Should You Sue Your Former Employer in Small Claims Court?

Today I read the following message posted on the Internet.

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Should I sue my former employer?

I recently worked for a contractor (who was also a good friend of mine at the time) and I trusted him to pay me. I was to be paid $10 an hour for various duties. The last 5 weeks I worked for him I did not receive any pay, he just kept saying money was tight and he would get it to me once the house we were working on was finished, and since he was a friend I trusted him. Not only did he not pay me but he kept ALL of my tools I had on the job… he currently owes me roughly 2 grand. Should I sue him or get a mediator? How do I go about doing it?
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Here is my answer.

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Since you and your former employer used to be good friends, you can take a few steps before suing him.

First, send him a letter. Explain (calmly) why you think that he owes you $2K, and ask him to call you and tell you when he wants to pay that money and return your tools.

If you don’t hear from him within a week, send him another letter. This time, warn him that if you still don’t hear from him within 5 days, you will have no choice but taking further steps for getting your money and tools back.

If your second letter still does not work, you should be able to file a lawsuit in small claims court. To find out the maximum amount you can file in small claims court in your state, click here.

Keep in mind, though, that winning in court and getting your money are two different things. If you win, the judge is not going to cut you a check. The burden to collect is still yours.

Thus, if your small claims court offers mediation, try to negotiate a mediated settlement agreement, which will increase your chances of getting your money and tools back. Your mediated agreement, which both of you will sign, could be something as simple as this:

  • By May 31, 2011, Defendant (your former employer) will return to Plaintiff (you) the following tools: Tool a, tool b, tool c, and so on.
  • Defendant agrees to owe Plaintiff $2,000 to be paid in monthly installments of minimum $1,000, starting June 1, 2011 until the entire amount is paid off. All payments by money order, to be mailed to (your address) return receipt.
  • If Defendant fails to pay the above amounts on time and in full, Plaintiff will ask this court to enter a judgment against Defendant for the balance owed.

Finally, keep in mind that if you take the small claims court route, you will have to spend a few hours for filing the claim, preparing your case, showing up in court, going through mediation, and possibly going through the trial.

Thus, depending on the value of your time, you might also want to consider another option. You and your former employer/friend can try to resolve your case through online mediation: by video or phone conference, and email.

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