A Midway memo given to laid-off employees says they will not be paid for time worked. The Raleigh attorney representing Midway says the company filed a motion with the bankruptcy court asking that it be allowed to honor pre-bankruptcy wages and benefits. The court turned down the request.
The North Carolina Department of Labor is investigating to see whether state wage and hour laws may have been violated.
"We, to the extent that there's been a violation of North Carolina law, would be seeking to go around that process through the police power of the commission of labor to enforce North Carolina law," says Barbara Jackson, general counsel for the State Department of Labor.
Bankruptcy attorney Terri Gardner does not represent Midway, but says federal law is clear.
"The debt incurred before Chapter 11 cannot be paid without court approval. This is a very strict rule that the company must adhere to unless the court orders otherwise," she says.
Midway employees who have been laid-off do have recourse through the court under the company's reorganization.
Jeb Jeutter, the attorney representing Midway, stresses two things. Midway did not make a conscious decision not to honor claims for back pay. That decision was made by the courts.
In addition, laid-off employees do have a priority claim to be paid what they are owed by the company up to more than $4,000 before general and unsecured claims against the company are paid.
Laid-off employees should look for a proof of claim form in the mail. Check it thoroughly, fill it out and check the box -- priority claim.
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