In California at least, that's because you can sue the company for underpaying you (at least 2x minimum wage as stated above) but others cannot bring that suit

In California at least, that's because you can sue the company for underpaying you (at least 2x minimum wage as stated above) but others cannot bring that suit on your behalf. I don't believe California has any sort of "significant ownership" bar. So yes, the $1/yr salaries are against the rules, but just don't sue your own company.