Not paying employees

Recently resigned employment from Company I've been with for the past two years. Short facts are:

Company required direct deposit for semi-monthly pay (payable on 15th & end of month, unless date fell on weekend). On 10/31/2004, employees expecting direct deposit - was told, on payday, by Company that they were "shopping" around for a new bank and the employees would receive "paperchecks" this pay period - but direct deposit would be paid on 11/15/04. On 11/15/04, again a paydate, the Company informed their employees in the afternoon that the "bank" did not send the employee's checks and therefore, they were not getting paid. On 11/30/04, 12/15/04, & 12/31/04 payroll checks were not given to employees - the Company stated, in a company-wide email, it did not have enough money to cover employee salaries and reimbursement. The employees were told that the "Company" does not pay their salaries, but that the "Company's customers" do. If our customers are not paying their bills on time, then the Company will not pay us. Yet the Company expected its employees to continue working on projects and being billable. For the months of Jan/Feb 2005, Company pays its employee salaries on time, but withholds expense reimbursment. In March 2005, Company does not pay employee salaries on time again. Therefore, I start looking for a job in April 2005. In May 2005, I find a new job and submit resignation.

Originally I was working in one office when my Company approached me to move to another office. They paid my expenses for relocation. Company, upset about my departure, wants to reinforce relocation agreement because I resigned before term date.

Also, I made complaints about not being paid on time, be it for salary or expense reimbursement. I kept copies of written correspondence to my manager and CC'd to corporate staff of accounting and CFO.

Can the Company reinforce relocation agreement, when I had no choice but to resign because I need to be able to financially supply for my family? Our Company never gave any of its employees notice whenever they paid, and continue to pay us late. I.e. When a paydate rolled around, employees would have to call corporate office AND send emails before accounting/HR would let the employees know they would not be getting paid. On many occasions, those of us who were on travel would have to call in to our offices to ask, "Did we get paid today?" A comment was made by senior staff in the company during a company-wide conference call, "Everytime someone resigns, it's better for the Company because the Company does not have to pay their (employees) salary". This comment was made in reply to the numerous resignations the Company has suffered due to financial instability of Company.

1 answer  |  asked May 6, 2005 08:04 AM [EST]  |  applies to Illinois

Answers (1)

Anthony Cameron
Impact of failure to pay on relocation

No responsible lawyer can give you an opinion without seeing the Relocation Agreement. There are some principles that apply which might be useful for you to know.

The recoupment portion of a relocation agreement is part of a contract. The underlying assumption of the contract is that you will continue to serve in the established capacity subject to approximately the same terms and conditions and, conversely, that the company will continue to make it possible for you to serve. Failure to pay (on a continuing basis) is a breach of the underlying assumption of availability of work.

If they sued you for the recoupment under the agreement, you would put forth the affirmative defenses of "impossibility" and "frustration of purpose".

It is still possible for them to have a written a recoupment clause strong enough that it doesn't matter why you left but it would have to be powerful and unambiguous.

It's a little unclear to me whether the company was making up these "late" paychecks and whether you were under a written contract that specified your compensation was in any way tied to gross receipts. Contrary to popular opinion, it is possible to have an employment relationship in Illinois that shares the risk of gross funds being received. This must be done in writing in any non-agricultural field.

For the people who are still there and aren't being paid, the Illinois Department of Labor Really does a fair job of collecting wages from recalcitrant employers. Their wage claim form is simple and they are very cooperative in helping wage-earners.

Anthony B. Cameron

posted by Anthony Cameron  |  May 18, 2005 6:18 PM [EST]

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