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I am in IT consulting business. recently a consulting firm…

I am in IT consulting...
I am in IT consulting business. recently a consulting firm "A" hire me to work as consultant for one of fortune 500 companies after consulting firm "A" has done all of background checks. my badge at client side shows consulting firm "A" consultant. I report work timesheets directly to consulting firm "A". However I use my S corp to sign corp-to-corp contract with middle man company "B" which has contract with consulting firm "A". I receive pay from middle man company "B". There are always 5 weeks hold payroll after each pay day. This is my first time doing corp-to-corp and I do some concerns about those 5 weeks hold payroll. What if consulting firm "A" or middle man company "B" suspend payroll due to financial problem which cause I lose 5 weeks hold payroll? Is there any insurance I can buy for my S corp to claim 5 weeks hold payroll in case that happen? Can I file lawsuits against liability insurance for consulting firm "A" or middle man company "B"?
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3/14/2018
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Customer reply replied 4 months ago
please connect my question with expert
Law Educator, Esq.
Category: Business Law
Satisfied Customers: 125,860
Experience: All corporate law, including non-profits and charitable fraternal organizations.
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Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

Once you signed a company to company contract for payment, it is no longer payroll where you are an employee, it is a contractual agreement and it is paid under the terms of the contract. Had you been an individual employee, they would have to pay you under the payday laws on a regularly scheduled payday.

So, at this point, you can sue the party you have the contract with if they are not paying in accordance to the contract and your suit would be for breach of contract, since you signed as a company to company agreement and because you signed that agreement you would need to sue B, since A is not the one guaranteeing your payment and they allowed you to sign the company to company contract with B.

Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page, as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.

Law Educator, Esq.
Category: Business Law
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Customer reply replied 4 months ago
Ok got. So I am either business partner or 1099 contractor with party "B". Only W-2 will involve party "A" and "B".
Usually party "A" is big and good track record company. but middle party "B" is very small company. if part "B" is not out of business, then I maybe sue it. but I am also looking for insurance claim in my company if party "B" out of business or bankruptcy, the problem could start with total 7 weeks payroll which means always 5 weeks payroll hold plus the following scheduled two weeks pay. If I do hard stop to refuse work at 7th week, then I will sue for 7 weeks payroll. but nobody do hard stop at 7th week and always try to resolve peacefully after 7th week and continue work toward 8th week. But 8th week is definitely a hard stop no matter what.
7 or 8 weeks payroll is a lot lot money for IT consultant. Is there any insurance my company can buy so that I can claim in case that situation happen?

Thank you for your reply.

You are a business if you signed a business to business contract between your S corp and B. So your S corp is a contractor to B.

There is no general insurance you can buy for this. You can get specialty insurance for anything, but it is going to be VERY expensive to go to a insurance agent for insurance on this contract for breach, you can get it but the cost may be very high (I am not an insurance agent, so I don't know).

Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page, as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.

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Customer reply replied 4 months ago
ok one thing is very important that part "A" signed contract with client fortune 500 company to send part "A" consultant directly to client. Client will ask part "A" doing background check according to client standard (10+ years employment history). client only recognize consultant from part "A". also part "B" said his company cannot send any consultant directly to client fortune 500 company. I believe this is a very special situation apart from general contract without part "A" and client involvement.regarding 5 weeks payroll hold are on part "A" side. so when lawsuit occur, can I ask court to put restraint order on 5 or 8 weeks payroll hold on part "A".

Thank you for your reply

Yes, when you file suit you would be able to ask for a pre judgment lien on those funds.

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Customer reply replied 4 months ago
I agree to work for part "A" and part "A" accept my employment after 10+ YEARS EMPLOYMENT HISTORY VERIFICATION required by client fortune 500 company. so party "A" and client fortune 500 company think this is employment. this makes it very special case here.

Thank you for your reply.

Everyone thinks they have a "very special" or unique case. It is still a breach of contract case with B. As far as A, the case against them depends on the contract agreement you have with A. A could be breaching their contract with you as well.

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You legally are not an employee of A when your company entered a contract with B.

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Customer reply replied 4 months ago
yeah, thank you. now I am clear. I would be able to ask for a pre judgment lien on those funds and file lawsuit against "A" for breaching of contract because part "A" told client fortune 500 company I am part "A" consult (not company) and represent part "A" and client issued me a badge as part "A" consultant. all those HIDDEN written evidences could be used for filing lawsuit against A" for breaching of contract.
Customer reply replied 4 months ago
I am in double situation 1) I entered contract with "B" 2) part "A" entered contract with client fortune 500 company indicating any consultant sent by part "A" representing part "A" in client company. but NOBODY sees this contract but evidence strongly suggest this context in part "A" contract with client.

Thank you for your reply.

But it depends on what the contract agreement you have with A is as to what A is liable to you for. You know what B is liable to you for because you have a contract between B and your company.

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Customer reply replied 4 months ago
1) both party "A" HR and client HR!! acknowledge I represent part "A" 2) I am required to perform work at client by part "A" 3) I am required to report timesheet to part "A" 4) party "A" can hire / fire me at any time
Customer reply replied 4 months ago
I signed contingent contractor employment agreement with part "A" for background check under client HR standard
Customer reply replied 4 months ago
take one step back, if I only have pure 100% corp-to-corp relationship between my company and party "B", then party "A" will not involve background check
Customer reply replied 4 months ago
correct me if I am wrong. usually my company contract with party "B" doesn't involve employment background. this is required by client on my name and required by party "A" on my name and my SSN and employment resume

Thank you for your reply.

You are not an employee of A if it is a contractor agreement with A. And if the contract with A does not specify they pay you, they are not involved in the pay agreement between YOU and B.

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Customer reply replied 4 months ago
right, there is no pay agreement between "A" and my company or me
Customer reply replied 4 months ago
In case bad thing happen, this is I am going to do 1) file suite against party "B" 2) when file suit I would be able to ask for a pre judgment lien on those funds to prevent it from distributing to party "B" 3) judge will decide whether I can collect those funds directly from part "A" under judgement 4) those funds just like part "B" bank account money
Customer reply replied 4 months ago
during the lawsuit, I will continue work but will NOT report any timesheet to PARTY "A" so that PARTY "A" will not get paid by client fortune 500 company. This will force PARTY "A" to negotiate with my lawyer.
Customer reply replied 4 months ago
timesheet=money hungry

Thank you for your reply.

That is one way to do it, of course you can do that now and see if Company A will help you collect what you are due from B before you sue.

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Customer reply replied 4 months ago
thank you, ***** *****!

Thank you.

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