[phphphphp]

it’s not as simple as is being suggested. The corporate veil can be pierced in cases of wage theft where the corporation has been used for nefarious means. There’s no evidence that being unable to make payroll because of a bank collapse comes close to qualifying as bad behaviour on behalf of those behind the corporate veil.

You could argue that an overly cautious founder might cut all their employees off immediately out of an abundance of caution, but that would be self-immolation.

As a non-lawyer with zero credibility, I’d be shocked if any founders of companies that can’t make payroll because of this are at risk of the corporate veil being pierced. SVB was based in California, subject itself to California law, it would require some extreme mental gymnastics from a judge to believe that a company that can’t make payroll because they used SVB behaved inappropriately in this situation.

Again, I have zero credibility, but I’d expect when the dust settles, the only companies we see get in any trouble will be the companies that do some insane illegal things in a panic because they get caught up in the tidal wave of fear. Founders withdrawing millions into their personal accounts and then losing it by buying crypto or going to vegas to do a fedex with their remaining cash or something equally insane feels much more likely an outcome.

[mike_d]

California labor laws are extremely powerful. "Not receiving agreed upon wages" is wage theft, full stop. They don't care if your bank collapsed or your great aunt ran off with contents of the cash register.

All you have to do is file a wage theft claim with the Labor Commissioner, who evaluates your claim and issue an ODA (Order Decision or Award). Once the ODA is filed it is considered a legal judgement against the employer. You can then use any legal means to collect.

Edit to add: the whole process so streamlined and employee friendly it happens entirely outside the court system. Once a claim is filed the employer has to pay you or appeal within 10 days.

[BobbyJo]

> California labor laws are extremely powerful. "Not receiving agreed upon wages" is wage theft, full stop. They don't care if your bank collapsed or your great aunt ran off with contents of the cash register.

You forget that thinking, rational, humans are ultimately charged with enforcing the law.

Also, you seem way too certain of something that has no precedent. Show me where a major bank has gone under, caused companies to miss payroll, and the corporate officers were held liable.

[phphphphp]

The laws exist to protect employees, not to discourage employers from employing. Setting the precedent that a shareholder in a company is at risk of losing everything because a bank that their company uses fails would have a very negative impact on California as a place to employ people, which doesn’t help employees.

[tzs]

> "Not receiving agreed upon wages" is wage theft, full stop. They don't care if your bank collapsed or your great aunt ran off with contents of the cash register

The wage theft section of the California Penal Code (section 487m) says it is the intentional deprivation of wages. The California Labor Code talks about it in section 216, which applies when the employer has the ability to pay and willfully refuses.

It is hard to see how failure to pay because your bank collapsed and you can't get the money would be either intentional or a willful refusal.

[dsfyu404ed]

If the laws are so powerful then cite them.

Anyone who's been on the internet more than five minutes knows how much an uncited claim about the law is worth.

I find it very hard to believe they don't have some clause about employers acting in good faith but who can't make payroll because the payment processor had a truck number of 1, the bank was robbed that day and there was a police line or any of the other legitimate reasons processes have hiccups. And if they don't have that clause the labor commissioner almost certainly just ignores those claims until it's clear whether they're gonna shake themselves out or not.

The labor commissioner's office is almost certainly going to be slower at getting people the money than the company is (the latter is already set up to do so) in cases where the company is acting in good faith so in those cases the labor compssioner's office will best serve employees and also have the least work to do by just sitting back.

[dehrmann]

> You can then use any legal means to collect

Sure, but if all but $250k of your funds are in limbo and you don't have revenue, there's nothing to collect.

[flangola7]

Collection can mean arrive with the sheriff and start taking things to sell at auction. Since it pierces the corporate veil, this can eventually include the executives' personal property and bank accounts.

[Asparagirl]

Cut to a scene of fifty angry unpaid devs banding together to file their claim and then standing in the Atherton driveway of their VC and figuring out who gets his art collection, who gets the wine and how much, who gets his watches...

[roenxi]

To me, as an employee, that seems like a slightly weird take.

If my employer knows they can't pay me, and they ask me to do work anyway that is causing me serious losses. The moment they know they can't pay me, they have to stop asking me to do work. I would expect someone to be accountable for those sort of serious lies.

[hgsgm]

A sane enoloyer would furlough pending stabilization. Layoffs would destroy the company. Who would work for a company that both can't manage its finances and also can't manage its staffing?

[phphphphp]

I am presuming the employers operate in good faith, that is, they are open with the employees about the situation — it would be hard to keep this a secret given it’s major news.

If your employer said to you, “we are caught up in this, we are working to resolve the situation“ it would be pretty fair and reasonable of them. You can choose to quit if you want, you’re under no obligation to work.

[roenxi]

I am all in favour of getting rid of minimum wage laws. However, they are currently in play and I suspect that being open and direct about engaging in an illegal act to deal with a bankrupt bank is exactly the sort of situation that is likely to result in criminal prosecutions for executives if the company goes under.