[mlsu]

For anyone listening, if you live in CA absolutely do not do this, especially if you are tight on money. Employee can take 30 days of pay + attorneys fees if they are not paid out within 72 hours of their last paycheck and it's quite easy to win a lawsuit given the facts here. Something like that probably would have killed your startup, assuming you were thin enough to be paying server bills on your credit card. The corporate veil also would not have shielded you in this situation.

[neilv]

Massachusetts is similar.

Also, I might've misunderstood a lawyer, but it sounded like a business failing to make payroll would threaten its legal right to operate.

[creer]

Would killing the startup have gotten the employee paid? The threat would probably have gotten them a slow payment plan - but no attorney fees.

[mlsu]

Yes, it would. A missed paycheck brings you to the front of the debtor line, ahead of any bank or equity holder, when the company liquidates. The startup's owners would have been personally liable for paying out the employee in such a case.