16 ms·

I think the title should be changed back. The author glosses over the single, real biggest red flag: She never received any paystubs and the company was late o

by uiri 10y ago

I think the title should be changed back. The author glosses over the single, real biggest red flag: She never received any paystubs and the company was late on payroll as of before she was hired I have never, ever been paid without either a paystub (as an employee) or generating an invoice which the business then paid (as a freelancer). The outright refusal to share how they arrived at the figure on her cashier's cheque should have sent her looking for a new job in the Bay Area or back to Texas. The real lesson from this story is to always have a backup plan when making a big move: what do you do if you arrive and there is no job/no money? what do you do if you arrive and there is no apartment/room/house/etc.? Scammers exist and there is only so much you can do from a distance to avoid them.

themartorana 10y ago
Also this really isn't a Buzzfeed list - it's a rather personal story, with a little fraud sprinkled in for funsies.
jomamaxx 10y ago
This is not a huge flag. When a company starts up, it's difficult for them to get the money operating as per regular. He got paid - that's what matters. The paystub is a minor thing/
- einhverfr 10y ago
  Pay people in regular ways through regular channels. Seriously, though, ADP delivers paystubs. If they were using ADP, they would have gotten paystubs.
  - jomamaxx 10y ago
    When a company has just started, they may have not set this up. You can invoice the company. It's not a big deal. Again - of all flags - lack of pay stubs is the least of them if it's just a garage startup with 3-ish people. The actual exchange of money is 100x a stronger indicator of health than the presence of a stub.
    - dalke 10y ago
      This account had a dev team of 8 when she interviewed in May and 17 when she arrived in July, with an office in Santa Clara. That is not "a garage startup with 3-ish people."
    - elithrar 10y ago
      > You can invoice the company. It's not a big deal. Nonononono. You're hired as an employee. There is a legal and ethical agreement for them to pay you at the intervals agreed upon in your contract. There are no ifs or buts about it, no invoicing them, no excuses for 'just started'. Payroll is NOT hard.
      - jomamaxx 10y ago
        "Nonononono. You're hired as an employee. There is a legal and ethical agreement for them to pay you at the intervals agreed upon in your contract. There are no ifs or buts about it, no invoicing them, no excuses for 'just started'. Payroll is NOT hard." No - you are completely wrong. There is absolutely nothing wrong - or even remotely immoral - about paying using invoicing while a company gets going. It's common and normal. And payroll is not easy - it's a huge mess - and it can be very complicated. If a founder, with funding, told me: "Invoice us for the first two months until October when we are up with payroll" I would have no problem with that so long as I was getting paid. Again - of all things, it's not the issue. The non-payment, the lies about funding, the loans from staff, and all the rest were bad signals. What's odd is how nobody seemed to have anything to say about the product itself ...
        infinite8s 10y ago
        Apparently there is no product...
        dalke 10y ago
        Could you enlighten me as to the mechanics? If my contract says I'll be paid monthly on the 15th, when do I send in the invoice? Are the payment terms net-10, net-30, or longer? Do I need to break out sick or vacation days as its own line item? What about the deductions? Who is responsible for figuring out and paying the payroll tax? Because it sounds like asking for an invoice is a way for the company to avoid paying unemployment tax, social security, etc. That in itself would be a red flag. If the invoice is not paid, can I file it as a wage claim or do I use some other mechanism? These are the obvious questions. If as you say it a common and normal practice, there must be some place which describes the basic details. If payroll is hard for a company, why is it any easier for the employee to figure out these payroll details?
- Lalabadie 10y ago
  Startup or not, you don't offload the risks of making payroll onto your employees.
  - jomamaxx 10y ago
