I work as an employee for a contracting firm which supplies IT labor resources for their (or) to another contracting firm's clients.

As there is a 45 day holding period for the contract firm which i'm employed to get paid, that delays my paycheck.

Meaning of 45 days holding period is, I worked for first 45 days without getting paid. I received first 15 day paycheck after completing 45 days. Next paycheck will be on the 30th day which will be following 15 days of pay. So, there is always a 45 day pay behind.

My concern or clarification is " What if my employer filed bankruptcy? " - If that's the case, will i ever get paid for those delayed 45 days of my pay.

  • 1
    Are you sure you are an employee and not a contractor? If you are an employee, a 45 day delay is probably not legal-- your employer should bear the risk that the client doesn't pay (or doesn't pay immediately). If you are a contractor, the delay is legal and you may be out of luck if your employer goes bankrupt (and you might actually owe a refund of some of the money you've been paid). Dec 2 '19 at 2:22
  • @JustinCave - I am an EMPLOYEE for my firm which send me as a Contractor for their clients (or) their partner's clients. In the current scenario, I am employed at their Partner's Client.
    – goofyui
    Dec 2 '19 at 2:24
  • @JustinCave - I am not able to follow your statement - About i might owe a refund ... !! Refund from whom ?
    – goofyui
    Dec 2 '19 at 2:25
  • I just read your profile, I come from DB background. I work as a contractor for an Insurance firm. But my employer runs the payroll. He get paid from his partner firm. The partner firm is the one who has legal contract with the client. Per my employer, he will pay me when gets paid.
    – goofyui
    Dec 2 '19 at 2:27
  • Employee's hourly or salaried pay canNOT be held dependent on payment by specific customers. This can only be done with contractors (or possibly with commissions and/or bonusing plans). Dec 2 '19 at 14:29

If you are actually an employee and your employer goes bankrupt, you're first in line to recover money from the bankrupt company. Assuming that the company has some assets that can be sold off, you should get at least some of the money you're owed though it may take some time. The bankruptcy court can also potentially claw back payments the bankrupt company made to vendors close to filing bankruptcy in order to ensure that there are some assets with which to pay employees (but note that this is bad if you're a contractor, see below).

That said, paying employees 45 days in arrears almost certainly violates the employment laws of whatever state you are employed in. That's a perfectly reasonable thing to do if you were a subcontractor but employees shouldn't be dependent on when the client pays. If your "employer" goes bankrupt and someone argues that you are really a subcontractor, then you are much further down the list to recover. And if you are a contractor, you would potentially have to refund your "employer" some of the money they've paid you depending on things like what the "employer" owed to people that have priority in bankruptcy (such as actual employees). Practically, I have no idea how likely anyone would be in bankruptcy to contest your employee status or how likely they would be to succeed (which would depend on a variety of other factors).


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