Employers Beware: Pay Employee Wages First

Despite the infamous tales of Enron and its progeny, executives don’t seem to be detoured from engaging in questionable business practices. Sometimes personal habits can dictate poor business practices, but whatever the reason, Northwest Indiana is certainly not immune from such grave misconduct. Federal Agents are on heightened alert to white collar crime, even in our area. (See for example, NWI Times Article, “Valparaiso Entrepreneur Wanted on Warrant”)

Often, when businesses fail they fail to pay their employees the wages they are entitled to. In Indiana as well as most states, this is a grave mistake. Even when your business is failing, it is grossly ignorant for employers not to cover their payroll first. As an employer, you are much better served by making payroll before even addressing your monthly fixed and variable overhead expenses. You can discharge many debts in bankruptcy, but claims for unpaid wages will likely survive any attempt to reorganize or liquidate your failing business.

It is a rare action in court that provides for damages as well as attorney fees. With regard to actions to recover wages, however, the Indiana Legislature has sent a clear warning to employers through the Indiana Wage Payment Statute, as well as the Indiana Wage Claims Statute. I.C. 22-2-5-2, et. seq. These Statutes, however, provide for DOUBLE damages, as well as attorney fees to litigate these claims. In addition, there is a specific provision providing for liens against company assets for the recovery of wages. I.C. 22-2-5-24.

Employees: if your employer has failed to pay the wages that you are entitled to, CONTACT AN ATTORNEY IMMEDIATELY! There are two (2) time limitations on these actions. The first is a statute of limitations built into the statute which is two (2) years from the date of the wage deficiency. The second and more practical consideration, is that usually when employers fail to pay wages, the business itself is in serious financial trouble. As mentioned above, the Statute specifically provides the authority to place liens on company property to recover for wages. This becomes moot, however, where the assets have been seized or encumbered by creditors. The priority of liens on company assets (such as private aircraft, for example) are generally determined by first in time. Therefore, when you have been wronged by your employer in his failure to pay wages, time is of the essence, and you must act immediately to preserve your rights. If these assets disappear before you get around to filing your Complaint, there may be nothing left to collect. Contact a competent employment lawyer at the first sign that your employer won’t make payroll this month. You won’t even have to pick up the legal bill.

Questions? Give my office a call, I would be glad to help. (219) 791-1520.

This article is not intended to provide legal advice or to establish an attorney-client relationship. Please seek legal assistance from an attorney. This article was written for entertainment and educational purposes only.

  • briefs

    Looks like your comments are getting spammed a bit, might want to delete them.