Employees Claim Cash Flow Problems at 50 Below

By KBJR News 1

November 30, 2011 Updated Dec 1, 2011 at 1:52 PM CDT

Duluth, MN (Northland's NewsCenter) - A group of workers at a major Duluth technology company are angry and worried because they weren't paid for more than a week leading up to the Thanksgiving holiday.

Their employer, internet marketing and web design company, 50 Below admits its having cash flow problems. Former employees say this isn't the first time this has happened.

For nearly 13 years, "50 Below" has been dedicated to helping thousands of companies expand their reach on the internet.

Current and former employees tell the Northland's NewsCenter, on numerous occasions, they've had to wait -in some cases more than a week- to get paid for their work.

And sometimes, certain employees would be singled out to take the hit.

Karl Anderson, a former Senior Account Executive said "sometimes if they knew they'll be short on payroll then they usually asked employees who aren't supporting families if they can go without a check for a few days."

Another former employee, Scott Herrington, who worked with the company for a year said quote "They split the employees in half so they would have two pay cycles. They didn't have enough cash to give a check to everyone on the same day. They would still bounce."

Current employees, who asked to remain anonymous, fearing for their jobs, told us via e-mail they've had checks bounce or have been asked to hold off on cashing their checks for up to a week.

One employee told us: "If (clients) don't pay on time, (employees) don't get paid on time."

A former employee claimed: "my checks bounced so many times they started paying me with cashier's checks or even straight cash."

When reached for comment, 50 Below owners declined an on camera interview, but released a statement regarding the most recent missed payroll.

"50 Below experienced some unforeseen accounts receivable delays in early November which led to a temporary cash flow deficit. The problem has been resolved."

Despite the delayed payroll, both current and former employees say they've always eventually received their pay.

Several of 50 Below's current employees reached out to us and said despite internal payment issues, they are basically satisfied with where they work.

Workers were supposed to receive their most recent paychecks on November 18th. We understand most were paid Tuesday of this week, nearly 10 days late.

A majority of the people we spoke with for the story, said they all held high regard for their fellow, dedicated co-workers and the company itself.

50 Below has had problems in the past, going back to 2000, with paying taxes. The company was also investigated at one point by the IRS for failing to pay employee taxes.

According to records obtained by the Duluth News Tribune, the company, over time, owed about $7.5 million in unpaid taxes to various government agencies, including the IRS, the Minnesota Department of Revenue and the Wisconsin Department of Revenue.

Currently, 50 Below owes about $500,000, some of that to the U.S. Department of Justice after pleading guilty to embezzling from their employee's 401k fund.

They also owe money for failing to pay withholding taxes to the Minnesota and Wisconsin Departments of Revenue.

Read more from the Duluth News Tribune

Kevin Jacobsen
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