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I worked for a web-design company for about 9 months, and was laid off almost 6 months ago, because my employer was unable to continue to afford to pay me. At the time, he was behind on payment for a quite significant (several grand) sum of money. As of right now, I am still owed that money.

Every time I call to ask for the money I'm owed, I always get the answer "I am waiting for a check to come in, and I will have your money by the end of the week"

So far, it has been 6 months, and apparently, the "week" isn't over yet.

The employer is a family friend, and I know he means well, so I don't want to involve a lawsuit, but I still want to get my money.

So for my question: How can I convince him to (actually) give me the money, without causing any legal trouble or significant strain on the relationship?

Edit: As for jcmeloni's comment, it was basically a summer job (only a little longer...), he never actually had me sign a contract (I'm 18, and it was my first job, so I didn't think to make him write one), however he had agreed to pay me at a rate of $15 an hour.

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You file a civil suit against him. If you are owned the money, and you can prove it, then legal recourse is your only solution. –  Ramhound Apr 27 '12 at 15:41
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Thanks for adding the additional info. At the end of the day, this might end up being a very expensive lesson learned (always have a contract). –  jcmeloni Apr 27 '12 at 15:46
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@jcmeloni - Just because he doesn't have a written contract doesn't mean he doesn't have a contract. A verbal contract is just as valid as a written one, just a little more difficult to enforce. –  Mark Booth Apr 27 '12 at 15:48
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When it comes to business with family/friends, it's even more important to have a contract, so the expectations are clear and that relationships aren't damaged. It's ironic that people won't enter into a contract with family members "because it will harm the relationship" when in reality it preserves it and establishes trust. –  Atif Apr 27 '12 at 16:08
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Chalk this up as a learning experience never do business with family or friends, that is if you want to keep them as family for friends! –  Jarrod Roberson Jul 28 '12 at 16:08

8 Answers 8

up vote 49 down vote accepted

I think you have decide which you value more - the family friend relationship or the employment relationship.

And it would help to know if he really doesn't have money, or is messing with you.

Thoughts:

  • in a perfect world, I try to avoid ever having friends owe me money - the damage to the friendship is usually far worse than the lost opportunity to make money. But hindsight is 20/20

  • Back him up at the next excuse and say "you know I have no faith it'll be the end of the week... we've done this too many times" - and push to find a partial repayment plan - "can you give me $200/week until it's all paid back?"

  • Find a trade other than money that will satisfy you - given that it's a friend, you can get oddball - an hour for hour trade - can he do something for you for free to make it up? or something else. Just make sure it's worth the value you put on the money.

  • Decide you are willing to risk the friendship and get pushy - call twice a week, call at EVERY deadline. Be politely annoying so that he feels a subtle pressure to resolve the issue.

  • Back away subtly from family/friend contact with him until it's resolved. Don't skip stuff you care about, but don't put yourself in a position where a small get together will turn into a sharing of the bad feelings.

  • Backing away includes not doing favors (ie, free work!). Make it clear that while family friends do friendly favors, they don't welch on pay. So pay, no favors.

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Partial repayment plan sounds like a very good way of getting at least some of the money back (or else finding out that he really has no intention of repaying whatsoever). –  weronika Apr 27 '12 at 15:56
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+1. Sounds like a perfect answer. Your answer dropped my motivation to add another one! –  Dipan Mehta Apr 27 '12 at 16:33
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Maybe one to add here: Don't do him any favors until the issue is resolved. Decline requests politely but firmly. –  Jan Doggen Oct 4 '13 at 6:38

If you haven't already, set out in writing exactly how much you think you are owed, when it was owed, and mention times when he said he'd pay you that week. It can be a friendly letter just stating what's happened so far, but make sure you have a record and that this is not disputed. Once you're agreed on that, that makes it easier to talk about repayment.

If you speak on the phone, follow up with an email to remind him what you agreed in the call.

You can be understanding if he's not making a lot of money, but if he's not paying you anything, then he's in breach of a (verbal) contract, and the longer you leave it, the more likely that a) you won't be able to recoup it legally, and b) if he's not recorded money owing, he might be more reluctant to have to explain to his accountant/taxman.

