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Archive for the ‘Contracts’ Category

Payday Payback: Collecting Earned Wages from Deadbeat Employers

In Contracts, Employment, Legal, Texas Law on September 29, 2011 at 8:24 AM

It is unacceptable for an employer to not pay earned wages. Accordingly, the Texas legislature has provided avenues by which jilted employees can make life very difficult for recalcitrant employer-debtors.

Because wage disputes are usually small—one study shows the average dispute amount to be $420.00—the cost of pursuing redress through litigation usually greatly exceeds the value of the remedy sought. Texas therefore provides a cost-free administrative remedy to unpaid workers by empowering the Texas Workforce Commission (TWC) to investigate, rule on, and then enforce wage claims. Engaging this process requires little effort and education. One need only follow the instructions and complete the form found at http://www.twc.state.tx.us/ui/lablaw/ll1.pdf. These instructions include filling out the form completely and accurately, notarizing it, and then returning it to the address thereon indicated. The claim must be filed within 180 days of the date payment was originally due. (If 180 days have already lapsed, a claimant should NOT file with the TWC, as doing so may endanger a claimant’s ability to seek redress through the courts. See Igal v. Brightstar Information Group Tech. Inc., 250 S.W.3d 78 (Tex. 2007).)

The TWC then conducts an investigation, requesting information from the claimant and the employer as needed.  The investigation timelines can vary, and the TWC informs claimants of the estimated length of investigation. Upon completion of the investigation, the TWC issues a Preliminary Wage Determination Order (PWDO). If the TWC feels the employer engaged in a bad-faith failure to pay, it may assess an administrative penalty against the employer of up to $1,000.00.

After the PWDO is issued, the claimant and the employer have 21 days from the issue date to make an appeal. If neither the claimant nor the employer appeal, and if the employer fails to pay the amount determined by the TWC to be due (if any) then the PWDO becomes a final order 30 days after its issuance. The TWC’s Collections Unit then seeks recovery through a variety of avenues, such as bank account freezes and real property liens. Those employers who: (1) intend to withhold wages at the time the employee is hired; and (2) do not pay wages after a demand is made, can be subject to criminal penalties, including a two-to-ten-year prison sentence and a fine of up to $10,000.00. 

Sometimes—such as when there is a larger amount in controversy or when the TWC’s claims process has born no fruit in the past with a particular employer—an employee may instead decide to enforce a wage claim dispute through the courts. Enforcing a wage claim through the courts is the same as any other lawsuit, however, Texas legislators have likewise made efforts to facilitate this recovery process for jilted workers. The most daunting aspect of filing a civil suit is hiring and paying an attorney, yet under Texas law, the dead-beat employer can be made to pay attorneys’ fees. The Texas Civil Practices and Remedies Code §38.001 allows the plaintiff to recover attorneys’ fees if the claim is for performed labor or an oral or written contract. To recover the attorneys’ fees, the claimant must simply: (1) be represented by an attorney; (2) present the claim to the opposing party; and (3) give the opposing party thirty days to meet the demand.

Because the dead-beat employer-debtor will be footing the bill in a litigation proceeding, because of the administrative penalties the TWC may impose in an administrative proceeding, and because of the potential for criminal liability, Texas legislators have provided attention-getting incentives for employers to timely pay up; otherwise, they expose themselves to painful payback.

Sitting in high cotton or just high and dry?

In Agriculture, Contracts, Cotton, Landowners, Legal, Texas Law on April 18, 2011 at 9:11 AM

There is no secret that the South Plains region is the largest cotton producing region in the United States.  Cotton itself accounts for around 35% of total world fiber use. Cotton is produced by some eighty countries; however, the U.S., China, and India combined produce over two-thirds of the world’s cotton, the U.S. being the third largest cotton producing country. Cotton is at least a $25 billion industry and accounts for over 200,000 farm and textile jobs.

 During the growing season, cotton farmers execute contracts to sell their cotton.  The buyers then trade and sell this cotton to manufacturers on an open cotton market.  As of late, the cotton market has been volatile. Supply has been driving the market price to all-time highs. Raw cotton prices have risen to record levels while global cotton consumption, according to the USDA, is projected at 117.1 million bales. At the beginning of March 2011, the USDA estimated that prospective cotton plantings would be approximately 12.6 million acres. That is a 1.6 million acre or 15% increase above 2010 levels.  Globally, cotton production is anticipated to rise 13%.

 The current market price of cotton, coupled with tight supply, might lead some to believe that there is considerable interest by producers to plant cotton this coming year. This may also prompt cotton farmers to sign contracts that appear to be advantageous.  The contracting process, however, is filled with numerous potential obstacles.  Mother Nature is forever fickle and so far this year is not cooperating. Anyone who has been in the South Plains this spring can smell, and when the wind is up, taste the dry dirt in the air. In fact, this spring has been the warmest, driest and windiest spring since 1917.  With little to no subsurface moisture, there is a risk that this fall’s cotton crop may suffer.  A farmer looking at a contract needs to be aware of how the weather impacts the cotton growth and how that may impact the figures in a sales contract. 

 Since cotton contracts often involve some speculation about the overall crop, if Texas’ anticipated cotton production is lowered due to lack of moisture, which causes farmers not to plant, the high market prices are here to stay. This phenomenon, which is a potential with this year’s crop, also impacts the sale of cotton and a farmer’s contract.  In addition, factor in weather and instability around the globe and you have the makings for a perfect storm that will culminate in continued market volatility and high prices.

 The speculative cotton futures figures, which play a pivotal role in cotton sales contracts, have wreaked havoc at all levels of the industry. Cotton buyers oversold and production levels were below the estimates last year. This has caused litigation to blossom between producers and buyers. Moreover, buyers are tightening up their contracts for the coming crop year making it almost impossible for producers to contract their estimated cotton production because if they can’t plant due to a lack of rain, they still have to deliver their estimated production.  Thus, greed will drive many producers to the point of insolvency.  In light of all these factors, farmers faced with cotton sales contracts should pay particular attention to the speculative nature of crop estimation, and determine whether or not they can deliver and whether or not their buyer is in a position to live up to their end of the bargain.