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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 6800
Experience:  Significant experience in all areas of employment law.
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This question is for Josheph is possible. I have a new question

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This question is for Josheph is possible. I have a new question regarding my CA LLC that I am employed with. They now owe me 6 payrolls in arrears and have paid no sales commissions in 2013. Are you available to answer this as a new question? Thank you.
Submitted: 10 months ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 10 months ago.
Good evening.

It appeas Joseph is not online. Since it has been a while since you posed your question, would you like me to answer it for you? If not, I'll be happy to send Joseph a PM alerting him to your question.

Please advise.
Customer: replied 9 months ago.


Patrick, yes I would like to talk to you about this. Are you available?

Expert:  Patrick, Esq. replied 9 months ago.
John,

Thank you for your reply. I am very happy to assist. Just let me know what your specific question is...
Customer: replied 9 months ago.


Patrick, I tried to send an reply earlier today. Did you receive it?

Expert:  Patrick, Esq. replied 9 months ago.
John,

I am very sorry but all I have recived is your post directly above: "Patrick, yes I would like to talk to you about this. Are you available?"

If you would be so kind as to retype your reply, I would appreciate it. I am very sorry for the technical glitch.
Customer: replied 9 months ago.


I am leaving right now. I will send it over this weekend and you can take a look at it. Thanks for your help.

Expert:  Patrick, Esq. replied 9 months ago.
No problem at all. I look forward to assisting you and in the mean time, enjoy your weekend.
Customer: replied 9 months ago.


You too. Thanks.

Expert:  Patrick, Esq. replied 9 months ago.
The system requires me to be the last one to respond (silly technical glitch). Please ignore this message and contact me over the weekend whenever you have time to discuss this matter.
Customer: replied 9 months ago.

Patrick, I have worked for a CA LLC in the electronic display industry for 4+ years as VP Sales. There are only 5 employees. I don't have a contract, but "normal course of business" during this entire time is $85,000 salary (pd bi monthly) + 2.5% gross sales commission. The company is owned 97% by an Equity Fund LLC that has total decision making authority and also much give permission on all checks written. The "Partners/LLC" also have entitled themselves to be paid a monthly management fee, although I'm not sure if they have taken any out to date. I have been told by people who have seen our books, that it is a "substantial amount of money" and whether or not it has been taken out, it is definitely listed on our books as an expense. The Partners claim to have put approx. $2.5 million into the company during the past several years. This year sales have been down. The Partners decided several months ago that they would not put any more money into the company and have ceased making payroll, except if/when receivables come in and allow it to be paid (for all 5 employees). I am currently owed 6 payrolls (going on 7) in arrears and have not been paid any commissions (approx. $14,000) in 2013. My personal financial situation is nearing bankruptcy. I know that I can file a claim with CA Board of Labor Relations...., but have hesitated to do it yet. When I discussed this situation with Joseph on JustAnswers in late August, he told me that if the Partners decided to bankrupt the company, the corporate veil would be able to be pierced and the employees could go after their LLC because a court would recognize that they owned the VAST majority of the company and had total decision making authority, so they would not allow them to hide behind that corporate veil. I am still considering filing a claim, but I am weighing the advantages vs. disadvantages. I actually have some very large orders in the sales pipeline that would help to remedy to payroll situation IF they do come to fruition. The Partners are well aware of this...., but still refuse to put additional money into the company to help alleviate the financial problems each of the employees are experiencing from not being paid. It's really a sad situation for all of us. IF I do decide to file a claim, how quickly does the Sate take to act? It is my understanding that it takes several weeks....and then a "consultation" takes place where the parties try to "work things out" via a mutal agreement. I think the Partners would actually just take advantage of that extra time to see if the anticiapted orders are coming in or not.....so the threat does not intimidate them. However, is there any stance/method that State could take to order the Partners to put the money into the company to meet payroll or be immediately ordered to shut the company down? Since the Partners know there are potential orders starting to happen, wouldn't it be in their best interest to invest the additioanl money (probably less than $100,000 total) to cover payroll (and do the "right thing"), or risk having the State order the company to shut down...and they would lose their $2.5million + any upside potential to finally recoup the investment and generate revenues? Is there any way the State can force that decision to be made by them? Thanks.

Expert:  Patrick, Esq. replied 9 months ago.
John,

Thank you very much for your reply. I am very sorry to hear about this unfortunate situation and the state of your personal financial affairs.

First, I must note that the fact the owners are delinquent with payroll would likely be insufficient on its own to pierce the corporate veil. Only if you can demonstrate that the LLC was "markedly noncompliant," or if holding only the LLC liable would be "singularly unfair" to you as a creditor/plaintiff, would you be able to go after the owners in their personal capacity for what you are owed. For a great summary of the factors courts will consider in determiing whether to "pierce the veil," see the seminal California case on that topic here: http://scholar.google.com/scholar_case?case=17577914281106046705&q=associated+vendors+oakland+meat&hl=en&as_sdt=4,5

I start here with my answer because you seem to be basing your planned course of action on the assumption that you will be able to go after the owners personally once you obtain a judgment, and that very well may not be the case.

You are correct that it typically takes several weeks for the DLSE to issue a judgment with regard to wages owed and unfortunately there is no way to speed that process up. However, the question here seems not to be whether you are entitled to be paid (what the DLSE determines) but rather whether your company can afford to give you what you are owed. Thus, while the DLSE would quite certainly issue a ruliing your favor, that ruling--even if sped up--would not seem to address your problem here, which is that the LLC is financially incapable of immediately paying you without liquidating assets and going out of business.

As an alternative to the DLSE, an employee in your circumstance can file a lawsuit in civil court. The judicial process is not any quicker, but a prevailing plaintiff on an unpaid wages claim is entitled to attorney fees and costs in addition to the actual amount of wages owed. (See P { margin-bottom: 0.08in; }Labor Code sections 1194.5 and 218.5) Perhaps this threat of additional liability will at as an incentive to get your employer to do everything they can to pay you now rather than be liable for an additional attorney fee judgment when you prevail it court.

Considering the financial status of the LLC, though, perhaps it will not. If they are not worried about piercing the corporate veil, and if they don't have enough in the way of assets to satisfy your wages anyway, additional liability won't matter. There are really a lot of variables here and I'm not in a position to predict outcomes or reactions, but this is an additional consideration you should take into account.

All in all, there are no perfect solutions here. You can "chance it" and keep working without pay in the hope things turn around with your anticipated revenue. Alternatively, you can quit and collect unemployment benefits (normally when a claimant quits they are denied, but when the claimant has not been paid and has made reasonable efforts to get paid, they can quit with "good cause" and still be eligible), look for new work, and take legal action either through the DLSE or in civil court.

Here on Just Answer we are limited to providing information about the law--we cannot provide actual "legal advice" and so I cannot tell you what to do. I do hope, however, that the information I have provided is helpful to you in making your own decision, and I encourage you to ask any followup questions if necessary.

If you do not require any further assistance, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes and kindest regards.
Patrick, Esq., Lawyer
Satisfied Customers: 6800
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you
Customer: replied 9 months ago.


Thanks.

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