How to sue your employer and win

Disclamer: I’m not a lawyer, take this information and advice at your own risk.

I am posting this anonymously as it could be looked upon poorly by my current and/or future employers.

This post isn’t actually going to tell you how to sue your employer but will be my story of such. Hopefully someone will find it useful.

The Employer

Around June 2008 I applied for a Ruby on Rails contract job which I found on one of the few online Ruby centric job boards. I’d worked a bunch of Ruby jobs/gigs before this and was a very competent programmer in general. The contract I applied for was working with a startup creating a niche social network site for individuals in a profession which gives them a good amount of disposable income.

The interview was a skype chat with the CTO. It was by far the easiest interview/offer I’d ever had. This probably should have been the first red flag, but I knew I was good and thought maybe they were just good at spotting talent.

The site was already created and very functional. I was told there were a few other developers but that for now I wouldn’t be working with them directly (this should have been the 2nd red flag, as I would find out later). I would be interfacing only with the CTO. The only other person I interacted with (minimally) was the sysadmin, who helped set up my accounts and access.

The part of the site I worked on was essentially an advanced admin interface. It allowed the admin to do complex queries on members as well as batch actions. Most of my communication with the CTO was through skype or the bug tracking system. He was on the poorer side of the communication spectrum and somewhat slow to respond, but when I pressed him for details I got a clear enough picture of what he wanted.

On June 19th I sent my first invoice. I had put in 70 hours at that point. Two weeks later, on July 1st, still not having received my first payment, I sent my second invoice. During this period I only put in 36 hours as they were not actively giving me lots of things to do and I was working part time on another project. On July 7th, not having received either check, I send an email to the CTO notifying him that my payment hadn’t come and to check with the accounting people to figure out what was going on. By this point I was getting scared that I might not get paid and had stopped doing any more work for them.

I received a reply within the day saying he’d look into it. But four days later, no response with information, so I send:

Please let me know what the status is with my payment. It should not take this long for you to at least tell me what’s going on.

An hour later I receive:

Sorry for the delay. I have not gotten a clear answer on when they will send payment but should have let you know sooner.

The business team in xxx did not give me any heads up that they were tight. I learned Monday morning that they need to push out some invoices. There is little risk that they will not pay in full but it is clear that they will be late. I wanted to have a clear date and amount to pass on to you before I connected. xxx & xxx arrived in xxx yesterday and are in meetings with investors today and through the weekend. They have already got commitments for some and are telling me they will be coming back with checks in hand. I still told them this cannot drag on and they need to do at least partial payments and provide a realistic plan to pay all open invoices.

Please be patient and know that am working this constantly and will update you as I know.

Thus began my one and a half year fight/journey for less than a month’s pay. Throughout July and August I pestered the CTO for updates but always got a similar response, very hopeful but no definites. Near the end of August I decided to get a little more assertive. In one of his emails to me the the CTO indicated he was in the same position as me. So I inquired:

You said you were “in the same place as me”. Are you saying you have not been paid either? When was the last time you received payment from the company? When was the exact date that you learned that the company was not paying invoices?

He replied that the company was 6 weeks behind on his pay, putting the date of the last paycheck somewhere around July 10th. At first he ignored the question of when he first learned about invoices not being paid, but after further prodding he admitted having learned of it after July 4th weekend.

By mid september nothing had changed, the same hopeful “almost”s. I indicated that I was upset and wanted to talk to someone higher in the company. During this time I also had contacted some of the other employees and contractors trying to find out their situation. I found out that the main contractor who built the site was also lacking payment… but more interestingly he already hadn’t been paid for at least one month before I started working for them. A pretty clear indication of fraudulent intentions, hiring people with no plans to pay them.

This obviously infuriated me and I sent a somewhat angry letter to the CEO indicating that I had some knowledge of the way they were running things. His response is relatively calm and astonishingly he suggested that I should expect things like this working for a startup. He also said (I’m assuming to sympathize with me) that the senior management hadn’t taken pay in 6 months. That put them knowing they had money problems at two full months before I was hired. Surely a fact he didn’t realize he was giving away while writing the email. I replied letting him know that what he had done was unethical and probably illegal. All I got was another calm response and empty promise. I decided to contact the president who is the only other executive at the company. But he replied that he had nothing more to say than the CEO already had.

For the following months I received a few updates on possible funding and dates which they thought they would forsure be able to pay me by. All of which of course passed with no money. Near the end of November I threatened legal action:

I’ve asked you numerous times and given you plenty of leeway. This is your last chance otherwise I’m going to explore my legal options. Please pay me the amount of $X within 7 days.

Somewhat humorous/nonchalantly the CEO responds from his iphone in less than 5 minutes:

I assure you any efforts to extract money other than being patient are futile. Until our position changes, consider this our response.

Sent from my iPhone

I replied with one more email indicating what I had on them to which I received no reply:

– A contract and emails clearly showing you contracting my services.

– Two invoices which were accepted by XXX

– Email from another contractor saying you were behind on his payment before I was even hired

– Email from you stating you were not taking salaries because of financial troubles before I was even hired

The Lawsuit

Now that I had threatened to sue them I needed to decide whether I was actually going to do it or not. I talked to a bunch of people and most said that it was pretty much a lost cause and to just drop it since it wasn’t even that big an amount of money. I decided to talk to some lawyers about it anyway, mostly because I was extremely angry with the company and wanted to see them lose a lawsuit more than I actually wanted to get any money from them.

