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Author: footsox Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 14985  
Subject: Final paycheck for thieving subcontractor? Date: 9/29/2012 1:13 PM
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I am fuming over this and hope you guys might be able to offer advice. We run a small business and we were tipped off that one of our warehouse guys was stealing from us. We watched carefully and actually saw him take some items and put them in his car, we took photos of him doing this, and we immediately confronted him and we made him go to his car and give the items back. About $300 worth of stuff. We immediately fired him. He is a subcontractor, not an employee, so we technically didn't "fire him", we basically told him to leave and not come back. So, my partner deals with the warehouse guys and my partner thinks we are obligated to pay him his final paycheck. This paycheck will be perhaps $200 - I haven't seen his paysheet with his hours on it yet, but that's about the range. (He doesn't work too many hours.)

Does anyone know if we are legally obligated to give him his final paycheck? I tried googling this and it mostly said that if he was an employee, we legally have to pay him, but then it also said we could not pay him, and he would have to sue us to get his final check. He is a subcontractor, and apparently the law for employees is different. I am pretty mad about this, and he probably took maybe $2000 worth of stuff that we didn't know about, although we have no proof of this. I see absolutely no reason to pay him his last paycheck. Any thoughts or advice? Thanks.

Footsox
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Author: MichaelRead Big gold star, 5000 posts Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14665 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 9/29/2012 3:07 PM
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Does anyone know if we are legally obligated to give him his final paycheck? I tried googling this and it mostly said that if he was an employee, we legally have to pay him, but then it also said we could not pay him, and he would have to sue us to get his final check. He is a subcontractor, and apparently the law for employees is different. I am pretty mad about this, and he probably took maybe $2000 worth of stuff that we didn't know about, although we have no proof of this. I see absolutely no reason to pay him his last paycheck. Any thoughts or advice? Thanks.

Footsox


Subcontractor or someone who walked off the street theft is theft.

While your have proof of theft (i.e., photographs and testimony of others involved in apprehending him) you have not made a formal accusation of theft yet that is still an option.

While, as subcontractor he has worked to-be-paid-for hours, I would argue these hours were spend in arranging proven theft and, while it can’t be proven he was responsible for other missing merchandise, you can prove he was responsible for this theft.

Possibly your partner, in saying give a final check, just wants this to end and only cost $200 rather than expensive court fees. In that light I’d pay him off BUT I would, at the same time, say it is your option to open a case for theft using the evidence you have on hand.

What I would do is have all the evidence you have (pictures and testimonies from others involved) notarized and deposited with your company’s lawyer.

If you do follow the legal route I would suggest a restraining order not to be on your company’s premises. But I would hold that back to be used if he tries to ask for more than the $200 owed.

Your position now is accepting the $200 as final or the affair becomes public record.

MichaelR

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Author: desertdaveataol Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14666 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 9/29/2012 4:23 PM
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We watched carefully and actually saw him take some items and put them in his car, we took photos of him doing this, ...

I hope you saved the pictures. Someone will want to put the pictures up on Youtube, BAD idea he can sue you for that. But keep the pictures (under lock & key).

Hopefully it's not too late to call the cops. Call them! Make an official report listing witnesses. Have the witnesses give statements to the officer. Give the cops a COPY of the pictures. The officer will give you a case number. Save it with the pictures. After a week or two you may be able to get a copy of the report. Save it too. Be aware that a picture of someone carrying something is not in-and-of-itself proof of theft.

The subcontractor may lay him off or fire him because of this. He may go to the state to complain of "unfair termination" to get unemployment insurance. Be willing to go to the hearing (not a court thing) with the pictures and witness statements and back up your subcontractor.

Doing all this will accomplish two things.
One, it will assuage your anger (you'll sleep better).
Two, it'll protect you in case the thief tries to get back at you.

If you have a lawyer ask him about it.

Desert (The world's greatest excuse pales in the face of mediocre performance.) Dave
-- (Quotation, with attribution, permitted and encouraged.)

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Author: Donna405 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14667 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 12:48 AM
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The first thing you need to do is stop calling his last check his "paycheck". Per your statement, he is an independent contractor. There are various regulations regarding the differences between an independent or sub-contractor and employee.

Did your company require him to be at the warehouse at specific times? Was he required to work specific hours per day or week?

Donna

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Author: Donna405 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14668 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 12:49 AM
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Oh, I forgot to mention. If he is truly an independent contractor/sub-contractor, he would not be eligible for unemployment benefits.

Donna

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Author: desertdaveataol Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14669 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 12:59 AM
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Oh, I forgot to mention. If he is truly an independent contractor/sub-contractor, he would not be eligible for unemployment benefits.

Er... yes & no.

I agree he isn't entitled to any unemployment insurance from his work at the OP's business because he wasn't working for them.

