In some (many?) jurisdictions, it is unlawful to trade while insolvent. If you cannot pay your employees, you are insolvent. If they work for free, for equity,

In some (many?) jurisdictions, it is unlawful to trade while insolvent. If you cannot pay your employees, you are insolvent. If they work for free, for equity, they are not employees (and therefore should be getting a lot more than a percentage or two) and are essentially co-founders.