Unpaid Residuals and No Notice of Contract Termination

[ke123]

My question involves independent contractors in the state of: California

I work as an independent sales representative (ISR) for a merchant service provider and receive monthly residual income based on credit card processing of merchants I have signed up with them and that other ISRs under me have signed up (I receive a percentage of revenue). My spouse also worked for the same company as a salaried, upper management, exempt employee but was recently terminated and received severance pay. My spouse did not receive residual income. The separation agreement for my spouse did not state that my business agreement would also be terminated. In the separation agreement, it stated: "Company" and "Employee", heirs, executors, administrators, successors and assignors (collectively referred to as "employee"), enter into this Separation Agreement and General Releases....etc..... There was no mention of my business or residual income in the agreement. The severance package only included payment for 10 days pay per calendar year of service. There was no mention that this would also include a buyout of my portfolio or residual income for June and half of July.

The company decided not to pay me any more residuals and did not give me notice. I am a separate business entity and have filed DBA paperwork and received residual income under my business name. My spouse is not listed as a party under my business name nor is my spouse’s name listed on the contract or the checks I received. My contract states they need to provide me with written notice. I copied the relevant text of my contract below:

Section 3.2 Termination. - This Agreement may be terminated at any time as follows: (a) Voluntary Termination: This agreement may be terminated without cause or prejudice by either party immediately upon receipt of written notice. All payments due to the ISR will continue and apply as per sections 2.1 and 2.3. (b) Termination for Cause: If the ISR commits a breach of this agreement the company shall provide written notice of such breach to ISR requiring the same to be cured within 30 days from the date of receipt of the notice. If the breach is not cured in said time period the company may terminate this agreement, in which event the ISR will not be entitled to payments as described per section 2.1. (c) Either party may terminate this Agreement if the other party (i) becomes insolvent; (ii) fails to pay its debts or perform its obligations in the ordinary course of business as they mature; (iii) becomes the subject of any voluntary or involuntary proceeding in bankruptcy, liquidation, dissolution, receivership, attachment or composition for the benefit of creditors.

Section 2.1: Compensation to ISR - ISR shall receive monthly residual income, payable to ISR for the life of an account that Company is deriving revenue. Merchants signed by ISR must remain in compliance with the merchant service agreement and the provisions of section 1.3 and the monthly compensation payments to ISR must exceeds Fifty Dollars ($50.00) per month. Not later than (45) days following each month for which compensation is due to ISR hereunder, Company will pay to ISR an amount equal to such compensation as is determined by this application hereto and incorporated herein for all purposes. ISR calculated compensation hereunder will be funded by crediting an account maintained by ISR or delivered with a check via the U.S. Postal service for that purpose.

Section 2.3 Compensation to ISR Following Termination - Company shall continue to pay ISR for as long as Company is deriving revenue from any merchant unless the Company has terminated this agreement for cause as described in 3.2 below.

My spouse was terminated in mid-July but I did not receive my residuals for the month of June or the first half of July. Can the employer terminate my contract just because they terminated my spouse from employment? Is my business name and contract filed with them considered an "heir" under my spouse's separation agreement? Again, the separation agreement did not mention my business as part of the agreement. My spouse contacted the former employer today and the employer seems to think "heir" also means my business too. Again, there was no written notice of the termination of our agreement. The only way I found out that it ended is that I did not receive my residual check for June which normally comes on July 25th. I emailed the company about it July 27th and received a reply back today, July 30th which stated "Per the severance agreement that was signed and sent back, no further payments are due". They are referring to my spouse's severance agreement which stated nothing about my residual income. Another question, shouldn't they at least pay me for June residuals and half of July residuals since he was not officially terminated until mid-July?

[Mr. Knowitall]

If you are an independent contractor and your former client owes you money, you can sue them for the amount they have not paid.