This is related to, but different from, another thread I just started. That thread was concerned with other members of my company. My personal situation is a bit more exotic.

The Contract

When I left a well-paying job that I loved to join this startup at the beginning of the year, I was very concerned about my ability to recover and find comparable employment if my employment at the startup were to end before the year was out.

Unfortunately I'm not allowed to disclose the details of my employment agreement. Suffice to say that the driving principal that led to the contract (and the Personal Guarantee that I secured with the founder as a backup) was that I was willing to sign up for a year, minimum, and I wasn't comfortable joining the company unless the founder could financially commit to that.

The Company is now out of money. I've now been working without pay for nearly six weeks, and I'm trying to figure out how to proceed.

The founder also tells me that there is no money, either in the Company or in his own personal accounts. I'm not sure if I believe him, but it's entirely possible. He is not looking for a job but mentioned that his next step would be to sell his house and move in with friends and family and borrow money to keep the Company going.

I've got several questions here.

How to proceed with claims against Company / Founder?

I've never been involved in any legal action. Do I need to hire an attorney? Is small claims court an option?

It looks like Texas has a "payday" act. Could I file an "unpaid wages" claim? I am guessing that I could only file for the amount that was unpaid to date, rather than any extra commitments that might be made under our contract?

Could I go ahead and file an Unpaid Wages claim for the past six weeks and then take some time to figure out how to pursue a more expansive claim under the contract?

What happens if neither the Company nor the Founder has any money?

The founder is slippery but not entirely dishonest, and he says he's paying his bills with credit cards and is a month behind on his mortgage. He's got a nice house, but says he has borrowed "to the limit" of his equity. The company at this point consists of a website that has no revenue but may be valuable to someone else. I think he and the company will both be able to avoid bankruptcy, mainly because they stopped paying everyone.

How would Texas pursue my Unpaid Wages claim in this situation?

I'd rather not drive the company or the founder into bankruptcy. I'd rather give them both a chance to succeed, but without working there anymore and without relinquishing my claim. I've thought about trying to write a new contract that added some interest in order to give him some time to either succeed or find a new job -- but I wouldn't want to have to get in line behind the other creditors if he were to go bankrupt.

Any ideas?

Unemployment

Given all of the above, it's very possible that my family and I will never receive any more money from my employer, including for those last 6 weeks of full time work. And it may be 2009 before I find another job.

Can I file for unemployment (it hadn't occurred to me until now)? If I "quit" after 6 weeks of non-payment, does that hurt my eligibility for unemployment?

The other big mystery to me is arbitration, which may be required - I'm not sure.

At this point there is technically no dispute, in the sense that although the Founder has not paid me, he has said he will try to do so, but that he might also "wait for the lawyers to get involved".

Should I try to initiate arbitration? Do I need an attorney for that? And how do I find one?

Sorry to have so many questions. I am researching them myself but am coming up empty so far, and I am at a total loss on how to proceed.

:confused:

Honestly, I would take your contract to a local employment attorney. No one one here can give advice on a contract that we can not read (and we do not want to read).

That said, it can't hurt to file a wage claim (assuming they are paying you as an employee and not as a contractor). Because it does take time for your claim to make it through the system.

However, if the company/owner truly have no money/assets, it is going to be hard to get $ out of a turnip....even if you take them to court. You might get a judgement, but again without any assets, it will be very hard to recover since Texas doesn't allow for garnishment of wages beyond IRS tax liens, child support payments and (certain) student loan garnishments.

You might be better of quitting (due to good cause-- not getting paid), filing unemployment and looking for a new job sooner rather than later. But only an attorney can advise you based on facts that you can not post here.

ETA: From the TX UI Appeals manual: "Good cause connected with the work for leaving, as that term is used in the law of unemployment insurance, means such cause, re-lated to the work, as would cause a person who is genuinely interested in retaining work to nevertheless leave the job."

"Appeal No. 1089-CA-72. A claimant has good cause connected with the work for quitting after making a reasonable effort to resolve legitimate complaints with management."

Well, it's been a crazy week.

Lots of random meetings called by my boss, with several pitches asking me to take alternative forms of payment, such as equity, which I was unwilling to do because we have such wildly different opinions of the value of the company at this point.

At one point, the founder wanted to pay me via Paypal so he could put it on his Amex and not pay it off until late November, when he expects to have sold his house (which is not yet on the market).

Then we argued about whether or not he could pay me for just the most recent pay period and still be compliant with the contract. I said it would be a breach and held my ground.

That was followed by another attempt to find an alternate "deal". But this time he applied more pressure. There was intimidation: saying that the board members are both excellent attorneys and they don't believe my case holds water (although he didn't elaborate), and he also talked about how painful he could make litigation for me and how this wasn't the way out. Also I think he tried to bait me into saying that I didn't want to work for the company anymore. There were more pitches about how rich I could get, and there were also accusations that I was being vengeful, unethical, trying to exploit the contract for personal gain, etc.

In light of my total inexperience with stuff like this, all I could do was hold to my principals: that the deal we made in the beginning was the only one I would have taken, that I will honor that agreement, that I will also try to enforce it if I believe it to be in breach, and that I don't have any attorneys advising me so all I could do was go with my gut.

In retrospect, seems to have amounted to a big game of "chicken". After all the posturing and intimidation, last night I received an email saying that payment in full for the past 6 weeks is on its way via the usual channels.

I have no idea where he is going to get the money, and it's entirely possible that he was just buying time and the funds won't clear, but assuming money shows up, then I'll continue to work until he misses a payment again, which gives me at least two weeks. Hopefully during that time I can find the right attorney to help me clarify the items in the contract that are under dispute.