California Wage Theft Recovery System

Employer Went Bankrupt or Vanished? Wage Recovery Paths That Still Work

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by

timothymccandless
in

A shuttered storefront does not erase wage debt. Between bankruptcy priorities, industry bonds, personal liability, and state funds, workers have more routes than they think.

What California Law Says

Bankruptcy law gives recent wages priority claim status up to a statutory cap; Labor Code section 558.1 reaches responsible individuals; and certain industries — farm labor contractors, car washes, garment manufacturers — carry mandatory bonds and special funds for unpaid wages.

How to Fight Back, Step by Step

  1. If bankruptcy was filed, submit a proof of claim promptly and mark the wage priority box.
  2. Identify individually liable owners and managers and pursue them under section 558.1.
  3. Check for industry bonds through the licensing agency — a bond claim can pay in weeks.
  4. For garment work, file with the state’s garment fund; for farm labor, claim against the contractor’s bond and the grower jointly.
  5. Keep the judgment alive — assets and successor businesses surface later.

Common Questions

The owner says the LLC has no money so I get nothing. True?

LLC protection is not absolute — personal liability under 558.1, alter ego facts, and fraudulent transfers all cut through in wage cases.

Do I need a bankruptcy lawyer to file a proof of claim?

No. The proof of claim form is short and free to file, and our kit includes a completed sample for wage claimants.

Get the free California Wage Theft Recovery Kit — demand letters, Labor Commissioner claim worksheets, penalty calculators, and AI prompts to customize every document to your facts. Free, no email wall, at wagetheftkit.com. All five Justice Foundation kits are at justiceprompt.com. Educational use only — not legal advice.

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