Q: Will my boss owe me unpaid wage if startup closes?
Hello, I'm working in a startup as an independent contractor. Mo contract starts with this paragraph:
This Consulting Agreement (“Agreement”) is made and entered into as of the Date (“Effective Date”) by and between Boss Name and legal entities he represents (the “Company”), and My Name (“Consultant”), resident at My Address.
After working at this startup for about 6 months, my boss started experiencing difficulties to pay me the full wage, but kept talking that this is temporarily. I was committed to the project and was receiving only half of the wage that we agreed upon, assuming that my boss will pay the rest later. Today I had a talk with him and he told, that in 3 months we will either get an investment (the chances of this are so so), or close. My concern is, will I loose all those money that he owes me by this moment (a few dozen grands). What should I do to I protect myself?
A: In such a situation, an employer (or potentially a just a business you have a contract with) would still owe the wages. The problem is, if this person does not have the money, then you would have a difficult time collecting what is owed. Further, your contract is likely with the company, which is likely an LLC, so you would have difficulty collecting from the person if the business is wound-up. Not much you can do and still work for this person, but perhaps talk to them about your concerns and see if they would swap what is owed for equity in the company so you have a potential of a big pay off, or change the contract to him personally so you could potentially go after his assets if things go sour.
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