I haven’t been paid in 2 months and was asked not to come in — have I been laid off?

by Alison Green on June 3, 2013

A reader writes:

I work at a start-up tech company. I’ve worked at the company for 3 years now, and over the years we’ve had consistent issues with funding and delayed payroll as a consequence. Along the way, many people have quit due to paychecks being late more than often for periods of minimum 2 weeks up to 3 months. At this point in time, we have not been paid in 4 months, 8 pay periods have been missed.

Back in April, due to the stress of not having consistent paychecks, one of the employees lost his temper and mistakenly left a threatening message on my voicemail which was meant for the CEO. In light of receiving this disturbing message, I addressed it with the CEO who responded by telling me that it would be best for all if we didn’t come back to the office until all funding issues have been resolved and paychecks could be issued. I agreed, assuming at most, we would be back to the office no more than 2 weeks later. It’s been 2 months now since then. Although I’m not working 8 hours from home, I still continue to reply to emails and make sure operations are still being conducted smoothly.

My questions are:
1) Am I laid off? Even though the CEO never provided any notice? Is this legal for a company to do?
2) Will I be paid for the months (April to now) that I haven’t gone to the office? Even though the CEO instructed me to do so?
3) How do I get my pay current? Report to Labor Board?

If you’re not getting paid, you shouldn’t be working. Period.

(Unless you’re volunteering for a legitimate charity or nonprofit, which isn’t the case here.)

Have you been laid off? I don’t know. Have you asked what’s going on? I’m assuming you haven’t just stayed at home for two months without asking for an update on the situation, so what are they telling you?

They don’t need to give you official notice of laying you off, if indeed they have — they can simply tell you they can’t pay you now and that they’ll notify you when they can. And then theoretically, they could just never get back to you. That would be a ridiculous way to operate, but not unheard of. But rather than wondering, you should ask them.

That said, regardless of what they tell you, I would start an active job search — because a company that hasn’t paid you in so long is not a company you should be relying on for future paychecks. And you should realize, of course, that whether they say you’ve been laid off or not, for all practical purposes you have been — you’re not getting paid and you’re not going to work. You don’t have a job right now, no matter what you want to call it.

Will you be paid for the two months you haven’t gone to the office? I have no idea. You should ask. My bet is no, but I’m not the one to ask — your manager is.

If you did work during that period, you should be paid for that time (and could file a wage complaint with your state labor agency if you have trouble making that happen), but if they don’t have any money, that may not go anywhere.

In the future … if you’re not getting paid, don’t do work that you hope to get paid for at some vague future date. It too often doesn’t happen. If you do it, you’ve got to know that you’re doing it as a probable volunteer.

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{ 63 comments }

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    1. Yup*

      Ditto. I had no idea that this type of thing occurred with any regularity, til I read these posts on AAM — which are super helpful, because I certainly wouldn’t know what to do if I came up against such a bizarre experience.

      1. annie0*

        I went through a similar experience in the past few months – I’m getting paid again, thankfully, but it was so bizarre for me, I just didn’t know what to do. I was so glad AAM had already tackled it (as she has most things). It gave me the push to get out of denial and into a job search.

  2. 05girl*

    Any further information on how to ” file a wage complaint with your state labor agency if you have trouble making that happen” ?

    is this different from filing a small claims lawsuit? Which has greater benefit? I am in a situation where I did work for a 3-person small business operation and did not get paid. There is written proof that the business said they would pay me.

    1. The IT Manager*

      Were you an employee of the small business? Or did you agree to do the work on a contract?

      1. 05girl*

        @IT manager

        it was contract/consulting work. Like “help out a friend” type stuff. There was no formal signing that said “you will get paid $50 for x,y,z,” but there are documents that state his intention to pay me $50 for x,y,z.

        1. The IT Manager*

          I’m pretty sure* that you’d need to be an employee of the company to file wage claim so as a contractor a lawsuit is your only option.

