Opinion
No. 78 B 7481
May 25, 1979
Wage Earners' Plans — Eligibility — Self-Employed Contractor
A self-employed contractor paid on a commission or per job basis was a "wage earner" within the meaning of Section 606(8) of the Bankruptcy Act.
Section 606(8) provides that `wage earner' shall mean an individual whose principal income is derived from wages, salary, or commission." The debtor's employer, noted the court, withheld neither social security nor state and federal taxes, and did not provide the debtor with wage statements. Payment was made to the debtor on a commission or per job basis. In addition, the debtor received regular compensation for tending bar. The issue confronting the court was whether the debtor was a wage earner within the scope of Chapter XIII.
Reliance was placed on the case of In re Reed, CCH Bankruptcy L. Rep., ¶ 62,982, where it was held that a debtor who was self-employed carpenter was a wage earner entitled to Chapter XIII relief. The carpenter worked for numerous people at an hourly rate on an odd job basis, and no taxes were withheld from his earnings. The case at hand, reasoned the court, fell squarely within the holding in Reed. While employed, the debtor received compensation for personal services, and, was also a salaried bartender. Furthermore, it seemed clear that the debtor was not engaged in business at the time of he filed his Chapter XIII petition. Thus, in conformance with Chapter XIII's rehabilitative purpose and in light of the Reed decision, the court held that the debtor was a wage earner within the meaning of Section 606(8). Accordingly, the motion to dismiss the debtor's petition was denied. See Sec. 606(8) at ¶ 3711.