Commercial Debt: Can You Stop Work If You’re Not Getting Paid?
You are not getting paid. Commercial debt is increasing and your A/R is higher than you’d like it to be. Can you stop work if you are not getting paid? The answer is sometimes yes and sometimes no.
Every industry has its own policies and procedures for stopping work when not getting paid. For example: lawyers are not permitted to stop work without asking permission from the Court, architects and engineers that use the AIA contract generally have to continue working for a pre-agreed number of days before stopping work, those in construction must follow specific protocols and generally can not just walk off the job.
Regardless of the industry you work in you must:
1. Consult the contract. Each contract/engagement has their complexities and includes what you may do in the event of non-payment.
2. Understand the reason for non-payment. For example, if you are a subcontractor and the owner will not approve change orders there is a generally recognized protocol followed in the industry. If non-payment has to do with your product or work it is up to you to resolve the issue. It generally does not include walking off the job.
3. Maintain complete records and documents. Often payment is delayed by incomplete documentation. Have all your backup documents ready and available to provide them as required.
4. Satisfy all “conditions precedent.” Often you will find conditions that must be met before payment can be made. These may include certain approvals of plans, finished work and inspections of completed work.
If you are not getting paid, it is imperative that you seek advice before stopping work or walking off the job. Do not walk off based upon your anticipation of not getting paid without seeking advice from commercial debt collection counsel. The consequences for walking off the job may cause you to forfeit any right to recover the monies owed you and you may be liable for costs to replace you as well as injuries or damages that occurred as a result of your work stop.
Call this commercial debt collection attorney to find out if you can walk off the job at (212) 686-0100 or email Jocelyn directly at JNager@ffgnesqs.com.