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LawTalk, Attorney
Category: California Employment Law
Satisfied Customers: 37855
Experience:  I have 30 years of experience in the practice of law, including employment law and discrimination law.
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This is a new question. I work for a CA LLC selling electronic display equipment. For the past 4+ years I have been paid a salary ($85k pd bi monthly) + 2.5% gross sales commission. The company has decided to stop paying employees (I am one of 5) unless new sales come in to cover payroll. As of this Friday I will be 7 payrolls in arrears (approx $23k) and have been paid zero in commissions in 2013 (approx $15k). I have complained that it is the repsonibility of the company to pay its employees, but the investmenst fund LLC that owns 97% of the company has refused to put additional money into the company to cover payroll. I have not filed a claim with the CA Board of Labor Relations, because I have hoped that some of the potential sales I have in the pipeline "might" happen soon and alleviate the situation. But, I have run out of money waiting for this. I am torn about what to do, but would like to know what my legal options are to force the company and the "partners (with very deep pockets) to pay me. Please let me know what you think. Thank you.
Hi John,

Thanks for asking for me.

Are you an employee, or are you a contractor with your S-Corp acting as the client of your employer?

And please confirm that in addition to not paying any commissions, you have not been paid your bi-monthly salary in more than 3 months?

Customer: replied 3 years ago.

I am an employee. The S Corp is separate....and part of the reason I formed it was that I knew I might have to try to find some outside ways of finding a means to pay bills. The S Corp. has nothing to do with my job in the electronic display business.

Hi John,

Thanks for the additional information.

Clearly the failure of the employer to pay both your salary and any commissions due under company policy for commissions is in violation of CA and federal laws.

You may apply to the CA Department of Labor for assistance, or you may sue the employer directly for the unpaid wages (CA considers commissions due as wages, just as they do salaries).

You may actually sue the employer in court and recover your wages/commissions. Additionally, if you sue in court, under federal laws (FLSA), you are also entitled to seek what is called Liquidated damages. Liquidated damages is equal to the amount of back wages that they owe you and must be paid in addition to the wages themselves---so you essentially get double the wages owed you in the claim based on their willful failure to pay you. Additionally, you will be entitled to be awarded costs of the court as well as your attorney fees incurred in filing suit and litigating it against your employer.

A recent law signed by the CA Governor, allows CA employees to seek liquidated damages when making a claim to the Division of Labor Standards Enforcement (DLSE), just as they could if suing in court initially. So in CA whether you make a claim to the Division of Labor Standards Enforcement, or file an action in court on your own, you may seek liquidated damages. Here is a link to an article on the change---good for CA employees, but bad for CA employers:

The award of liquidated damages is mandatory unless employer shows that (A) act or omission giving rise to violation was in good faith and (B) the employer had reasonable grounds for believing that act or omission was not a violation of 29 U.S.C.A. § 216(b). This is a very difficult standard for the employer to meet.

Here is an excellent article which deals with pursuing an FLSA claim---which you may do in either state court or federal court. Do take the time to review it:

CA Labor Code Section 1194.2. (a) In any action under Section 98, 1193.6, or 1194 torecover wages because of the payment of a wage less than the minimumwage fixed by an order of the commission or by statute, an employeeshall be entitled to recover liquidated damages in an amount equal tothe wages unlawfully unpaid and interest thereon. Nothing in thissubdivision shall be construed to authorize the recovery ofliquidated damages for failure to pay overtime compensation. (b) Notwithstanding subdivision (a), if the employer demonstratesto the satisfaction of the court or the Labor Commissioner that theact or omission giving rise to the action was in good faith and thatthe employer had reasonable grounds for believing that the act oromission was not a violation of any provision of the Labor Coderelating to minimum wage, or an order of the commission, the court orthe Labor Commissioner may, as a matter of discretion, refuse toaward liquidated damages or award any amount of liquidated damagesnot exceeding the amount specified in subdivision (a). (c) This section applies only to civil actions commenced on orafter January 1, 1992.

You may reply back to me again if you have additional questions, and I will continue to assist you.

I wish you the best in your future,


Customer: replied 3 years ago.

Would I file the claim and file the suit separately, or simultaneously....Or, should I just file the claim and see what the reaction is and then file suit? According to what I've heard, if I just file the claim it normally goes through a review process and the state tries to get the 2 parties together to "resolve" it. I actually think that they would count on this being an ability by the company to stall a little longer to see if the sales happen to come through. In addition, the Equity Partner Fund that owns 97% of the company might decide to bankrupt the company and just walk away. However, I'm not sure they would do this, because they have invested a couple million dollars over the past 4-5 years and also know that their are some possible orders coming in that would finally give them the chance to make their money back. If they bankrupted the company, I'm not sure if I could go after them directly. ??

You may file simultaneously, or file with the department first---your choice. Filing with the labor board stalls the process a long time---no doubt about it.

If they file BK, as an employee who was not paid, you would be a priority creditor in the bankruptcy.

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

Please remember to rate my service to you when our communication is completed.

I wish you the best in 2013,

Customer: replied 3 years ago.

If I file with Labor Board vs. File Suit what would probably be the time difference....assuming the company/partners decided to settle?


I would have absolutely no way to know that because it all depends on how quickly the owner of the company wants a settlement. I do know that a public lawsuit is a heck of a lot more embarrassing for a company than a labor board claim is.

Customer: replied 3 years ago.

That's all good to know.....You seem very knowledgeable about this process. I actually live in Colorado, even though the employer is in CA. Would I be able to hire you if I wanted to pursue a law suit?

Hi John,

Unfortunately, JustAnswer prohibits us from representing their customers---so representing you, or acting as your attorney, is not possible. I am sorry. And honestly, you probably don't need a $400 an hour attorney handling this pretty much slam dunk case for you anyway.

Thank you for your kind words. They are appreciated. Please keep in mind that even though you have already paid your deposit money over to JustAnswer, until you rate me highly for my service, I will not be paid for having assisted you with your questions. Bonuses for well done jobs are greatly appreciated.

Thanks again.

Have a great week,

LawTalk and other California Employment Law Specialists are ready to help you
Thank you once again for your positive rating of my service, John. It is always my pleasure to assist you and I hope than you will continue to ask for me on JustAnswer as future needs arise.

Thanks again.

Customer: replied 3 years ago.

You're welcome....One last question. Where would I try to find an attorney who specializes in this kind of law? If it doesn't go to court, would I have to pay the legal fees, or is the company only liable to pay them if it goes to court?

Hi John,

Only if the matter goes to court can you get an award of attorney fees. And any employment law attorney with a few years under their belt could probably handle this for you. Here is a link where you can look for an attorney by filling in the city/state you want and the type of law---employment law:

LawTalk and other California Employment Law Specialists are ready to help you