          *not a lawyer or expert

          3. Jessa*

            Yep a wage claim by a contractor is a contract case, that I believe is small claims court.

          4. HRAnon*

            Agreed, but… could also depend on x,y,z.
            If x,y,z = for instance: come act as a receptionist for 6 hours on these days then you were not a contractor (unless you have a business set up to provide those services to multiple companies.) Calling you a contractor, or treating you as one does not make you one.
            If however x,y,x = I agree to pay you $50 to produce a brochure for me by with your own resources on your own schedule, then it’s likely a legitimate contractor situation.

    2. fposte*

      It’s completely different than filing a small claims suit (though they’re not mutually exclusive). Google whatever your state is and then “department of labor wage claim” (though not in quotes in the search) and you should get to your state department of labor’s relevant site. They’ve often got an online form you can fill out and just send in or submit.

      State DOL claims are the state against your employer. Small claims is just you against the employer. Even if you win, you still have to collect the money–the court doesn’t do that for you–and that’s the position you’re already in. See if the state can shake the money loose from them instead. But file quickly, because there’s a limitation on how long you have to file.

      1. fposte*

        Ah, an actual Employment Lawyer has weighed in below. Listen to her/him rather than me, because I am far from being an employment lawyer.

      2. 05girl*

        This is helpful still. I tried to find the business’ records on the SOS website and couldn’t find any, so i wonder how that may affect a State DOL claim. I’m thinking the State DOL are for registered businesses? This business says it’s an LLC but I’ve found no documentation on SOS website to confer that.

        1. fposte*

          If you were a contractor/freelance, then the DOL won’t get involved–it’s strictly a contractual issue for you. Which is probably something that you knew in the back of your head and why you were thinking small claims.

          (In case it’s relevant in future: the DOL doesn’t care if they’re registered or not. They hire you as an employee, they have to pay you for your work.)

          1. Chinook*

            This is yet another reason why pays to be an employee rather than a contractor. Even as a temp through an agency, if the company I am placed at goes belly up, my agency still has to pay me even if they never get paid.

            Forget the benefits, vacation & sick time, regular reviews, the best thing about being an employee is that you are put to the head of the line (I think) when it comes to getting paid.

  3. Stacie*

    I think it’s sad how much employees are willing to take before acting – 4 MONTHS of not being paid?? That’s just ridiculous!

    Can you file a wage claim or try to get unemployment going back to the last time you were paid?

  4. Employment lawyer*

    1) Do not file in small claims court without at least speaking to an employment attorney first.
    2) Wage claims can be made under federal or state laws. Generally speaking, whichever set of laws is more favorable to the employee will control.
    3) Most wage statutes are “fee shifting,” which means that the other side will pay your attorney’s fees. If you have a decent claim and a reasonable opportunity to collect, most attorneys in the wage-claim area will work on contingency.
    4) In some states (for example, my own state of Massachusetts) you can “pierce the corporate veil” for wage claims. What that means is that you can hold certain corporate officers personally liable if a company doesn’t pay wages, even if you were employed only by the company.

    As a start, you should look at your state’s branch of “NELA,” which is the National Employment Lawyers Association. Most states have their own chapter. For example, I am a member of massnela.org because I practice in Massachusetts. NELA membership (and NELA chapters) is restricted to attorneys who focus on protecting employee rights.

    1. AnotherEngineer*

      Washington state also holds corporate officers and their families personally liable for unpaid wages plus interest. My husband was able to collect almost $10k of wages this way by filling out the state wage claim form. No lawyer needed.

      It was still an incredibly long, drawn-out, and stressful process. Lesson learned: don’t keep working when the paychecks stop. It is shocking how many employers get away with this.

    2. littlemoose*

      Thanks for weighing in. I don’t practice in this area, but my (admittedly fuzzy) recollection is that, in most states, an employee’s wage claims are given high(est?) priority for satisfaction if the entity files for bankruptcy or dissolves. I’m sure it varies by state law, but is that generally the case? If so, I imagine it would behoove the employee to file a wage claim, to put themselves at the front of the line should the employer cease operations (which, given these drastic payroll problems, unfortunately sounds likely).

