[chiph]

The US states take unpaid employees very seriously. Think about it from the employee's point of view - if the company can't make payroll one week, you might be tempted to let it ride until next week. If they again can't make payroll, you've put 80+ (120+!) hours into the firm with no payment. I certainly wouldn't be happy in that situation.

[_delirium]

This also partly aligns with it being very easy to fire people in the US. The government therefore views the employer as having a perfectly reasonable option in the case where they are truly short of money: fire the employees you can't afford to pay before they work the hours you don't have money for (or something halfway, like giving people a non-optional offer to go down to half-time). In most cases that can even be done with no notice, though that isn't very nice. But it is at least seen as more honest than stringing people along ostensibly working for a salary they aren't going to get.

In practice one way to handle this is keep one payroll cycle's worth of liquid cash "locked up" in an account that is reserved for payroll and which you don't dip into for other expenses. So even in the worst case the last paychecks can be sent out before shutting down, if you avoid the temptation to dip into that account "just this once". That does require having a little bit of a cash cushion, but a VC-funded company should be in a relatively good position in that regard.