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Posts Tagged ‘Deadbeat Employers’

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.