However, as I said, the sub-contractor might fire him for being a thief and the thief might then try to appeal if denied unemployment from the sub-contractor's account. (States do these things differently and have different names etc. so my wording may not fit your state although the meanings are probably similar.

The subcontractor may lay him off or fire him because of this. He may go to the state to complain of "unfair termination" to get unemployment insurance. Be willing to go to the hearing (not a court thing) with the pictures and witness statements and back up your subcontractor.

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Author: footsox Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14670 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 2:27 AM
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Yes, he is definitely a sub-contractor. We know the rules regarding subcontractors. He is not required to be at our warehouse at specific times. We are also well aware that he is not elligible for unemployment. Thanks.

Footsox

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14671 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 8:51 AM
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You have two different issues. His contract with you governs his payments. I would imagine you are obligated to pay him for work done, but you would need to check the terms of your contract on that.

As a separate issue you can sue him or charge him for the theft.

I would very much doubt you can just decide to offset one with the other. That's what courts are for. Whether or not he WOULD make an issue of it is another question, but if you are obligated to pay him for work completed and don't he can sue you over it.

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14672 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 11:07 AM
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<<I would very much doubt you can just decide to offset one with the other. That's what courts are for. Whether or not he WOULD make an issue of it is another question, but if you are obligated to pay him for work completed and don't he can sue you over it.>>


Generally speaking, people are entitled to make offsets for damages against amounts owed. Theft is a tort, and a crime to boot.

If you owed someone $100 for services rendered but on their way out the door they had hit you over the head with a fireplace poker and put you in the hospital, would you still fork over the $100?

Furthermore, courts generally expect plaintiffs to come to court with clean hands. If someone sued you for amounts due when you had convincing evidence of theft, I would suppose courts would have little interest in awarding them amounts they might otherwise have been due.

After seeing convincing evidence that a crime had been committed, a court might just decide to order the offender arrested pending the filing of criminal charges. I suppose that might be a stretch to expect, but it might weigh on the mind of someone thinking about suing you.

In short, I wouldn't pay the guy if I had convincing evidence of the theft.



Seattle Pioneer

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Author: desertdaveataol Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14673 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 11:49 AM
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You have two different issues. His contract with you governs his payments. I would imagine you are obligated to pay him for work done, but you would need to check the terms of your contract on that.

I'm not sure I understand you here. The OP has an obligation to the sub-contractor which should be paid for the job.

The OP has no contract with the sub-contractor's employee thief.

So assuming the job is done as agreed the OP has no quarrel with the sub-contractor and should pay them.

Since the OP hasn't had a contract with the sub-contractor's employee thief he is under no obligation to pay the sub-contractor's employee thief directly.

Is that what you're getting at?

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Author: desertdaveataol Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14674 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 11:58 AM
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In short, I wouldn't pay the guy if I had convincing evidence of the theft.

Er... SP, it was the sub-contractor's employee who stole, not the sub-contractor. So, in my mind, the OP is obligated to pay the sub-contractor for work done.

Since the OP can prove only $300 of theft that would be the limit of damages and I doubt the OP has the time to go to small claims court to get it.

If the OP wants to continue working with the sub-contractor he'd be best served to let the matter alone now methinks.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14675 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 12:21 PM
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I may be mis-understanding, but I don't think this guy IS a "sub" contractor. If this company hires a contractor, and that contractor hires someone else, then yes, he's a sub. Is that what happened here? In that case there would be NO check directly to the "sub" contractor, so the OP's statement that there was a last "paycheck" would make no sense. The contractor would pay the sub, not the OP's company.

And yes, this company does still have to pay the contractor. Sure, you could ask for/expect chargeback for losses incurred by the sub, but the contractor would have to agree to that. My clients deal with chargebacks for E&O all the time, and there are offsets against contracts all the time. But it is always a mutual decision & an agreed-upon credit - usually done for the purposes of keeping good relations between main company and contracting company.

Again, you cannot unilaterally void a contract or do an offset. Not unless the CONTRACT says you can. You may FEEL you should be able to do so, but you cannot usually. Now, if you do so and the guy doesn't fight it, fine. But that doesn't mean he cannot fight it.

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14676 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 12:26 PM
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<< In short, I wouldn't pay the guy if I had convincing evidence of the theft.

Er... SP, it was the sub-contractor's employee who stole, not the sub-contractor. So, in my mind, the OP is obligated to pay the sub-contractor for work done. >>


Under the legal doctrine of respondeat superior, the employer is probably just as responsible for the thefts as the employee who did them, as far as damages go.

<< Since the OP can prove only $300 of theft that would be the limit of damages and I doubt the OP has the time to go to small claims court to get it.
>>


Theft is a tort --- a legal wrong. Prove that someone stole from you in civil court and a judge might well award you punitive damages to punish the wrong, and in this case criminal act.