  5. Lanya*

    I had something similar happen to me. I was freelancing for a company on a per-diem basis, and over time they slowly stopped calling me to come in to the office. Which is fine, but they didn’t bother to tell me flat-out that they had hired a full-time remove freelancer and would not be needing me at all anymore. I could have been looking for other work while they were stringing me along. It would have been much less painful if they had just been up-front with me from the beginning.

  7. Jamie*

    It never fails to shock me how many people continue to work if they aren’t getting paid.

    I have a fair amount of loyalty to my employer and like the ownership on a personal level very much…but if my Friday direct deposit doesn’t clear my desk is empty Monday morning.

    That’s the very heart of our contract. I spend my days working for the company instead of home in sweat pants cuddling my dogs and playing pocket pond with my cats and in exchange for that they give me money.

    The money stops and my time frees up immediately. And what kind of employer isn’t ashamed to allow people to work without paying them?

    It would never happen, but if this happened I know for a fact the people who own my company would move heaven and earth at their own expense to make sure every one of us got what we were due.

    1. Sabrina*

      Completely agreed. You don’t pay me I don’t show up.

      A hat for a cat or a cat for a hat, but nothing for nothing!

    2. The IT Manager*

      I’d show up to work on Monday and spend the time trying to find out when I was getting paid. If it was not resolved, I wouldn’t keep showing up.

      1. Chinook*

        That is exactly what happened when working retail and the company was delayed in paying us via direct deposit the previous day. I am pretty sure that, if we hadn’t gotten a phone call from head office guaranteeing the cheques were beign fed exed to us at that moment (and gave the store manager the tracking number), we would have all turned around and left.

    3. Penny*

      Completely agree! All it takes is once for me to not get paid and I’m sure as heck not spending my time and money getting to the office and working to help a company that doesn’t care about my livelihood. I don’t even get how people can afford to not get paid for 4 months! Do these people not have bills? Maybe they’re lucky enough to have a spouse that can cover all the bills or something, but still.

      1. Jamie*

        My husband works but believe me when I tell you if my checks stopped he would not be silently happy if I continued to work as if nothing happened.

        I don’t get it either – principle aside I couldn’t afford to do that even if I wanted to.

      2. The Snarky B*

        Agreed – I’m wondering about what OP’s lifestyle is like that not knowing of you’re getting paid for 2 months of work or not is okay. OP, please come back- we’d love more details on this post! Good luck with getting your money!!

      3. danr*

        Once or twice far apart may be a deposit error, but you need to be sure. I had my paycheck bounced twice at my old firm before direct deposit. Both times they were errors caused by the bank… putting in the payroll deposit as a debit. They made good on the pay, paid for all bounced check fees and provided a letter to give to merchants and my home bank stating that it was their fault. And this was a major bank in a big city.

    4. EnnVeeEl*

      I am shocked how often this happens too! How can you look people in the eye and have them keep working for you, knowing you don’t have a check that will clear for them on Friday? I would feel awful running a company and I can’t pay people!

    5. KayDay*

      I’m shocked as well. And I work for a non-profit that I can legally volunteer for. But unless I have a separate agreement to do something on a volunteer basis, if I don’t get paid, I won’t show up. (I’d be semi-forgiving about a single administrative error, however). And I’m not motivated to work solely by the money–I care about my organizations mission and like the work. But it’s such an essential contract that I wouldn’t show up if I wasn’t getting my earnings.

    6. JoAnna*

      It’s easy to say this, but sometimes in practice the circumstances are different.

      Last May/June, my paychecks started bouncing. The company at first blamed it on bank error, user error (i.e., the accountant typed in the wrong wire transfer number, etc.). The other employees and I started getting suspicious. Finally, one payday we didn’t get a check at all, and were told that payroll would be “delayed” but hopefully only for a few days.