    "Startup or not, you don't offload the risks of making payroll onto your employees." What are you talking about? Invoicing your startup for a payment is perfectly normal, and has nothing to do with 'offloading the risks of making payroll'. Again - getting paid without a pay stub is utterly irrelevant to a new startup. What matters is getting paid and hopefully it's done in an above the board manner, but the transfer of money is the primary indicator of risk - not the pay stub. There is absolutely nothing wrong with not using payroll services for the first little while while a startup gets going, and it has nothing to do with the ability of an entity to pay you. If you are getting paid consistently - through invoicing or whatever means, this is a good signal. By the way - although the story is pretty scary (and hilarious) - the author is also a little bit naive. Everyone involved seems to be a little inexperienced. The contract you sign is only as valid as the parties backing it up! Just because someone gives you a 'piece of paper' that may be legally binding, does not mean it has any integrity. The author should have done a basic bit of homework or point blank asked some very basic questions about funding status. He joined a company 'assuming' there was a round of funding, but that turned out to not be true. From my reading of the article, it doesn't seem as though the founder lied, but rather mislead the author. A few simple questions such as: "who has backed you, for how much" - or even a check on Crunchbase would have sufficed. Again - a contract is only has the amount of real integrity as the people signing it. Your ability to enforce it is not just a matter of law - it's a matter of the reality of the entities ability to do so. Anyhow, I'm glad it was written up so that people can learn form it.
    - awinder 10y ago
      "If you are getting paid consistently - through invoicing or whatever means, this is a good signal." But that's not what happened, because they were late, enough so that people were filing their rent late. How about -- "Startup or not, don't take your employees for 'free credit'"? Or, more brief: "Fake it till you make it, but don't break the flippin' law".
- snowwrestler 10y ago
  If a company can't produce a paystub with a paycheck, I doubt that they are handling accounting and taxes properly. Paystubs don't need to come from ADP. They can be typed up or even hand-written if you want. But they demonstrate, and record, that the company is fulfilling its legal obligations as an employer, and give the employee the information the employee needs to fulfill their legal obligations as a taxpayer.
  - e28eta 10y ago
    I wonder how this will play out in April. I seriously doubt the company is properly withholding & paying the payroll taxes. I guess it's not even clear whether or not they'll be filing a W2 for her.
- st3v3r 10y ago
  No, this is huge. Paystubs are a major thing. And if you can't get the money operating, then you shouldn't be hiring people. And if you are, you should be up front about it. You are NOT entitled to people working for you for free, under deceptive pretenses.
- thatthatis 10y ago
  It takes about 8 minutes to setup gusto to create w2 pay stubs at a cost of $25/mo +$4/employee. If you're in "this may fail at any time" mode you can pay people 1099 as contractors. going from w2 with pay stubs to no pay stubs means they're out of money and saving as much as they can be not paying payroll tax.
- CIPHERSTONE 10y ago
  That's not what matters. What matters is that the information is correctly documented. Taxes man. They make a difference. Say I make $100 a day before taxes. I get a check that shows they took out $25 for federal, $5 for State, etc. Whoopie, my take home is $70. At the end of the year I get a W-2 showing all the taxes they company took out etc.. But what if they just give me a hand written check for $70 made out to me, Joe Blow. There is no indication of taxes being taken out, but hey, I got $70, so all is great right? Wrong.. At the end of the year I get a W-9. They say I wasn't an employee but a contractor. I have no proof that they took out taxes and now suddenly I am on the hook to pay taxes to the government that were already taken out by the crappy employer and pocketed. See the problem now?
CIPHERSTONE 10y ago
I know this to be the biggest red flag from personal experience. Happened to me at a small start up in Illinois of all places 20+ years ago. I was fresh out of college the naive to things, trusted in the owner. Got royally screwed. It was a formative experience that I wouldn't wish on anyone but it taught me a very valuable lesson the result of which is that I have only worked at well established companies since.

