. Lira  |  Nov 20, 2001 1:14 PM [EST]

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