      My co-workers and I discussed not working, not coming in, etc., but everyone was afraid that we wouldn’t qualify for unemployment if we did so, since it’d be considered quitting or resigning. I called our state unemployment office but the lady I spoke to could not give me a definitive answer. All she would say was that it’s POSSIBLE we would qualify but she couldn’t say for sure until we’d actually filed a claim.

      We talked about filing DOL wage claim paperwork but our employer had 10 business days to pay us before they were in violation of state law.

      It was terrifying, not knowing what to do. We were afraid that if we quit and the payroll came through the next day, we’d have given up our jobs permanently for a situation that was temporary, and we had no way of knowing if we would be able to qualify for unemployment. All of us were frantically job-hunting in the meantime but we continued showing up to work in hopes that they would make good and we’d still have jobs until we could find something else.

      They did pay us before the 1o-business-day deadline, but those checks bounced. A few days later they wired our pay, plus reimbursement for bank fees and etc. No idea where they found the money, but I was just happy to be paid what was owed to me.

      A few weeks later, they announced that they’d sold off a portion of the company to their largest client for $10 million, and 11 of us were offered jobs with the client as part of the acquisition. Thank God, I was one of them, and I happily accepted. So, in the end, I’m very glad I hung in there — if I’d quit immediately after not receiving my check, I would not have been eligible for the new job (the client only offered positions to current employees).

      My former company is still in trouble, though. I keep in contact with some former coworkers (who are still there) and the company was evicted from their offices for nonpayment of rent. All the staff work from home full time and paychecks are still occasionally late and/or bounce. They’ve had huge turnover and changes in management (big surprise). I’m so glad I’m out of there.

      1. EnnVeeEl*

        I’m glad it worked out for you – but scroll up and see the link someone posted about a similar problem. People often don’t get an out like you did or their money. You have to assume the worst because that often happens.

        1. Ask a Manager* Post author

          I think she fully knows that but is making the point that it’s easy to say “oh, stop working” but it can be much harder in practice. Her story illustrates that really well.

      2. CoffeeLover*

        +1
        Case and point of a situation where people say they’ll do X, but when they’re really in the situation themselves they realize X might not be the best thing to do. It’s hard to makes claims like “I would never X” or “If it was me I would have Y” without actually being in the situation yourself.

      3. Jamie*

        Maybe it’s different in other states, but in Illinois unemployment is typically approved for all but the most gross misconduct and without question quitting because of lack of pay would be an automatic approval.

        I am glad it worked out for you, but I honestly cannot think of any circumstances for which I’d work if payroll wasn’t being met. It’s just such a violation of trust it changes everything – and frankly I’d want to spend my time looking for more stable work and I wouldn’t worry at all about “so tell me why you left your last job?” because if the interviewer is anything like me they will hear “they couldn’t meet payroll” and move on – few better reasons to go.

        It is great that it worked out for you, but I’d love to see the stats on this because I would bet for every happy ending like yours there are thousands who will never see the money they are owed unless they get an attorney.

        1. JoAnna*

          I researched it exhaustively and could not get a clear answer. Our state laws had clear language stating that if you quit or resigned, you didn’t qualify for unemployment – but on the other hand, if you quit “for cause” (sexual harassment, etc.) then you MAY be eligible for unemployment. But I could not get a straight answer either way as to if quitting due to non-payment of wages when the employers were still within the 10-business-day window allowed by state law would be considered quitting “for cause.”

          Most of my immediate co-workers and I had decided that if the 1o-day window allowed by state law passed and we still hadn’t received checks, we would file DOL wage claims and quit, then file for unemployment. But we did get our money (even with the bouncing fiasco) before that window had passed — and if we’d quit then, chances are we would not have qualified because our employer did pay us within the legal limits of state law, so we couldn’t claim we quit due to nonpayment of wages.

      4. Colette*

        I had a paycheck bounce once. The problem was that by the time I knew it had bounced, I was already 7 days into the next pay period.

