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Company Missing Payroll - Legal & Tax Implications

1,552 Views | 7 Replies | Last: 6 yr ago by Ol Jock 99
agstudent
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AG
My wife's company has been going through a rough patch lately and has missed payroll several times lately. Most of the time, it is just a week or so late, but they are now a full month behind. With the end of year quickly approaching, what are the tax implications if they can't catch up in time? At what point is her company breaking labor laws by not paying employees?
SWCBonfire
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AG
My company missed payroll by a week a year ago, but they had the payroll tax deducted out of their account automatically. I would be very concerned that they will not make it if they haven't paid payroll taxes on top of missing salaries. Kiss of death.
Stive
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AG
As opposed to worrying about labor law violations, why is she not worried about where her next interview is scheduled?

She's working for free right now; tell her to leave.
The Wonderer
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AG
Violation of Texas Payday Law.
Violation of Federal Labor Standards Act.

Owners face personal liability for wages owed, statutory penalties, and all complainants' attorneys fees.

She needs to file a complaint with the Texas Workforce Commission and seek counsel with an employment attorney.


The violated labor laws the moment they failed to timely pay their employees. The tax implications are dependant on if they are paying taxes on the payroll, but not paying the payroll itself. This is what cash-strapped companies do before they flame out and enter bankruptcy.
BigPuma
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AG
tell her to GTFO
Duncan Idaho
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This had better be a startup that
1)she absolutely believes in
2)she has a sizable equity sake in
3)and it is close to closing on a major round of funding.

If it isnt ALL of those, she needs to leave. If it is ALL of those, she should have a discussion about getting additional warrants for each missed check.
TennAg
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Tough spot for an employer and one i've been in. You have employees worried about this kind of thing while you're going without pay for months or more just to keep from laying off everybody. Not fun.
BigPuma
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AG
I've worked for small businesses and start up firms. I have never missed a check as an employee. If the owners don't have the ability to even personally guaranty a LOC to make sure their employees are paid they are over leveraged and then it goes back to what Duncan said. If she doesn't meet those three criteria GTFO.
Ol Jock 99
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AG
Tax is based on cash received not compensation earned but not paid*. And what everyone else said.

(*: generally speaking. Exceptions apply.)
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