by uiri 10y ago

themartorana 10y ago

Also this really isn't a Buzzfeed list - it's a rather personal story, with a little fraud sprinkled in for funsies.

jomamaxx 10y ago

This is not a huge flag. When a company starts up, it's difficult for them to get the money operating as per regular. He got paid - that's what matters. The paystub is a minor thing/

einhverfr 10y ago
Pay people in regular ways through regular channels. Seriously, though, ADP delivers paystubs. If they were using ADP, they would have gotten paystubs.
- jomamaxx 10y ago
  When a company has just started, they may have not set this up. You can invoice the company. It's not a big deal. Again - of all flags - lack of pay stubs is the least of them if it's just a garage startup with 3-ish people. The actual exchange of money is 100x a stronger indicator of health than the presence of a stub.
  - dalke 10y ago
    This account had a dev team of 8 when she interviewed in May and 17 when she arrived in July, with an office in Santa Clara. That is not "a garage startup with 3-ish people."
  - elithrar 10y ago
    > You can invoice the company. It's not a big deal. Nonononono. You're hired as an employee. There is a legal and ethical agreement for them to pay you at the intervals agreed upon in your contract. There are no ifs or buts about it, no invoicing them, no excuses for 'just started'. Payroll is NOT hard.
    - jomamaxx 10y ago
      "Nonononono. You're hired as an employee. There is a legal and ethical agreement for them to pay you at the intervals agreed upon in your contract. There are no ifs or buts about it, no invoicing them, no excuses for 'just started'. Payroll is NOT hard." No - you are completely wrong. There is absolutely nothing wrong - or even remotely immoral - about paying using invoicing while a company gets going. It's common and normal. And payroll is not easy - it's a huge mess - and it can be very complicated. If a founder, with funding, told me: "Invoice us for the first two months until October when we are up with payroll" I would have no problem with that so long as I was getting paid. Again - of all things, it's not the issue. The non-payment, the lies about funding, the loans from staff, and all the rest were bad signals. What's odd is how nobody seemed to have anything to say about the product itself ...
      - infinite8s 10y ago
        Apparently there is no product...
      - dalke 10y ago
        Could you enlighten me as to the mechanics? If my contract says I'll be paid monthly on the 15th, when do I send in the invoice? Are the payment terms net-10, net-30, or longer? Do I need to break out sick or vacation days as its own line item? What about the deductions? Who is responsible for figuring out and paying the payroll tax? Because it sounds like asking for an invoice is a way for the company to avoid paying unemployment tax, social security, etc. That in itself would be a red flag. If the invoice is not paid, can I file it as a wage claim or do I use some other mechanism? These are the obvious questions. If as you say it a common and normal practice, there must be some place which describes the basic details. If payroll is hard for a company, why is it any easier for the employee to figure out these payroll details?
Lalabadie 10y ago
Startup or not, you don't offload the risks of making payroll onto your employees.
- jomamaxx 10y ago
  "Startup or not, you don't offload the risks of making payroll onto your employees." What are you talking about? Invoicing your startup for a payment is perfectly normal, and has nothing to do with 'offloading the risks of making payroll'. Again - getting paid without a pay stub is utterly irrelevant to a new startup. What matters is getting paid and hopefully it's done in an above the board manner, but the transfer of money is the primary indicator of risk - not the pay stub. There is absolutely nothing wrong with not using payroll services for the first little while while a startup gets going, and it has nothing to do with the ability of an entity to pay you. If you are getting paid consistently - through invoicing or whatever means, this is a good signal. By the way - although the story is pretty scary (and hilarious) - the author is also a little bit naive. Everyone involved seems to be a little inexperienced. The contract you sign is only as valid as the parties backing it up! Just because someone gives you a 'piece of paper' that may be legally binding, does not mean it has any integrity. The author should have done a basic bit of homework or point blank asked some very basic questions about funding status. He joined a company 'assuming' there was a round of funding, but that turned out to not be true. From my reading of the article, it doesn't seem as though the founder lied, but rather mislead the author. A few simple questions such as: "who has backed you, for how much" - or even a check on Crunchbase would have sufficed. Again - a contract is only has the amount of real integrity as the people signing it. Your ability to enforce it is not just a matter of law - it's a matter of the reality of the entities ability to do so. Anyhow, I'm glad it was written up so that people can learn form it.
  - awinder 10y ago
    "If you are getting paid consistently - through invoicing or whatever means, this is a good signal." But that's not what happened, because they were late, enough so that people were filing their rent late. How about -- "Startup or not, don't take your employees for 'free credit'"? Or, more brief: "Fake it till you make it, but don't break the flippin' law".
snowwrestler 10y ago
If a company can't produce a paystub with a paycheck, I doubt that they are handling accounting and taxes properly. Paystubs don't need to come from ADP. They can be typed up or even hand-written if you want. But they demonstrate, and record, that the company is fulfilling its legal obligations as an employer, and give the employee the information the employee needs to fulfill their legal obligations as a taxpayer.
- e28eta 10y ago
  I wonder how this will play out in April. I seriously doubt the company is properly withholding & paying the payroll taxes. I guess it's not even clear whether or not they'll be filing a W2 for her.
st3v3r 10y ago
No, this is huge. Paystubs are a major thing. And if you can't get the money operating, then you shouldn't be hiring people. And if you are, you should be up front about it. You are NOT entitled to people working for you for free, under deceptive pretenses.
thatthatis 10y ago
It takes about 8 minutes to setup gusto to create w2 pay stubs at a cost of $25/mo +$4/employee. If you're in "this may fail at any time" mode you can pay people 1099 as contractors. going from w2 with pay stubs to no pay stubs means they're out of money and saving as much as they can be not paying payroll tax.
CIPHERSTONE 10y ago
That's not what matters. What matters is that the information is correctly documented. Taxes man. They make a difference. Say I make $100 a day before taxes. I get a check that shows they took out $25 for federal, $5 for State, etc. Whoopie, my take home is $70. At the end of the year I get a W-2 showing all the taxes they company took out etc.. But what if they just give me a hand written check for $70 made out to me, Joe Blow. There is no indication of taxes being taken out, but hey, I got $70, so all is great right? Wrong.. At the end of the year I get a W-9. They say I wasn't an employee but a contractor. I have no proof that they took out taxes and now suddenly I am on the hook to pay taxes to the government that were already taken out by the crappy employer and pocketed. See the problem now?

CIPHERSTONE 10y ago

I know this to be the biggest red flag from personal experience. Happened to me at a small start up in Illinois of all places 20+ years ago. I was fresh out of college the naive to things, trusted in the owner. Got royally screwed. It was a formative experience that I wouldn't wish on anyone but it taught me a very valuable lesson the result of which is that I have only worked at well established companies since.