        I made the decision to give them to the end of the week before walking – and they did get caught up by then. I was willing to chance working 2 weeks for free, but that was it.

        1. Jessa*

          Yeh ONE paycheque bouncing, I will give them as a screwup – it happened in a small company I worked for, and it literally WAS a bank error, they had an operating account and a payroll account and the banker who was supposed to make the biweekly transfer did not make it properly or at all. I saw the bank records. We were kind o f upset that it had bounced, and the owner showed them up as proof. All our fees were refunded if anything had bounced. And a system was put in that the billing clerk called the bank the day before to CHECK on the transfer personally from there out.

          My father was working for the State of New York when their financial troubles during the 70s caused the NY State payroll to bounce, THAT was a nightmare.

      5. KayDay*

        That’s interesting (and I’m sorry you had to go through that). I’ve been under the impression that one of the few areas where labor laws are really clear are regarding being paid and it never really occurred to me that one wouldn’t qualify for unemployment, but fortunately, I’ve never had to think of it beyond the hypothetical.

        1. 2013 Jobseeker*

          As states’ budgets have gotten tighter post-2008, and as the political climates in some states have favored cutting everything back wherever possible, some states have gotten very stingy with what does and doesn’t constitute “legitimate” unemployment. I had to go through a couple of rounds of investigation with my state (my filing was 100% within their rules and even within the spirit of their rules) to get and keep my benefits, and when my ex-employer switched payroll systems two months later, and all records from the past 5 years transferred to the new vendor, it flagged me as “employed” and the state started writing me nastygrams about fraud and unreported work and unreported income. It was a major pain.

          (Meanwhile when I tried to report actual income as earned through freelance work, the system wouldn’t let me until I fudged the numbers, because if freelance work came out to less than minimum wage you couldn’t submit it. Had to lowball all the hours I worked on project-flat-fee rather than hourly work.)

      6. fposte*

        Agreed. It’s one thing if I’m hourly at a mom-and-pop grocery store–it’s not like I’m going to keep coming in and schlepping tomato cans if you stiff me. But if I’m paid monthly, and I’ve got bennies and stuff going out to the public with my name on it, I’m not just going to walk away without knowing what I could walk to, and I might keep some things ticking over in case I was able to walk back into the situation. And of course I’d need to allow a little time for denial to melt, too.

      7. Chinook*

        Wait – you called DOL and no one could tell you if you were required to keep coming to work without a pay cheque? Wow! If I was at the receiving end of a call like that and didn’t know the answer, I would have put you on hold and found someone that could.

        1. JoAnna*

          All the lady I spoke to would tell me is that it was *possible* I would qualify, but for liability reasons she could not give me a definitive answer. She reiterated state law, which said that my employer had 10 business days from the end of the pay period in which to pay me before being in violation of the law. I asked about what constitutes quitting “for cause” and she said it was something that was discussed on a case-by-case basis, and that discussion could only happen after a claim was filed (and I couldn’t file a claim until I had officially quit/resigned).

          1. V*

            I know NY has a series of historical cases you can review that have set precedent for what is considered “good cause” for quitting. I’m sure other states have something similar. I reviewed a bunch of them and won my unemployment hearing.

      8. Layla*

        Happened to me too , but I didn’t get my money back.
        The first 2 months were – promises of cheques.
        Thereafter we took unpaid leave. My excuse was I needed surgery & time to recuperate. My colleagues were they were on employment passes hence remaining employed meant that their passes were not cancelled while they looked for new jobs.
        Not in the US; we don’t have wage claim or unemployment benefits. I went to labour court , got a judgement but could not collect.
        Was living with my parents then. Would never do it now !!!