Consider mentioning it if you're paying overdraft charges or are otherwise losing out, and explain your needs (though avoid getting into an involved discussion about your personal finances).

If you need to be firm, point out he's effectively got a six month interest-free loan already off you without agreeing that beforehand. A "repayment plan" should be for more than the value of the original amount owing due to the the risk involved and the inconvenience for you.

Finally, do think about what would make you seek legal redress. What if he decided he would never pay you?

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You could try the old debt-collector trick and ask for a post-dated check in good faith and promise to only cash it after that date he is promising he will have the payment ready.

This forces him to admit he has no intention of paying you by that date, or risk bouncing a check which would cost him more money and possible criminal charges.

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Frankly, it sounds like your former employer is abusing his family friend status to get out of paying you.

He's essentially stealing a large amount of money from you. You're not the bad guy for wanting to be paid.

Give him a final warning, with a very short deadline and then do whatever you'd do if he was not a family friend.

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I wouldn't consider him a family friend if he's able to do this to you, consciously. It's understandable that entrepreneurs sometime get into situations that just suck -- judging by the amount of debt he's in there's most likely multiple people that he owes this money to -- but a family friend should be getting any payments before anyone.

I would suggest, before a lawsuit, that you present to him that you're going to pursue legal action and that you're willing to work with him to maybe do a payment plan or even take a cut of what the original amount was to come to an agreement for the payment, and to avoid legal action. This may scare him enough to actually pay you.

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If the entrepreneur pays off the OP in full and then declares bankruptcy, the other creditors may cry foul and go after the OP. In that situation, you can not preferentially pay family and friends. –  emory Apr 27 '12 at 16:55

The employment classification matters: 1099 or W2?

If it was as a 1099, it might be permissible and desirable to consider trading the debt via real property of comparable value. For example, if the employer owes OP 3k, and employer has a small fishing boat worth 4k or thereabouts, consider taking the boat to satisfy the debt (and of course with a signed title and bill of sale when applicible).

Then obviously the OP can choose to keep the real property, or attempt to sell it, possibly for further profit.

If it was a W2 employee, this almost certainly wouldn't be allowed.

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@Ramhound - yes, I was paid most of it, but I wasn't paid for about the last 2 months –  Ephraim Apr 30 '12 at 17:30

It may be that he really doesn't have the cash to pay you what he owes, and would have a hard time raising it. If this is true, you could perhaps come to a deal about an alternative form of recompense. For example, if he is genuine, and acknowledges the debt, one way out of the problem would be to offer you shares in the company instead. Of course, any entrepreneur will see the equity in their company as the way they are building up their future, and therefore valuable, and on the other hand, the shares might well be worthless - that's a judgement you'd have to make.

Mostly, my point is that there are other ways than cash to settle a debt. If he isn't willing to at least consider alternatives, then it really brings the friendship into doubt. If you're genuinely looking for a solution that works for both of you, he must do the same, or he is not your friend.

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@Ramhound - the OP is keen to avoid conflict, because of something he perceives as friendship. If this is genuine, he has one way forward. If he can clearly see that it isn't genuine, then he has another way forward. Being prepared to look at alternative ways of settling the matter shows friendship, and the response would show whether the debtor is a friend or not. If the debtor were a genuine friend and the OP were to coerce him into raising the cash "at all costs", sufficient conflict would ensue to end the friendship for ever. Perhaps you should read the question again from this perspective –  Dominic Cronin Jan 24 '13 at 18:32

I am in the same situation, with a friend I have known for over 25 years! what I have done (because I know I am needed) is remove myself from the "live in" part of the job, so I am not on hand 24/7 (and expected to work those hours) and reduced the amount of work I do to a bare minimum.

I am trying for my "employer"/friend to see how much I am needed (and it was a lot), without upsetting her or her knowing I am actually looking for another job. I know from her history, once people "leave" she will never pay the debt.

It is a shame that a 25 year friendship will be ruined by her not paying me... but at least I am out of the firing line! (she was very difficult to work with, I was about the only person who would put up with her).

Good luck - I have learnt my lesson! but in these hard times, it is very difficult to be demanding when seeking work.

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