Government funds help workers recover wages

By CHRIS MEGERIAN
The Atlanta Journal-Constitution
Published on: 07/20/08
The former employees of America's Kitchen may never receive their final paycheck, and their lawsuits could be ineffective if the company is simply out of money.

But the same situation would not have happened in states like Oregon, which created a government fund to allow workers to collect up to $4,000 in lost wages. Called the Wage Securities Fund, it was established following the recession of the early 1980s.

"It was a time period when we had a lot of workers that had families that winded up without income," Oregon Labor Commissioner Brad Avakian said.

The fund did not require a tax increase. Instead, it is financed by rerouting .03 of 1 percent of the state employment tax. The fund already has paid about $16 million since 1986, and it is expected to collect more than $3.6 million between 2007 and 2009.

Christine Hammond, administrator for the Wage and Hour Division of the Oregon Bureau of Labor and Industries, said 80 percent of workers receive payment within 45 days of applying.

Maine has a system similar to Oregon's, called the Wage Assurance Fund. Created in 1979, it will pay up to two weeks in lost wages. Recently the fund dished out about $70,000 to 136 workers that lost jobs at a health care company.

"A lot of people live paycheck to paycheck," said Adam Fisher, director of public affairs for the Maine Department of Labor. "And when you lose one paycheck, it makes a world of difference."

But in Georgia, there are no such protections, lawyers specializing in bankruptcy and employment law said. Employees are generally unsecured creditors, meaning their wages are not guaranteed.

"It's an unfortunate circumstance," said Jess Austin, an Atlanta-based bankruptcy lawyer at Paul, Hastings, Janofsky & Walker.

Austin said that employees are generally better off if the company files for bankruptcy. A "first day" motion filed by the company can allow the payment of back wages before proceedings begin in earnest.

Also, former employees can file a priority claim that can allow them to get paid faster than other unsecured creditors.

John Thompson, an employment lawyer for Atlanta law firm Fisher & Phillips, said the federal Fair Labor Standards Act requires that employees get paid at least minimum wage and overtime, but he emphasized that it's not always that simple.

"Your [court] judgments are not worth anything if there are no assets," he said.