Worked as an independent contractor, now they won't pay me

Hi all,

I’ve appreciated this message board since I’ve run across it, and I thought this might be a good place to throw out a question.

I recently worked at a nonprofit organization for a few months as a teacher of English as a second language, to adult learners. At the beginning of my work there, I wrote up an independent contractor agreement at the executive director’s request, and she and I both signed it. It stipulated both my hourly pay and the dates on which I would be paid every month.

Well, now the executive director has conveyed to me, though not in so many words, that her grant funding has been cut off, and as for the money she had agreed to pay me for those classes–see ya, wouldn’t want to be ya. She’s not going to pay me if her grantor doesn’t pay her.

I’ve sent her a certified letter stating that our contract isn’t contingent on her grant funding, and one way or another she still owes me just short of $1,000. And of course, she’s ignored me.

I have a couple of questions about this case:

[li]I believe I can represent myself in small claims court, but is there any way to get legal representation or advice that would be cost effective in view of the (relatively) small amount?[/li][li]I’m thinking of complaining to our state’s Workforce Commission and to the Internal Revenue Service, to the effect that this person has wormed her way out of paying payroll taxes and complying with paycheck laws, by classifying me as an independent contractor when I really should have been an employee. But would I expose myself to possible legal problems as well, since she might argue that I went along with this willingly? I’m especially concerned that the IRS might accuse me of dodging withholdings.[/li][li]Can small claims court effectively enforce any judgment in my favor, or will she be able to ignore them as she’s ignored me up to now?[/li][li]And finally, are there other avenues to get this lady to pay, and (secondarily) help, ahem, educate her that it’s a mistake to treat independent contractors this way?[/li][/ul]

Thanks very much,

Matteo Ricci

If you win, the small claims court will give you a Judgement Order against her.

Then it’s up to you to get that collected. Many times the losing party will just pay it. That’s the best thing for you.

Or you can go to the local sheriff and ask them to collect this legal judgement. But, since such collections are rather low priority for sheriffs, they probably won’t do much unless you can give them the needed information to collect it. Things like the name of the bank where she has an account. Or the location of specific property (non real-estate) that can be seized to fulfill this judgement. Assuming she has property worth $1000 that you want. In general, unless you can find where she has cash or financial accounts, it’s hard to collect.

[Note – you’ve been saying ‘she’ owes you. Is it really her, or the non-profit organization that she heads that owes you? It’s important to have that straight.]

You might also find out who the previous Grantors to this organization have been (usually given in their website or annual report), and write to each of them (cc to her, of course) stating that you have a legal judgement against this organization for failure to pay wages, and asking them in any future grants, to pay your judgement first and then send the remainder of the grant to her organization. They are probably unlikely to do so, but it will certainly make them ask questions. It might also cause all the grants to this organization to dry up, so it goes out of business, taking with it any chance to ever collect your judgement. That’s a risk you take.

There are companies like this one, as an example–but I have no idea how much they charge. It looks like there are various agencies like the American Collectors Association that they become members with, though, so you should be able to track a local one down by asking the association and then ask about the pricing.

I have never worked with such a company, so take this is a “researchable course” not “recommended course.”

Just because you both signed an independent contractor agreement does not me that you were one. You may be classified as an employee and have protection from your state.

If you had set hours and a schedule you were probably an employee not an independent contractor.

You might check out this site to see where you fall.,,id=99921,00.html

Get your small claims judgement in hand. Make a donation, by check, to the agency, and after the check has cleared, get a copy of it , qand see what bank and account it was deposited into. With that info, you can file a lien against the account and have it frozen until they pay you off.

I also suggest that if you go to small claims, tack on your legal expenses to the damages.

I don’t know the process, but a friend of mine and his wife own a couple of rental properties.

They a tennant skip on them. Were able to obtain a court order for payment, but the court order was ignored. This is the part I don’t know about: Somehow this bad debt ended up on the tennant’s credit report.

Fast forward ~15 years: Deadbeat tennant wants to buy a house. Can’t because of outstanding judgment. Credit agency won’t remove the information, because it is demonstrably accurate. Deadbeat tennant sues my friends over claim. Court finds claim to be valid. Issues new judgment for origional judgment + interest+ plus leagle fees incurred defending the second suit + punitive damages. Now the deadbeat’s credit is well and truely screwed. Oh and guess what? Not even bankruptcy can get her out of it.

Eventually the deadbeat pays up so she can buy her dream home.

This was pretty much manna from heaven for my friends because they had long ago given up on collecting this debt. Even though unsuccessful initially, it payed of in the long run.

Independent contractor? You mean like a hitman? And they won’t pay you?

I’ve seen enough movies to know that the next step is obvious! :wink:

I have a friend like Kevbo’s with rental property in Boston. Many of his tenants are college students who are attracted to the idea of skipping out on the last several months rent and don’t seem to care much about their credit rating.

Apparently, back in the days of rent control, it took something like 14 months to evict a non-paying tenant. This was true if the landlord did everything right - one legal misstep and the clock was reset. If the tenant didn’t know the right way to do this, he could call the Mayor’s office and get free legal advice.

So my friend would up with more than a few tenants who left owing 14 months rent. His only recourse was an entry on their credit reports.

But time passes - the carefree student gets married and wants to buy a house. The bank says “Hey, your job & income look good, but there’s this entry on your credit report from 7 years ago that says you owe several thousand dollars. There’s no entry from you disputing this, so you’ll need to get it cleared up.”

My friend has received several calls from such former tenants. They usually begin with “You probably don’t remember me, but …” to which he responds “Oh, I remember you just fine.” They eventually pay in full.

