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UPDATE:

I was just let go today, May 8. After being let go, 2-3 hours later I was asked to sign a general release. Obviously I declined. I told them I cannot sign a general release as I have a claim to unpaid wages.

Original Post:

I asked a question over at Personal Finance and I was advised to ask for legal guidance here. A brief summary (please checkout full question for details) is below:

My company, based in NYC, has not paid salary for the month of April 2019. There is no update for when salary will be paid out, but it looks like it might happen until shortly after May 20, 2019. I'm optimistic, but also skeptical about this. I'm also expecting a bonus payment for 2018 that has not been paid yet either. It is a long story, but apparently the funds are currently frozen in another country due to the firm being a 3rd party in an ongoing investigation that is coming to a close.

What legal options do I have here? Do I have a claim to salary if I quit? I'm nearly positive I would not have a claim to the 100% discretionary bonus. But I am thinking it is best if I quit, move back in with my parents, get a different job, and then await the payment of previously earned salary. This is unless of course I have no legal claim to accrued wages unpaid.

  • 4
    When you say "100% discretionary bonus", you mean it's completely up to the company as to whether to pay a bonus? – Acccumulation May 7 at 17:54
  • 2
    @Acccumulation guessing based on my own experience: the company has a bonus system with a "target bonus", and employees receive X% of target depending on various factors. OP was granted a "100% of target" bonus. – hobbs May 7 at 18:47
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What legal options do I have here?

It depends on how much you are owed. If it is less than $5000 (in a city court) you can sue them in small claims. If it is more than that, you'll have to sue them in a different court.

Do I have a claim to salary if I quit?

Yes, absolutely. You quitting does not relieve the business of its obligation to pay you for work you have already performed. In some states, they may also be required to pay you for accrued leave (sick/vacation time). You should not have to work for a company that does not pay you, we got rid of slavery a long time ago.

I'm nearly positive I would not have a claim to the 100% discretionary bonus.

Maybe, maybe not. This depends on your contract and what you've been told. If you were told (in writing) that you would be given $X amount for a bonus for work performed in 2018, the bonus may no longer be discretionary because the company obligated themselves to pay it via a promise. Bonuses may be harder to argue in court, but if you have sufficient documentation that you were promised this bonus then you may have a claim to it.

If you do decide to go to court with this, gather up as much documentation as you can before quitting, print it out and save it to bring to court or to your lawyer. Make sure to get as much as possible, for example if it is an email, get the whole chain, as much of the headers as possible, etc. If you have voicemails, see if you can save them or record them for later.

Do not wait too long, have a lawyer draft up a demand letter the moment you quit outlining exactly everything you are owed, including the bonus, vacation, sick days, etc. Deliver this via certified mail. Don't let them say "well we'll get you taken care of next week/month/pay day". There are statutes of limitations (I don't know what they are for NYC) but you should be making an effort to collect, not waiting on them. After you quit, they don't have an incentive to pay you anymore (even though they are legally obligated to).

  • 1
    +1 for "we got rid of slavery a long time ago". – SSight3 May 7 at 20:28
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    The big reason not to wait has nothing to do with statutes of limitations. It's because if they're not paying salaries, there's a good risk they'll go bankrupt before your court case gets resolved. – Mark May 7 at 20:45
  • In Illinois there's also a wage claim process. I'm not sure if New York has something similar. – EJoshuaS - Reinstate Monica May 7 at 23:40
9

The New York Department of Labor will investigate claims of withheld wages and withheld wage supplements (i.e., bonuses). The latter is harder to prove, but even an oral promise is something that will be investigated. Note that the NY Labor Department will not investigate claims that are before a small claims court, so it may be the case that you have to choose one "track" or the other.

As far as whether you forfeit your back wages by quitting, almost certainly not. Given that they can't withhold your last paycheck, even when you're fired (it must be given to you by the next scheduled payday — see this FAQ), it stands to reason that the wages are still yours. However, fringe benefits, such as your bonus, can be withheld after resignation under certain circumstances:

New York courts have held that an agreement to give benefits or wage supplements, like vacation, can specify that employees lose accrued benefits under certain conditions. To be valid, the employer must have told employees, in writing, of the conditions that nullify the benefit.

So consult your employment contract about this.

  • I don't know about New York. In some jurisdictions, you can first file a claim with the Department of Labor, which will investigate & likely prosecute the wage claim against the company. You may not need to have your own lawyer for this, but in some jurisdictions the Department of Labor will represent you. If the Department of Labor chooses not to prosecute your claim, you can then file suit in an appropriate court. In some jurisdictions, you are owed normal salary for time after your pay is withheld, even if you don't actually work up to some max (e.g. up to an additional 30 days). – Makyen May 7 at 22:04
1

You still have claim to the money, but in your question you say they do not have the money since it is frozen right now.

I suspect they will pay you in the future, but it is probably best to look for a different job.

You can sue them for not paying you, but if the money is not there it is not there.

  • 3
    "you can't get blood from a stone" – Barmar May 7 at 20:49
  • Agreed. There is a claim to the already earned wages. But, suing may not make sense because the problem is not that the company is unwilling to pay, but that it is unable to pay. The only reason to sue would be to document the obligation which might be useful to intervene in a suit over the frozen funds or a later bankruptcy. But, it probably isn't worth the money for a month's wages that they are willing but unable to pay. – ohwilleke May 8 at 22:33
1

If you were to quit, your employer might, depending on the contract, be entitled to a reduce the pay. However, there is a legal concept called constructive dismissal in which an employer, by their behavior, has effectively fired an employee. Not being paid certainly would be a strong basis for claiming this. If you have a contract committing you to working a certain length of time, they have already breached that contract by failing to pay you. So not only are you entitled to back pay, the fact that you are voluntarily choosing to not continue coming to work (I am avoiding the terminology "choosing to not work", because "work" implies being paid) does not bar a claim of unlawful termination,. nor does it bar an unemployment claim (although it may make it more difficult, especially if the company disputes it). And while I don't know the exact amount of minimum wage in NY, it definitely is greater than zero. Depending on what representations were made to you regarding the bonus, you may be entitled to that as well.

However, while you have a legal case for them owing you money, the fact that their funds are frozen means that it will likely be difficult to get your hands on the money. This indicates that someone else has claimed a right to the money, so you'll be competing with them for access. You should talk with a lawyer about finding out who has frozen the money and why, and what you should do to best preserve your claim to the money. There may be a long line of creditors, and you want to be as far up that line as you can. If it has been frozen in another jurisdiction, you may need to pursue legal action in that jurisdiction to get your hands on it. You might want to talk with other employees and see about pooling your resources for the legal fight that appears to be upcoming.

  • So they've effectively fired everyone in the company if they don't have money for payroll? – Barmar May 7 at 20:50

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