Doesn't the company have a contractual obligation to pay you your wages even if it has to go into debt to do so? I don't see how they could get away with that.
Owed wages have very high precedence when all creditors line up for whatever's left... but if there's no cash and no one to loan/invest more money, employees may not be made whole.
My understanding is that the choice is completely optional.
While Vidoop is legally responsible for paying them, I can see how some employees would rather have valuable merchandise now than wait what could potentially be a very long time for their wages in cash.
A program where where the state pays before collecting from the company would be pretty amazing, so I read your link and the related form.
I found no evidence the state pays before collection; in fact they warn that "collection depends upon your employer’s financial ability to
pay, business closure, bankruptcy filing or location of money and assets". It might still be a good program to help assert an employee's claim with the weight of the state agency, but there are other caveats which might make many Vidoop employees ineligible for even that sort of assistance, such as a total unpaid amount more than $10K or "having a direct financial interest" in the company, which many startup employees might have.
The officers of the company are astronomically unlikely to personally bear any contractual liability at all, that being the one of the points of incorporating in the first place.
No. Your article is from 2002 and, at the end, refers to a case then before the Colorado Supreme Court. Here's the outcome (2003):
"After finding a lack of precedent from the Colorado Supreme Court construing individual officer liability under the Wage Claim Act, we certified the following determinative questions...
1. Are officers of a now-bankrupt corporation individually liable for the wages of the corporation's former employees under the Colorado Wage Claim Act? ...
2. If so, are all officers individually liable due to mere status as officers or must the officers have been high ranking or active decision-makers? ...
The Colorado Supreme Court then answered the first reframed question, holding "under Colorado's Wage Claim Act, the officers and agents of a corporation are not jointly and severally liable for payment of employee wages and other compensation the corporation owes to its employees under the employment contract and the Colorado Wage Claim Act." Id. (emphasis added). This response clearly answers the first question certified by this court and moots our second question. We REVERSE the district court's summary judgment order..."
Citing general treatises and texts on corporate law, the majority sets out general precepts like “insulation from individual liability is an inherent purpose of incorporation; only extraordinary circumstances justify disregarding the corporate entity to impose personal liability . . . a corporate officer is not the employer responsible for creating the contractual employment relationship and is not personally responsible for a breach of that relationship . . .” Id. The court rejected the employees' argument, viewing it as making every corporate officer a surety (guarantor) for the corporate obligations. Thus, the court found, that under general principles of corporate law, the officers of Nations Way were insulated from liability by the general principles of corporate and agency law.
Thanks for the update. I lived in CO in the late 1990s and actually had an employer take a while to pay me, which is why I incorrectly assumed that the law was the same, when it has in fact changed.
It is actually more difficult than I thought it would be to locate an accurate list of which states have which positions in this matter.
It seems that courts in many states are starting to lean against officers being responsible for unpaid wages.
If it was an LLC, any form of Corporation (like the C Corp it almost certainly is), or an LLP, there is no liability. The "LL" in "LLC" sets LLC's apart from Companies that are not formally Corporations.