Loki Aftermath Looks Bad

einer writes "Things look mighty bad for Loki employees. From this article it appears that some of them haven't seen a paycheck since late 2000. Perhaps the most telling part of the article is contained in a parenthetical near the bottom of the page: "A single employee is listed in creditor filings as being owed almost $350,000 in unpaid salary and in expenses the company incurred using the employee's credit card."" there's a lot of not-so-happy-stuff in this article.

Comments

60 days

[wiredog]

I think. Or maybe 30. Still. The company used his credit card? I think he might want to consider criminal theft charges against the principles. Or would it have been considered a loan?

"Corporate Card"

[kawika]

Wow, I never thought about this scenario, I've been lucky enough to never be there. A lot of companies issue corporate American Express cards to their employees so they can charge company expenses such as airline tickets, small equipment and software, etc. The employee is supposed to then file an expense report and be reimbursed for those expenses. Regardless, the employee is responsible for paying the card balance.

In this case it sounds like the employee was royally screwed by this arrangement. It's also possible that they never got around to filing an expense report. A few years ago I worked with one guy who hadn't filed expense report for eight months and was owed a few thousand dollars; the company sent him a letter saying he had to file by the end of the year or they wouldn't reimburse him.

Re:Whoa, doesn't the US protect its citizens ?

[Ravensfire]

Well, not quite as simple as that.

Basically (and highly simplified), creditors are placed in various groups (no, amount owed isn't a criteria - other factors are). These groups are then paid off in a set priority. If you are a creditor with an unsecured debt, you're not getting much. Within the group, the money is usually distributed in a level manner - x percent per dollar owed.

Usually, everyone in bankruptcy gets screwed, especially chapter 9.

What the courts CAN do is examine past transactions from the company, and compel the reversal of those transactions.

Re:at what point

[OverCode@work]

Loki was a little different. For the most part, everyone WANTED to work there, and believed in the company. It's easy to believe promises and speculations when you trust the administration and have a sense of a common goal.

-John (former Loki contractor)

Paid in Loans?

[Sir Tristam]

During at least part of the period when employee payrolls were not met, Loki sometimes gave employees "advances" on salary owed. Former employees say that these advances were in the amount of their net pay; the benefit to the company was that federal and state taxes on the payroll were not paid, because the money was treated as loans rather than pay.

If I were a Loki employee that received one of these "advances", I'd make plans to talk to a lawyer, because the screwing might not be over. If these payments were actually made with the understanding that they were loans against future salary payments, the bankruptcy court might view the amounts as monies owed to the company, and thus an asset of Loki. If so, the employees might be required to repay the full amount, and then file as creditors for the amount of their salary owed (Pay back $1, get back $0.10 if you're lucky.) I would think that a 1099 for the 2001 tax year for the amount of the advances received would be evidence that the advance amount had been forgiven, so the emplyees shouldn't have to worry about amounts advanced in 2001; however, the court might still consider any of these advances made in 2002 as loans. IANAL, but I would think it would be prudent to talk to one in this situation.

Chris Beckenbach

1099s? That bugs me.

[Yekrats]

But it doesn't surprise me. Some companies are slimy like that. Heck, it happened a couple of years ago to my wife.
Fortunately for us, the IRS has pretty stringent rules on who is and is not a contractor. If it's called into question, there's 20 Guidelines which the IRS uses to determine if a person is self-employed or an employee.

If you think you're an employee, but your employer dodges their own taxes by handing you a 1099, you can petition the IRS to look into it. Check out Form SS-8.