Yes, it's binding. And two, I am gonna go out on a limb here and bet that if the tables were turned and her employer owed her $500 she would see the cause to go after it and it Would "make or break her".

Good Lord, what is it with people and double standards?

I would totally send her a registered letter telling her she needs to pay you in CASH or certified cheque by XX date and that if payment is not received you will be filing a suit against her in small claims. And if she does not pay then GO AND FILE suit. When she loses she will have to not only pay for the $500 but for the day's pay you lost to go to court and the fee to file.