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Rock & a Hard Place in Michigan

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  • Rock & a Hard Place in Michigan

    Looking for a little advice regarding a unique position I'm in in Michigan. I currently am a minority owner in a small company with following breakdown on ownership. Founder 99% and three partners including myself having less than 1% ownership. This is the first year of a 10 year buyout but due to down turn in housing industry, company is really suffering financially.

    My position the last ten years has been a salaried professionally with varying hours etc. During the last quarter of last year salaries were cut to roughly 50% for the three partners. For the last six weeks salaried partners have been eliminated with no compensation at all. Yet, we are still expected by the founder to continue to work as "owners" of the company for no pay. While I have done so to date I can not continue to work with no compensation. I do not see a change in lack of compensation in the foreseeable future.

    I am planning on tendering my letter of resignation due to non-payment shortly and was wondering how it may affect the following.

    1) Unemployment benefits in the State of Michigan

    2) Legallity of Non-Compete Agreement with non-fault discharge.

    Any advice would be appreciated...

    Stuck In Michigan....

  • #2
    What does the partnership agreement say, if anything, regarding these two issues? If you were paid as an employee, you can always file for UI. Whether or not you will be approved is state-specific but, IMHO, not being paid your salary is a "good reason connected with the work" to quit. Although my opinion doesn't count; only the state's does.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      Thanks for the reply.

      The partnership is not a employment contract. We are considered employees of the company for payroll and benifits. We have signed employee handbooks in our files. The buyout is a contract between the owner and the partners separate from employment. Only provision in partnership papers regarding employment is that upon termination partners are to surrender thier share back to the corporation.

      I certainly understand the need for owners to work from time to time without income as the company requires. The benefit to that is company survival and benefit of long term ownership. The position I'm in right now is I have seen no benefit to ownership, i..e founder over last five years has taken lions share of income out of campany, I see no change in company income in foreseeable future, three junior partners have no control over purse of company to recover lost income until buyout is complete, and till then it seems the founder and two other partners attitude is pay founder first and partners second. Problem with that is founder has stepped away from the company to leave all the work to us. Which is fine, but I can not work for years at reduced income to pay founder. Buyout documents were very clear on payment requirements to founder and the founder has an expectation that we are to exceed those requirements by 100% annually. My position in this economy is to pay minimum allowed under contract and distribute balance to three remaining partners. Nobody seems willing to stand with me and force this issue with the founder. Personally the lack of back bone in my two partners over this issue has disgusted me. There were warning signs over the past 24 months that they were his "Yes" men and were not going to swin against the current. Several bad real estate transaction decisions over the last 24 months that I strongly disagreed with have come back to bite us in the @#$, I was the one who in meeting was questioned for not agreeing with the deals but who laughing now as the over head for carrying these white elephants is a contributing factor to negative returns...

      Anyways, just alittle venting....

      Comment

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