I run a small business that works with independent subcontractors. A former sub contractor was removed from my work pool due to her lack of reliability. Her pay was mailed to her via USPS money order a few weeks ago. She contacted me claiming to have never received it. I placed an inquiry on the money order to find out of it has been cashed, and if so by whom and when. The inquiry can take up to 60 days. She has been made aware of this. She contacted my clients claiming to have been defrauded and is threatening to contact the DOL. What can I do to protect myself at this point and my business as she is making false claims against me.
2 Answers from Attorneys
This is a mess! A few reminders -- you never pay an employee with cash (or, in your case, a money order). It is very hard to track, and very easy to steal. Secondly, you never send important documents without tracking -- certified mail.
In answer to your question, the employer is responsible for paying the employee. Period. Under DC law, payment should be made at the time of separation, or the next pay period at the latest. Federal law -- controlled by the FLSA -- requires payment of all hours. Failure to pay results in full pay, plus the amount being doubled, and possibly tripled, if bad faith is shown. Also, you will have to pay all attorney fees associated with the other side. Generally, a bad idea.
How to fix this? You need to provide her payment immediately. Get a signed release from her indicating she was paid. Have her come to the office for a company check and signature sheet. You can track prior money order to see where it went. If the money order was made out to her, and someone else cashed it, you can go after the check cashing location, or bank, for failure to verify signatures or ID. You don't want a legal fight on your hands AND have to pay the amount again.
Information on FLSA can be found at 29 USC 201-219. DC wage and hour laws can be found here: https://does.dc.gov/sites/default/files/dc/sites/does/publication/attachments/DOES_wage_hour_rules.pdf.
Have additional questions or need help? Call us! You can reach my firm at 1-800-579-9864 or 7022-402-2723. Or, send us an email: [email protected] We can help with all business and tax related questions -- including wage and hour issues.
I meant to include this caveat in my original post: although you indicated the individual in question is a sub-contractor, it is common for legal suits to be brought under the guise of "employee." If there is any chink in the independent contractor contract or agreement, the individual will be found to be an employee, and my answer will apply.
If the person is, in fact, an independent contractor, then legal action accrues not under the guise of FLSA or wage/hour, but rather as breach of contract and unjust enrichment. Her interference with your contracts is potentially actionable at that point, as well.