What legal options exist when an employer claims bankruptcy but keeps operating without paying wages?

Lexi, Chatbot

I understand how frustrating it can be to deal with unpaid wages from a previous employer. Can you tell me how long it has been since you were owed this money?

Lexi, Chatbot

Have you already attempted to contact your former employer regarding the unpaid wages?

Lexi, Chatbot

Is there anything else the Employment Lawyer should know before I connect you? Rest assured they'll be able to help with your unpaid wages.

Dan

Hello, and welcome to our service. My name is Daniel, and I've been a licensed attorney for over 22 years. I'm sorry you're dealing with this situation, and I'll do everything I can to help. It sounds like you're owed money from a previous employer who claimed bankruptcy but is still trading. Is that right?

Dan

It sounds like you have been through a frustrating and unfair experience. You worked for an employer who still appears to be operating but has claimed bankruptcy, leaving you unpaid for nearly a year. That combination can feel confusing, especially when the business continues trading as if nothing happened.

Under federal law, the Fair Labor Standards Act (FLSA) requires employers to pay employees for all hours worked. (29 U.S.C. § 206) In cases of bankruptcy, your claim for unpaid wages becomes a priority debt under the U.S. Bankruptcy Code, meaning it ranks higher than most other unsecured debts. In plain terms, you have a legal right to be paid, even if your employer is in bankruptcy proceedings. Let's go over some practical steps you can take to move forward:

1. One option is to file a proof of claim in the employer's bankruptcy case. This is a formal document that notifies the bankruptcy court you are owed money. Typically, employees owed wages from the 180 days prior to the bankruptcy filing are considered priority creditors up to a certain dollar limit, which increases periodically based on inflation. (11 U.S.C. § 507) To do this, you would need the case number and information about the bankruptcy court handling the matter. The U.S. Courts website provides the appropriate form, and you can file it yourself or ask a local bankruptcy attorney for help.
2. A second option is to report the unpaid wages to the U.S. Department of Labor's Wage and Hour Division. This agency investigates wage violations, including cases tied to bankruptcy when employers continue operating. If the business is still trading, the Department can determine whether the bankruptcy claim was legitimate or whether the employer violated wage laws. Filing a complaint does not cost anything, and in some cases, the DOL can recover the wages directly from the employer or through legal enforcement. (29 U.S.C. § 216)
3. A third approach is to consult with a local employment or bankruptcy attorney to explore whether you can assert personal claims against the business owner. If the company continues trading under the same name or ownership, there might be grounds to argue that the bankruptcy was being misused to avoid paying workers. An attorney could help you request records, identify potential fraud, or file a claim in small claims court or state labor court if appropriate. Many lawyers will initially review your case at low or no cost.

Of these choices, I would suggest beginning with filing a proof of claim and contacting the Department of Labor. Both steps create an official record that you are owed wages and can trigger direct recovery efforts. If those actions do not resolve the problem, then a local employment lawyer can guide you further. Please let me know if these options make sense to you. I am happy to explain anything further. It's important to me that you fully understand your choices.

Dan

Thank you so much for sharing your questions with me. I truly appreciate the opportunity to assist you and am very glad you reached out. If you have any additional questions, now or later, feel free to reach out.