      9. annie0*

        Yes! Thank you for posting Joanna. When my company stopped paying us for 2 months, it was similarly vague week-to-week as to whether and how we could qualify for unemployment. And, as AAM makes abundantly clear, a job search typically takes a lot longer than 1 pay period. I didn’t want to quit a job without another job, even if the first one wasn’t paying at the moment. It wasn’t fun, it wasn’t good, but it was a bit more complicated in practice than many commenters are suggesting here.

        1. Jamie*

          I will admit I didn’t take benefits into account when I said I would leave immediately, because I have them through my husband so it’s a cleaner break for me.

          I guess I don’t get the not quitting without another job, even if the job isn’t paying…because for me that’s not a job – it’s a volunteer gig.

          I do respect the more cautious and judicious approach to that – I just wouldn’t be able to do it. To me the lack of pay (and barring a one time actual clerical error) is such a deal breaker I would not be able to bring myself to continue to work.

    7. Liz in a Library*

      Yep. I really enjoy my job, but there is no job in the world that I love so much that I’d just keep trucking for months without pay. If for no other reason, then simply because I could not afford it…

    8. Lynn*

      Yes. My husband owns a small business. In the early days of the business, sometimes he took cash advances against his personal credit cards to meet payroll. I can’t imagine these kind of shady dealings.

    9. anon attorney*

      I once worked for a small practice which went through some bad times, and the partners once met the payroll out of their own pockets. Had things not improved I wouldn’t have wanted to work for free but I also had clients, some of them pretty vulnerable, whom I couldn’t have just walked out on. There was nobody else in the firm who could have helped them. So I can understand that it’s not always as simple as it looks. However, I also at that point started looking for another job, which I got quite quickly, and had a managed transition. So as others have said, that’s probably the ultimate solution.

  8. Vicomte*

    I’m wondering if this company’s practice of hiring the type of people who will work for so long without pay is perhaps one if its problems.

    1. Liz*

      This sounds a little like victim-blaming to me. I think the greater problem is probably cultivating the type of upper management that will encourage people to work for months without pay.

      1. Vicomte*

        Indeed, there are time when a “victim” holds partial responsibility for his predicament, i.e., not seeing the forest for the trees. Why this person continues to sit at home without pay and make sure operations are still “conducted smoothly,” while apparently not seeking another job, is a mystery. Which leads me to wonder how operations continue to be conducted at all when the company has no money.

      2. Coco*

        Sorry, I disagree. This is business. Management didn’t pay. At that point, it was up to the employee to react. He/she chose to keep working without being paid. That’s on him/her.

        No one can treat you bad unless you allow it. Sure, they may try but it’s up to you to not take it.

  9. PJ*

    LW, not only should you immediately stop working for this employer, but you should not start again until you have been paid up to date. Stop answering emails immediately. And make a record of all time that you have worked since they sent you home.

    Talk to the highest level person you can reach TODAY and if you don’t get a satisfactory answer your next stop should be as suggested by the employment attorney above.

    Then, before the day is over, apply for unemployment, and see if they will make it retroactive.

    You have an agreement with your employer. They have failed miserably to hold up their end, and have left you hanging. All bets are off.

  10. anon-2*

    I don’t know about your state – but here in Massachusetts–

    a) – intentional non-payment of wages is a felony – a criminal offense.

    b) – if the company is bankrupt – you’ll be first in line to get money if you put in a claim.

    c) – if the company ISN’T in bankruptcy – and is still running and bringing in revenue, see a) above.

    1. JoAnna*

      In my state (AZ) non-payment of wages is only a petty offense — less than a misdemeanor. It’s punishable by a maximum fine of $1,000 for businesses.

  11. Anonymously Anonymous*

    To me it sounds like you were laid off by the CEO response ‘don’t come back in until funding issues are resolved…’

  12. Sara M*

    Just a datapoint–this happened to my husband. CA law considers such a drastic change in pay (i.e. dropping to zero) as a qualifier for unemployment. Many of his coworkers kept working for a month because they really believed the company would pull through somehow. Of course it didn’t.

    Anytime your paycheck stops, it’s time to get out of there (with rare exception, like the story above).

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