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Thread: Messy situation

  1. #1

    Default Messy situation

    I have a messy situation and I'm not sure how to best handle it.

    I started a business with $0 while broke and homeless 12 months ago. Today, we're a team of 12 in our own office. It's a commercial cleaning business in California.

    Initially, I was doing the cleaning work myself but as we started to grow I brought on independent contractors to help with the load. I'm trying to build a business for the long term and offered everybody equity including the problem contractor I write about below. All the contractors signed paperwork agreeing to vest equity over four years.

    One of the contractors after a few months cleaning wanted to work in the office with me instead of cleaning. He's a smart enough guy. I couldn't afford an office person and told him that. He was homeless like me, and said it would be ok if I paid him enough to get by and get caught up when/if the business is getting more successful. I could use the help so agreed to it.

    We've had month on month growth but I'm still not able to pay myself much of a wage yet. A few hundred dollars a month at most. Every penny in revenue is covering the service workers payroll, office rent, van rental, and other costs of doing business. Last month we did just under $20k in revenue. I'm still homeless, I view it as my time will come later on... We're about to release new technology that will give us a massive advantage over our local competitors.

    This pay as we can arrangement with the contractor has been going on for 8 months and we're now right at the one year cliff we put into the equity agreement. From what I can see, mostly he actually works around 2 or 3 hours per day, and the rest of the time he's on his mobile phone reading websites. We've spoken about this, how I'm not too happy about him sitting in the office not working and only causing a distraction by being there. I'd prefer he wasn't here if he wasn't working. Each time that conversation comes up (maybe every 2 months) he does better for a while.

    In the past 8 months I've given him around $4,500 and he claims there's another $12k owed. Sometime recently he must have logged into our time tracking software and logged the hours he claims we owe him as typically he never logged in daily to record the hours worked when he was here. Today, he came in with a crappy mood. He demanded that I either pay him $12k now, or agree to a payment plan with interest. I said I'd agree to a payment plan but not to interest. He wasn't interested so started shouting he's holding all the cards and is going to sue me. I told him to leave the office and come back when he'd calmed down. He asked if he was fired to which I said no. I asked if he'd quit to which he said no. However under the hostile environment it can't go on as-is. As he was leaving he took a laptop that belongs to the company. He never usually takes it with him. I told him he can't take it, that it's company property and he's not authorized to take it offsite. He took it regardless, then said he was going to sue me again claiming he can take my equity in the company.

    Other than this messy situation with one person, everything else in the business is done by the book. The cleaners are all paid for the hours they work, we're registered with the state of CA and Board of Equalization (as we resell supplies too). We're currently in the process of changing the workers from W9 to W2. That begins on Sept 1.

    Any advice about this mess I can get here would be helpful. Thanks in advance.

  2. #2


    I'm not a lawyer and know nothing of the law.

    If he stole the computer then you should call law enforcement on him.

    If you were doing business in an underhanded way and get caught then, you have to deal with it (the right way) and chalk it up to experience.

  3. #3
    Registered User
    Join Date
    Jan 2009
    Jackson MO


    First thing you need to do is lock down the time tracking system so that someone can't just go in and enter 12k worth or hours. Next, find out when he entered the 12k worth of hours, there should be logs to allow you to determine when it was entered. Then talk to a lawyer!!! There are a lot of issue here. Since he is working in the office, is he really an IC? Are there legal issues involving him being mis-classified as an IC? Do you really owe him 12k since he didn't record the hours? Can you be held responsible for not requiring him to record his hours? ...

    AFTER you talk to your lawyer and with the advice of your lawyer, fire him. Change the locks if he has keys, disable his passwords, notify any clients with which he has contacts. You need to get this guy out of your business, period. Simple fact is that he is a mooch, that is taking advantage of you. He will slowly poison the working environment, unless this is resolved.
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