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Collecting Deferred Salary California

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  • Collecting Deferred Salary California

    Hello Everyone,

    In June 2012 I went to work for a startup based in California. In addition to salary and equity options, I accepted a deferral of $15k of my pay until January 15, at which time it was expected that the company would have a substantial revenue stream.

    In November I was laid off along with all other employees. The two owners told us there was no more money and the company would be finished in a matter of days.

    In fact the company is still operational, still paying at least one employee, still paying substantial operational costs, and still supporting their customers. There are a number of vendors who have not been paid, but to my knowledge they have not filed for bankruptcy protection.

    January 15 will be here soon. In your opinion, will I (as of that date) be entitled the deferred pay, either in whole or on a pro-rata basis? If so, what is the best way to pursue a claim?

    Thanks for all insight and opinions!

    David
    Last edited by dvb0222; 01-11-2013, 02:16 PM. Reason: typos, grammar

  • #2
    Do you have any type of written employment contract?
    Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

    Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

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    • #3
      Originally posted by Betty3 View Post
      Do you have any type of written employment contract?
      I have an offer letter that lays out all terms including the salary deferral, and an email stream spanning two weeks where all of the terms were negotiated.
      Last edited by dvb0222; 01-11-2013, 04:48 PM.

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      • #4
        If you don't receive any deferred salary, you might take all the papers you have to an employment or contract attorney for review. However, generally offer letters & e-mails do not rise to the level of a binding contract.
        Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

        Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

        Comment


        • #5
          I'd also be asking if the money went into a non-qualified deferred plan (NQDP) with rules, etc or whether it was just a deferral of actual salary. Either way there are tax complications if you earned it in one year, but were paid in another year. Usually it has to do with when the cash is first available to be taken. And usually you at least have to pay FICA in the year it was earned (if I remember correctly, the only tax deferral was income taxes). Were you taxed in 2012 on that deferred amount (it should be in a last paystub or checking your W-2 against the last pay stub)? But it's been a long time since I worked with NQDP and I know the laws/regulations have changed recently.

          With a NQDP there are also very strict rules on when it can be paid back out and usually it is much much later than just the next year (again I think it used to be 7 years at the earliest). Plus there is also a large probability of forfeiture should the company have financial difficulties. In the end, usually NQDP assets get in line with the other creditors.

          That said, it will all come down to the paperwork. Is it truly a contract? Did you defer a higher salary until then (i.e. it was supposed to start 1/15) or were you deferring current salary that was currently accruing to be paid then? Whose expectations were it that the company would have the revenue stream? In the end it is hard to get blood from a turnip...you might have more of a chance is this is deemed earned salary/wage claim than if it is deemed future promises or NQDP assets.

          I know what you believe it to be, but who knows what the paperwork actually states and can be held to.....that's why you need to take it all to a local attorney.

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