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Say a person worked as an independent contractor at firm X. Firm X is in New Jersey; he worked remotely in New York. After 7 and a half months of work he decided to end the project--a 4 days notice was offered but was rejected by the company, allowing him to leave immediately.

At this time, there where still 2 weeks of unpaid work. The company was diligent to always send a check every two weeks based on the invoice sent. However, when the time came to part, the company claimed that his client hasn't yet given him the funds but made promises of having it available shortly.

A lot of back and forth has gone by in the span of five months. The company began ignoring all forms of contact and the payment is nowhere in sight.

What steps can one take to get his last payment?

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    Have you discussed this with a lawyer? – littleadv Aug 9 '13 at 22:20
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    Was the 4 days notice you offered adequate, according to the terms of your contract? It seems short. – Chris W. Rea Aug 10 '13 at 0:48
  • @ChrisW.Rea, The project was completed months before but the end client kept on adding feature upon feature; there was no contract unfortunately. – TheOne Aug 11 '13 at 1:08
  • @littleadv, that's mostly the reason for this question. I was hoping to bypass a lawyer. – TheOne Aug 11 '13 at 1:09
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If you are an independent contractor, you are not an employee. The fact that you send invoices confirms this. You have not been receiving paycheques.

This is a legal matter. Depending on the amount of money involved, you may be able to file a suit in small-claims, in which case you may be able to function without a lawyer. If the money owed exceeds the small-claims limit in your state, you will need to file a civil suit and will require a lawyer. In either case, you may have difficulty collecting the judgment. In Canada, you may need to hire bailiffs to collect, and this would be your responsibility. I'm not sure how the equivalent in the U.S. works.

Given that this is just two weeks, though, you may first want to send a demand letter via registered mail.

Unless your contract states differently, it is not your responsibility that this company's client has not paid funds owed to them. This would not excuse them from their legal responsibility to pay you.

As an aside, I've been in a similar situation. I won the court case for about $12,000 but was never able to collect.

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    In the US we have collection agencies that would buy this debt from you for, say, 25% of its worth and will make the owner's life living hell until they pay. – littleadv Aug 9 '13 at 23:24
  • Do you know if it makes a difference if the suit is filed in the NJ or NY small claims court? – TheOne Aug 11 '13 at 1:11
  • you were unable to collect because.... the person had no seizable assets nor income? had other creditors before you?...? – CQM Aug 11 '13 at 3:04
  • CQM, I was unable to collect because the costs to collect would have been too high based on my estimates of the assets and balances held in the corporation. – ChrisInEdmonton Aug 12 '13 at 14:17
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Yes this is a big problem for contractors in the new york area, despite how much commerce happens there this kind of situation is still not streamlined.

You sue the company in New Jersey. If the amount owed to you is more than the small claims court limit in New Jersey that doesn't mean you HAVE to file a civil suit in a higher new jersey court. You can still file for the maximum that the small claims court will allow, but you can argue your contract and the amount owed to you as normal, but the court simply can't award more than the max + filing fees.

Unfortunately, NJ small claims limit is quite low, $3000 in these kind of cases. And the expense of civil court cases to make them worth it is much higher, this is based on how many hours a lawyer will have to work with you in any civil court case. Whereas the point of small claims is to represent yourself.

Get your lawyer to send a threatening letter, this resolves a lot of things. This service is actually offered on the cheap.

  • "This service is actually offered on the cheap." Do you think you can tack the lawyer's fees onto the money owed? You should be able to, since you're incurring a cost solely due to the company's action of failing to pay contracted work: they have cost you additional money (beyond what they owed you.) – Chelonian Aug 10 '13 at 5:54
  • @Chelonian generally if you win a civil suit, the court also adds the expenses related to the suit to the judgement. The problem, as Chris mentioned, is to collect. Same in small courts. If you just send a threatening letter - you can add the expense to the amount owed, but they'll pay whatever they'll pay. If anything at all. – littleadv Aug 10 '13 at 11:52
  • The additional fees to collect payment might be mentioned in the contract. Payment specifications such as net30, and late fees should be addressed in the contract. – mhoran_psprep Aug 10 '13 at 15:27

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