So here’s what you need to do if you want to sue your company. Write a short concise description of your situation. Then google for employment lawyers in [city where company is based]. Fill out every web based contact form you can find with the description you wrote and your contact info. Also include a question about whether they will work for a contingency fee and what % that would be. Then call up all the lawyers which don’t have contact forms on their website and talk to them. If any lawyer tells you that they won’t/can’t take your case make sure to ask them if they know someone who would or have any advice for you. They will usually have at least one other lawyer to refer you to. I had to call probably 10 different lawyers before I found one which seemed like a good fit and would take the case. The one I ended up going with took a 30% contingency fee and also required me to pay for any court costs. I was told the court costs (if we sued) would be around $350.

The first thing to do according to my lawyer was to send them an official letter requesting payment.

On December 31st my lawyer tells me the letter has been sent and any communication I have with my company should be forwarded to him. In the first week of February I still had no response from my lawyer or company. When I email him to ask what’s going on he responds by saying there is no one to talk to there, that he can’t get on their website, and asking me if I had actually invoiced the company. This was depressing because I had already sent him both invoices and he had acknowledged receiving them. He was starting to remind me of the company we were supposed to be suing. I emailed asking him if he had actually sent the letter. He replied that he had sent the letter but not received any reply. I re-forwarded my invoices to him and provided him with all the company’s contact info.

At this point he suggested we go ahead and sue.

I’ll start suit right away when I have what I need. Then the process server has to serve the lawsuit on the defendant. That could be quick or could be slow or could be impossible. After service of the lawsuit they have 20 days to reply. If they do not reply we get a judgment. If they reply there will be a hearing in about 4-6 months. I can’t give you an exact answer to any timing questions.

This sounded promising, it was finally going to happen. I just had to send him the court fees and fill out and notarize an affidavit stating how much the company owed me. A month and a half later on March 21st (my lawyer was kinda slow), the lawsuit was being served to my ex employer.

By April 1st the lawsuit had been successfully served. By April 14th we had won the lawsuit by default because they didn’t show up to court. At this point I was ecstatic… it was too easy! Alas, winning the lawsuit was the easy part. My laywer asked me to send him any information concerning assets or bank accounts. Sadly since I hadn’t ever been paid by them I had none of this.

End Game

Since we had no info on them, I sent my lawyer an extra $61 in court fees for him to set up a court date for the Supplemental Examination of the Debtor. It was set for a month out. It takes two months for my lawyer to respond to me saying that the server was not able to find anyone to serve.

Attached is the process server’s report on attempted [and failed] service of our Supplemental Examination Order on the defendant

At this point I’m somewhat depressed because of my lawyer’s incompetence. The server’s report notice showed the CTO’s name instead of the CEO and showed the CTO’s title as Vice President. It also showed an address which I hadn’t ever seen or sent to him. Regardless, he had a next step:

At this point, we will have to subpoena the Secretary of State to get a report on corporate information to see if that will reveal other possible addresses for the principals of the corporation for service of another supp order. Please advance your file 30 days.

A week later I receive this:

We were able to start suit on this account, and obtain a judgment, because we were able to serve the registered agent for the corporation. We have never been able to contact the debtor. We tried recently to serve an order on the corporation directing it to be in court to answer questions about assets. The process server was not able to serve the order. Please see the attached affidavit from the process server. The debtor corporation is apparently dead and gone. There is no reason to keep this file open. I am slightly out of pocket in the court cost account so there is nothing to return to you. The file is closed.

It seemed like my lawyer had completely forgotten that he already told me this and told me that he was setting up a new court date. Now I was even more down on the whole situation and on the verge of giving up. I decided to check out the company’s website and blog again since it had been a long time since I last looked. I saw that there were recent posts and talk of deals with other companies.

I decided to give it one more shot. I notified my lawyer he had served the wrong person at the wrong address and gave him the correct information (once again) and asked how much it would cost to re-attempt serving them. $100 was the price this time. I was started to worry that maybe I had been conned by my lawyer as well as my company since he had forgotten to attach the copy of the lawsuit default judgement when he told me we had won. After two more requests he finally sent me the document. I decided I trusted it enough to send him the $100.

On August 26th I receive an email from my lawyer saying the court date has been set at September 30th for a new supplemental examination. On October 1st I find out that the company’s lawyer has contact my lawyer and informed him of the situation, that they are out of money but expecting funding soon. This was the same song I heard many times before from them and I didn’t expect it to be any more real this time, but at least I had enough pressure on them to be talking to their lawyer.

On October 30th their lawyer says that with 95% confidence they can pay by November 15th. On November 18th I receive a check for about half of what they owed. On December 23rd I receive a check for the full remainder of their payment.

Their final payment actually was about ~26% higher than the original invoices because of interest.  Since I was also reimbursed for court fees, after the 30% contingency fee I ended up getting only a little less than the original amount owed to me. All in all a pretty amazing experience, and not what I expected at all.

In conclusion…

The reason I wrote this was not self interest. It was mainly because after having been stiffed by the company I was working for I learned that many other (completely unrelated to this company) developers whom I encountered had also been stiffed by theirs. I find this to be one of the most offensive things I can think of. A company running out of money is fine, but not telling the people on your payroll about it, for as long as you possibly can hold off (and then actually hiring more people), just to get some free work is completely fraudulent to me and wish there was more I could do than just sue to get what I earned. So I wrote this for other people in similar situations to give them hope and knowledge that recourse is possible.

So in conclusion the thing that paid off here the most as perseverance. I was at the point of giving up so many times because of all the little stupid obstacles that presented themselves as well as the long amount of time which passed between them. All in all though it wasn’t really that much work on my end, it was really the lack of knowledge of how these things worked and not knowing what I should do next or expect that brought me close to defeat. So hopefully this has shed some light on that for the next guy.