Company illegally running as contract labor / Independent contractors.

[Microwave]

My question involves business law in the state of: Kentucky

Hello, I will try to sum up everything here. But I work for a security company that pays $6.50 an hour, we also get no benefits, no overtime, or holiday pay. We are classified as contract labor / independent contractors. Rather than an employee / employer.

A few months ago I found out that they were being investigated by the Kentucky labor cabinet, I talked to them recently and I gave her all my hours that I could find. ( I only started documenting my hours myself last August / September ) So I couldn't give any hours prior to that. She told me that she the labor cabinet is not there to close people down but rather help people abide the law. But he ( my boss ) is not cooperating with her at all. He has only returned one phone call and many other things. She said originally she would have given him a payment plan to be able to pay what he owes and keep his company open, but instead she said since he isn't cooperating with her she is going to send him one bill and have the court force him to pay that.

The owner owes me over 4k dollars. It was 5.5k but he gave me a jeep worth about 1.5k. 3k was in straight cash, which is he still owes 1.5k on that I'll never see. And about 2k was in unpaid wages. I did not get paid for 1 week in September 2011 and the whole month of December 2011 I did not get one check. I have already brought this up with the Kentucky labor cabinet and they said that they will add this in their filing against him and his final bill.

his company is an LLC which if I am correct protects your residence and a few other things? What all would the IRS/labor cabinet or court go after to help recuperate money? They have 3 cars, 2 ATVs, a tractor, two motorcycles and a few other things of value. I am just trying to see what is protected and what isn't and if there is even a real need to worry about those things being taken. Also they would put a freeze on his bank account without warning correct? These are just things I have read and am trying to understand.

Would he be required to pay us the overtime and minimum wage stuff plus damages or could he file bankruptcy and get out of that?

So my basic questions are, when he gets the bill from court, and it's going to obviously be over 100k, what are the options at that point in time? Can the law take any of his personal stuff, or can the company file bankruptcy to avoid anything from happening and screwing the men out of thousands of dollars? What can happen here and what are the most possible outcomes?

Also is there anyway to put a lien on the company in chances of taking it over during all of this?

Thanks for your help.

 

[FlyingRon]

You should file complaints with the Department of Labor. That may get him an order to pay the minimum wage/overtime. You should also file an SS-8 with the IRS and when you complete your taxes an 8919 to avoid you being responsible for his share of the SE tax.

I'd not count on getting any of the back wages due if he is insolvent. You can bet the IRS will try to collect the unpaid taxes. Depending on exactly the nature of the business, he may indeed be personally liable. An LLC or corporation is not a shield against intentional fraud by an individual.

 

[ecmst12]

You'd better start looking for a new job, too. He is going to owe the government a heck of a lot more than he owes you, if he's been illegally classifying multiple people as independent contractors, and it's probably going to drive him out of business.

 

[cbg]

Microwave, I think we've discussed this on another board, right? I hope it's you - I'd hate to think this same situation is cropping up in two different companies.

In order to put a lien on the company, you would need to have sued and gotten a judgement. In your situation, again assuming that you are the poster I think you are, and referring to information you posted there but did not post here, I would very, very strongly suggest that you talk to an attorney in your state who may be able to help you salvage some of the losses.

 

[Microwave]

Yeah, I realize that he is going to go out of business. I am not worried about that anymore. Right now only the Kentucky labor cabinet is involved no one else. I assume that the IRS will come in on a later date to due some auditing. I did hear about an amnesty program.

http://www.usovertimelawyers.com/temporary-amnesty-for-businesses-misclassifying-workers--1-3764.html

Not sure if he would be able to use this amnesty program or not? I know he has been in business for the last 7 years or so and has been running illegally since the start. His lawyers and CPA keep telling him that it is set up legal despite anyone with internet access could go to the IRS website and find out that obvious security companies are employee employer and not contract labor.

But my question is how likely are we to get paid back and would they go for his assets to pay us back if he won't do it? I am going to call the Labor cabinet again today, and see if they have anymore information that they can tell me. But my main concern is not to keep my job, but to get the money he owes me, plus paying up to minimum wage and overtime for the hours I have worked that he refused to pay me overtime and minimum wage for.

Also can that amnesty program help him? Thanks

 

[commentator]

I believe that in a bankruptcy, which is the very first thing employers think of in this situation, the wages they owe come out way before any of the other bills, such as those they owe to suppliers, etc. I have seen many companies launching into this route, and have always heard that according to federal law, pay to employees is of foremost priority. In most of the situations I have seen, eventually the employees did get their pay, but it isn't a quick thing.

Of course you needed to stop working for this person, pronto! It was unwise to ever agree to work for him in the first place, but that's water over the bridge. I never understand why people will keep working for someone when they're not getting paid. You're not going to consult with an attorney, in spite of everyone advising you to, so I suspect you'd better be talking bigtime to your tax preparer and figuring how much you owe in taxes from this bad contractor job, and how you're going to support yourself when this company is completely belly up, because that's where they're going.