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It sucks. Hopefully you will land on your feet. I went through a similar situation. The founder at least let us know the approximate runway length before our se
by mswen 11y ago
It sucks. Hopefully you will land on your feet. I went through a similar situation. The founder at least let us know the approximate runway length before our series A funding would run out. It was clear to everyone as employees that we were still struggling to get meaningful revenue growth. Still in the end it was a bit of surprise because it sounded like he had verbal commitments to do series B funding - and then it all seemed to fade away over the course of a week and all 12 of us employees got the call on the same day -- "can't make payroll at regular rate - you will get the minimum wage required by law and everyone is laid off as of today."
So I would say my boss at the time tried to do the middle road - it was enough transparency that we weren't surprised at any fundamental level. We had a last straw hope that then went away. I think that level of transparency helped me to not to be bitter toward to the founder.
- Spoom 11y agoI don't think they can retroactively change your payroll to minimum wage, even over a single period. I think I would have lawyered up under those circumstances.
- dangrossman 11y agoYou can't collect money that doesn't exist. It is normal and legal for businesses to go out of business while owing people money, and for them to never get that money. This company couldn't make payroll and laid off all employees: it's broke and folding. They'll declare bankruptcy, liquidate the furniture and other assets, distribute whatever they get for it (probably entirely to secured creditors, not employees), and cease to exist. All the remaining debt just disappears, and there's nothing a lawyer can do to change that.
- Spoom 11y agoMissing payroll is one of the few items that can pierce the corporate veil. Laying off employees is one thing; saying that the work they've done over the last two weeks will now be paid at minimum wage is quite another.
- dangrossman 11y agoActually, so long as you pay minimum wage before folding, there is virtually no chance a state or federal court would pierce the corporate veil and impose personal liability. This has been upheld in both California's supreme court and federal courts. FSLA for example is written broadly enough that a company officer may be considered an employer and personally liable for FLSA violations, but only liable to pay minimum wage, not contractual wages and benefits. What mswen's employer did would shield them from any personal liability in California and most every other state. Here's a good review of the relevant case law on this: http://www.latham.com/thoughtLeadership/officers-and-directors-personal-liability-for-wages http://www.latham.com/thoughtLeadership/officers-and-directo... [PDF]
- Spoom 11y agoFair enough. Well, fair enough in that you're probably right; it doesn't seem fair on an individual basis. I would still have consulted a lawyer in the case mentioned.
- greenyoda 11y agoBut if you retroactively reduce someone's salary to minimum wage, don't they cease to be "exempt" employees, at which point they're retroactively entitled to overtime pay? The Department of Labor says: "Exempt computer employees may be paid at least $455 on a salary basis or on an hourly basis at a rate not less than $27.63 an hour."[1] So the minimum salary to be exempt from overtime is a lot higher than the federal minimum wage. [1] http://www.dol.gov/whd/regs/compliance/fairpay/fs17g_salary.htm http://www.dol.gov/whd/regs/compliance/fairpay/fs17g_salary....
- deleted 11y ago[deleted]