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ScottyMacEsq
ScottyMacEsq, Lawyer
Category: Employment Law
Satisfied Customers: 16052
Experience:  Licensed Texas General Practice Attorney
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Hello, my wife entered into an independent contractor agreement

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Hello, my wife entered into an independent contractor agreement with a direct selling company to be a manager. She worked for the company for 7 years and recently submitted her 30 day advance written notice of termination. She offered to transition her team within that 30 days but the company ultimately ended the relationship immediately. The paid her commission for the 11 days in the month she submitted her resignation but did not pay her for the 19 days in the following month.

At the time of her resignation, she received an email from her manager stating she would only be paid through May and she replied with, I submitted a 30 day advance notice of resignation and expect to be paid those 30 days.

No report was ever sent outlining her commissions for the period that ended on June 19 and she was never paid by the 10th of the following month as stated.

We submitted a letter outlining the facts of the 30 day resignation and the material breach for non-payment of commissions from June 1 to June 19. (the main consideration in the contract since she did not receive a salary)

Effectively we used Paragraph 12(b) - Immediate termination for material breach clause to terminate the contract and rescind any rights given and cancel the contract.

Do we need to do anything else or does the letter service truly complete the contract termination.

ScottyMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

ScottyMacEsq :

Just to be clear, the contract provides that both parties will give 30 days notice for any resignation / lay off situation?

Customer:

Termination


This agreement shall continue in full force and effect until terminated according to one of the following provisions.


(a) Either party may terminate this Agreement, with or without cause, upon thirty (30) days advance written notice to the other party

ScottyMacEsq :

I see. In this regard, it's pretty clear that they will have to pay for the 30 days. The fact that they breached by immediately terminating means that you don't have to do anything, and certainly don't have to rely on 12(b). 12(b) here means that if there was a material breach of the agreement, they could terminate her immediately without giving 30 days notice and without paying her.

ScottyMacEsq :

But since they were first in breach, while you can let them know that they were in breach by this termination, you're under no obligation.

ScottyMacEsq :

Rather, I would send a demand letter demanding payments of monies owed within 30 days.

ScottyMacEsq :

Send a demand letter demanding payment within 30 days, otherwise you will pursue legal action against them, seeking that amount plus any additional damages as allowed by law. Send this letter certified, return receipt requested, as well as a copy sent regular mail. Keep a copy for yourself, as well as the return receipt number so that you can show the court that you made a demand for the unpaid wages.

ScottyMacEsq :

Do a search on the web for your county and "small claims court." You should find either a website or phone number to the small claims clerk. Ask them what you need to do to bring such a lawsuit. The small claims clerk will give you guidance on how to file this suit and how to get the other party served with notice. You will receive a hearing date, at which you should present your evidence and ask for a judgment for the amount that you should be paid.

ScottyMacEsq :

Luckily small claims courts in Tennessee have the highest amount in controversy limit. That is, if you're claiming anything under $25,000, that can be heard in small claims court.

Customer:

So through their breach, the contract is essentially cancelled

ScottyMacEsq :

If the contract also has an "attorneys fees" provision (that the losing party will pay attorney fees to the winner in a lawsuit) you can contact an attorney, but I would think that small claims court would be the quickest way to recover.

ScottyMacEsq :

Yes.

ScottyMacEsq :

Breach by one side relieves performance by the other.

ScottyMacEsq :

So the moment they terminated her immediately without good cause, that was a breach, even though she gave 30 days notice.

ScottyMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!

ScottyMacEsq :

Did you have any other questions before you rate this answer?

Customer:

one last one

ScottyMacEsq :

Okay...

Customer:

they sent her a letter about non-compete and non-solicitation

Customer:

cease and desist

Customer:

what you said is their immediate termination cleared the path for contract cancellation and we don't have to worry about any of that

ScottyMacEsq :

A non-compete / non-solicitation is a separate clause, and generally the initial employment is the completion of that contract. So if she were to compete / solicit, that could, potentially be a problem, unless she could show that it was inextricably intertwined with the rest of the contract such that it could not be severed.

Customer:

right she was an independent contractor

ScottyMacEsq :

I understand that.

Customer:

and it is part of the same contract

Customer:

so the question is, since they breached this contract by immediately terminating her, does this clause go with that

ScottyMacEsq :

Contracts and contractual clauses contemplate various stages of completion. Typically a non compete / non solicitation will be "complete" upon hiring.

ScottyMacEsq :

Now courts are far less likely to enforce a contract against someone that was fired.

ScottyMacEsq :

But considering that she was fired after resigning, a court might still enforce that.

ScottyMacEsq :

Now that being said, enforcement of non-competes is expensive.

ScottyMacEsq :

If they were to sue, that would be in the 5 digit range.

ScottyMacEsq :

Cease and desist letters are cheap.

Customer:

for them

ScottyMacEsq :

Yes.

ScottyMacEsq :

It's not unusual to see cease and desist letters, but it's very unusual to see actual litigation except in very high level executive positions or in situations where there are very valuable trade secrets.

Customer:

yeah, i would imagine a non-compete saying your cannot sell a specific product anywhere in the use is too broad

ScottyMacEsq :

That probably would be.

ScottyMacEsq :

(and they would analyze their chances of success and any defenses that would come up before suing and making that investment)

Customer:

yeah it would not be a good use of this companys funds. With revenues at about 200k per year, spending that would be silly

ScottyMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!

ScottyMacEsq :

Yes. That would probably be a frivolous expenditure.

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