You haven’t mentioned what kind of charitable organization you did the work for. If it is strictly a local organization this advice won’t apply, but if they are part of a regional or national organization you might want to contact the main office and explain the situation. The parent group isn’t going to want lawsuits smearing their reputation and may well put pressure on this group to pay up to avoid bad publicity.

Did I say publicity? One of your local newspapers or TV stations might be interested in this story. People don’t like to donate money to organizations that stiff workers, so the threat of negative publicity might helo you out.

Just so you know, the part of that debt not dischargeable in bankruptcy was the defendant’s legal fees + punitive damages. Bankruptcy would have gotten her out of her tenancy debts, barring certain unlikely scenarios such as genuine fraud in obtaining the apartment rental.

Assuming the deadbeats don’t care about stiffing people, that was pretty stupid to pay up. Deliquent debts fall off your credit report after 7 years, whether you pay them or not. They were probably within a few months of being free and clear.

My state has specific criteria that define independent contractor status; you may want to look at the requirements in your state. Here are a few that apply in Oregon:

  1. The Contractor is free from direction and control over the means and manner of providing the labor or services, subject only to the specifications of the desired results.
  2. The Contractor is responsible for obtaining all assumed business registrations or professional occupation licenses required by state law or local ordinances.
  3. The Contractor furnishes the tools or equipment necessary for the contracted labor or services.
  4. The Contractor has the authority to hire and fire employees to perform the labor or services.
  5. has filed federal and state income tax returns in the name of my business or a business Schedule C as part of the personal income tax return, for the previous year, or expect to file federal and state income tax returns, for labor or services performed as an independent contractor in the previous year.
  6. will furnish the tools or equipment necessary for the contracted labor or services.
  7. has the authority to hire and fire employees who perform the labor or services.
  8. The labor or services are primarily carried out at a location that is separate from my residence or is primarily carried out in a specific portion of contractor’s residence, which is set aside as the location of the business.
  9. Commercial advertising or business cards are purchased for the business, or contractor has a trade association membership;
  10. Telephone listing is used for the business that is separate from the personal residence listing.
  11. Labor or services are performed only pursuant to written contracts.
  12. Labor or services are performed for two or more different persons within a period of one year.
  13. assumes financial responsibility for defective workmanship or for service not provided as evidenced by the ownership of performance bonds, warranties, errors and omission insurance or liability insurance relating to the labor or services to be provided.

These are pretty general, but are required for someone doing business with the state as an independent contractor.

Courts will generally hold you responsible for whatever documents you’ve signed, provided you’re of legal age.

My guess is that it is indeed the organization who holds the contract, not her personally, although she may be named as the contract administrator.

Good luck with the enforcement problem. The alternative would be to send Louie & Big Frankie around to pay her a visit, but not one I’d recommend.

Consumer statements disputing credit items do not help. I’ve never seen, nor seen any evidence of, any positive consideration that a lender may give you for putting a consumer statement in your credit file.
If you have a bogus negative, just provide proper notice to the alleged creditor.
If they won’t fix it…
Apply for a mortgage. Get the denial letter or notice that you’re being given an unfavorable rate due to credit.
Sue for the lost money due to a higher rate or paying 30 years of mortgage vs rent.
Once you have a judgement for the additional interest, they’ll likely be willing to remove the credit notation if you are willing to drop some of the judgement.
By and large, though, if the tradeline is bogus, 99% of creditors will have it deleted within a week or two of your first call or letter to have things straightened out. It’s the other 1% you hear horror stories about.

That’s genius, Bob.

Funny thing is, paying off an old delinquint debt just resets the timer. Sure it shows as paid in full, but that delinquincy is on the report for another 7 years.

I was wondering, if say you’re a landlord who’s holding a seven year old debt . . . is it true you’ve got to eat that debt after seven years, that there’s no way to keep that debt active and ready to go after a deadbeat when they finally have a reason to clean up their credit report? If it’s true that bad debts fall off credit reports after seven years, no business person in their right mind would ever sell anything expensive for anything other than cash for fear of customers refusing to pay and knowing they only have to wait for seven years for the negative information to fall off of their credit report?

Dead wrong. If one of your creditors does this, it’s illegal re-aging and subjects them to civil prosecution under the applicable SOL and the Fair Credit Reporting Act.
The date that the timer begins ticking at is no later than the date at which your debt went 180 days late, UNLESS you enter into a new agreement or open a new account with the creditor.
If anyone ignores that, it is a violation.

Your ability to ding someone’s credit only lasts 7.5 years from when they were on time, but your ability to sue them is on a different timer.
Your state will have a statute of limitations for a given type of debt.
Google “statute of limitations by state” if you want comprehensive details.
If you sue before the SOL runs out, then you will preserve your rights to some degree. This varies by state, but in many states you can keep an old debt alive for decades if you can afford to keep going to court on it.

[Disclaimer: Some of this may be changing when the bankruptcy reform laws take effect. I am ignorant of much of that law.]

I worked as an independent contractor for many moons. One thing near the top of the list of things to do is to have a weekly status report, with your hours, what you did in those hours, and how much you are charging, signed by your supervisor. I thought this was all a big waste of time, until the day came where a client tried to stiff me out of about $7K. My lawyer called them with my signed timed sheets in his hand, they didn’t have a leg to stand on.

A bit of Monday morning quarterbacking here on my part, but, next time …

Oh, if you know a lawyer, have him call or write a letter to them. A letter received from a lawyer tends to put into a higher priority queue.

It’s not true. It will only be listed on their credit report for 7 years, the debt itself is still owed forever (or for whatever limitations your state puts on it).

At one time I worked for a state government department which had many unpaid debts from people using state hospitals. Those debts were collectable, even after the person died! We had an employee who monitored all deaths reported in the state, checked them against our debtor list, and filed claims against the estate of any that matched. She brought in quite a bit of money from this! Enough to cover her own salary many times over.