U.S. Based Business Refuses to Pay Contractual Fee/Salary for Services Performed by Employees/Contra
You got an opportunity to work with a U.S. based company either as an employee or as a contractor. You negotiate a compensation, sign a contract and get to work. You are based outside the U.S. and are providing services electronically through emails, phone calls, WhatsApp or another such medium. Everything is going well. Then comes a point where you need to be paid. The company tells you that are unable to pay you at the moment. Some commonly heard reasons are anticipated funding, revenue or contract. These are probably true and sound reasonable. In good faith and spirit, you continue performing your duties. This continues for a while and at some point to compensate for the delay the company offers an increased salary, stocks or another such incentive. You feel fine to continue. Then one day you are told that your services are no longer needed and the due compensation is not possible at that time. You feel wronged, lost, helpless and unsure of the next step. You are not in the United States. You don't know how to enforce your rights.
This scenario or a variation of it, is becoming common. In a post COVID-19 world as organizations realize the ability to leverage the internet for hiring workforce outside the U.S. in combination with tougher immigration laws/restrictions on international travel, such situations will become part of the often stated "new normal".
As such prospective employees/contractors need to be prepared to work in this evolving business environment. They need to go in stronger. There are several things that an employee/contractor can do to lower the risk of such an event. I am listing a few here:
1. Negotiate a stronger contract that protects your rights. Certain clauses to consider:
The employer should be willing to subject itself to the laws and regulations of your geographic location
Payment of full or portion of the monthly fees/salary in advance
In event of lawsuit, the prevailing party will be reimbursed for litigation costs by the other party
2. Once you begin working, keep a daily record of your hours, activities and deliverables. Record any feedback you receive from the employer. Remember, in a lawsuit, generally speaking the party with stronger evidence has a better chance of prevailing.
3. Do not ignore the first instance of non-payment. It is a red flag. Do not renegotiate the contract without first obtaining the due payment.
Even with such safeguards in place, you may find yourself in a position where you need to initiate a legal proceeding against the employer to protect/enforce your rights.
While, we strongly recommend engaging our firm when you begin negotiating your contract, we are fully equipped and experienced in handling such disputes. We will work with you no matter at what stage you are in your employer/employee relationship to get your fair due.
Remember, employees have more power to negotiate and enforce their rights than they realize. It is just the way the system is set up right now. The gig and internet enabled economy is modifying this power structure, making the employee more powerful. Contact us today to understand how we can help you.