A contractor who sued you to pay a bill for services that involved theft would be in a poor position in court, I would suppose.

Did he fire the employee after the incident? If so, I imagine he would have a tough time coming up with a witness and a defense. If he didn't fire the employee and the theft was proved, a judge might take a very dim view of an employer who would again foist such an employee upon the public as an employee.

The real issue in my view would be to be sure you have the evidence in hand to prove the theft. If you do, I think refusing to pay the bill, or to make only a partial payment might well be a reasonable thing to do.



Seattle Pioneer

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14677 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 12:30 PM
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<<Again, you cannot unilaterally void a contract or do an offset. Not unless the CONTRACT says you can. You may FEEL you should be able to do so, but you cannot usually. >>


If it were just a contract dispute, I would agree with you Ginko.


But the defense is that the person committed a tort and a crime against the victim. That makes it no longer a contracts case if the theft can be proved. And the victim isn't limited to the awards that might be made in a contract case, but might collect punitive damages to punish the tort and crime.


Seattle Pioneer

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14678 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 12:41 PM
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That makes it no longer a contracts case if the theft can be proved. And the victim isn't limited to the awards that might be made in a contract case, but might collect punitive damages to punish the tort and crime.
True - but all that is a matter for the courts. They make the call as to punitive awards, etc. The company can't just unilaterally decide to invoke themselves to act as court/judge/jury.

They may be able to easily win in court. They may be able to talk the contractor into an agreement that pay be reduced to AVOID dealing with courts (and should probably do so as this is the best and easiest path here). But they have no right to unilaterally do so.

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Author: desertdaveataol Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14679 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 12:43 PM
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I may be mis-understanding, but I don't think this guy IS a "sub" contractor. If this company hires a contractor, and that contractor hires someone else, then yes, he's a sub. Is that what happened here?

Hummmm... that's what I thought was happening, but you bring up an interesting angle: that the thief was the sub-contractor sub-contracted by the OP.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14680 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 12:50 PM
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There is no IRS category of subcontractor. There are only contractors or employees.

The guy is either a contractor to OP's company or he is a contractor or employee of another company, who in turn contracts to OP's company for services.

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14681 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 2:21 PM
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<< That makes it no longer a contracts case if the theft can be proved. And the victim isn't limited to the awards that might be made in a contract case, but might collect punitive damages to punish the tort and crime.
True - but all that is a matter for the courts. They make the call as to punitive awards, etc. The company can't just unilaterally decide to invoke themselves to act as court/judge/jury. >>


Sure they can. They simply refuse to pay --- and perhaps they make a demand on the contractor for payments from the contractor for damages.

A smart contractor who had theft by his employee proved would be wise to avoid going to court if possible.

The contractor is free to make a demand for payment and the customer is free to refuse to pay the bill presented.

That would leave it up to the contractor to decide if he wanted to go to court to enforce his claim.

The customer has no obligation to pay a bill just because it's presented to him.



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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14682 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 3:55 PM
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You are mixing up two things.

What you suggest, is exactly what I said should be done. You can say, "heck no we won't pay," and hope the contractor accepts your take on it and agrees not to make a stink. That's what most people will choose to do in these circumstances.

But you have no actual legal right to do so. The contract is for work done, and you cannot withhold it based on other factors if they did the CONTRACTED work. Despite the fact they may have also embezzled while performing said work. Not legally. Now if you decide to make a point of it, call his bluff and hope he won't sure you over it (and you counter-sue him for the theft) that's fine. But you still have no actual legal right to withhold payment for contracted services that were completed.

What you suggest is a negotiating tactic, and a common and viable one. It has no basis in law though.

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Author: Donna405 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14683 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 4:00 PM
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It was my interpretation that the thief IS the sub-contractor.

Donna

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14684 of 14985
Subject: Re: Final paycheck for thieving subcontractor? Date: 10/1/2012 4:45 PM
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<< But you have no actual legal right to do so. The contract is for work done, and you cannot withhold it based on other factors if they did the CONTRACTED work. Despite the fact they may have also embezzled while performing said work. Not legally. Now if you decide to make a point of it, call his bluff and hope he won't sure you over it (and you counter-sue him for the theft) that's fine. But you still have no actual legal right to withhold payment for contracted services that were completed.
>>


Sure you do.


You are neglecting the fact that the contractor has obligations under the contract as well --- such as providing employees who don't steal from the customer.

You seem to suggest that customers have an obligation to pay the bill just because it's submitted by the contractor and that's not the case. A bill is just a claim by the person submitting it.

A person with a claim can accept what he is given or sue the person if he wants more.


You seem to be suggesting that a contractor is free to lie, cheat and steal and then be paid under a contract that was signed. That's bogus.



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