As an independent contractor or salesperson, not getting paid for a product or service can be a frustrating experience. Especially when a client avoids your calls. Although it may seem like your choices are limited, you have a few options to take legal action:
Request a final demand for payment.
Take legal action by filing a lawsuit in a small claims court.
File a lawsuit in a civil trial court.
Typically claims filed against a customer should be submitted in the county where the customer resides or operates their business. We recommend consulting with anemployment attorney in Los Angeles before taking legal action. A legal professional can provide a detailed overview of your case and determine how to recover money in either a small claims court or civil trial court.
Make a Final Demand
Although it is not an ideal situation, after repeated attempts of trying to collect a payment, but before you sue you should try one more time. Instead of confronting an individual directly, send a final demand letter indicating they have an outstanding bill with your company. If you work on commission, their inability to pay not only affects your job but also impacts the company’s financial position.
In most cases, this has been a successful approach. Depending on how long you have been trying to reach the client, it may take just one last chance before you see results. When you take legal action, an attorney for commission-related crises will ask if you tried to settle before going to court. If your client does not pay, then you should prepare a lawsuit with your legal counsel.
Small Claims Court
Small claim courts were established to resolve disputes quickly and efficiently. As a court of limited jurisdiction, claims regarding monetary disputes can range from $1,500 to $25,000 according to AllBusiness. That makes a small claims court ideal for businesses and salespersons. However, unlike a regular court, appeal rights for plaintiffs and defendants are limited. Attorneys are seldom involved, even if they are permitted to represent or provide legal advice to the plaintiff.
All you need is an official contract or invoice of the debt owed to you and your business to prove your case. The client may try to refute your claim or excuse why they have not provided payment, but you may settle in court. However, if the defendant doesn’t show up in court, you automatically win and can proceed with a stronger legal approach to collect the debt.
Civil Trial Court
If the amount of the debt exceeds $25,000, you can sue in a trial court (state court). The debt collection process is straightforward, but like a small claims court, you can still retain an attorney to assist as needed. As the plaintiff, you should know about the rules and procedures for bringing a lawsuit against the defendant. The customer may be more inclined to settle their debt in a state court than a small claims court, as there are more legal consequences associated.
For more information about how to settle your case and litigation concerns against your client, reach out to our team of attorneys at Mann & Elias!