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Joseph
Joseph, Lawyer
Category: California Employment Law
Satisfied Customers: 5046
Experience:  Extensive experience representing employees and management
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I am currently a Partner at a Consulting firm where I hold

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I am currently a Partner at a Consulting firm where I hold 10% ownership of the firm. We as a firm are working towards cashing out everyone's ownership percentage (mine currently worth $21,000). Our CEO/my boss (owns 60%) elects to draw money from what is due to him in amounts of $10k/$20k as he needs cash. However, when we had a discussion this morning about me wanting to move on from the firm due to irreconcilable differences, I was told they "the firm doesn't owe me a damn thing", furthermore that if I were to be paid back, it would be done in a way where as the firm has the cash to do so, they will pay back all Partners.

Isn't this contradicting given he draws directly from it whenever he pleases, only to ask me to cut him a check?

I am 26 years old and because I am a Partner (promoted from an Executive Assistant) and receive a Schedule K-1, I also pay taxes on income allocated to the firm at the end of every year. So I have financial implications, but am not treated as a Partner in any other way which may or may not be valid in court given it's due to interpersonal differences with the rest of my Partners (who are ages 50+). My boss says this isn't a "Partnership" because our other Partners are not performing as they should be. I'm very confused by all of this and something doesn't seem right. Was I given just a title and have to deal with financial implications based on our annual Profit and Loss but am unable to collect what is due to me? Is there an opportunity for a case here? 2011 was my first year as a Partner so I want to make sure I understand what is/is not due to me.

Thank you,

Jeremy
Submitted: 2 years ago.
Category: California Employment Law
Expert:  Joseph replied 2 years ago.
Hello Jeremy,

Welcome to JustAnswer.

I'm sorry to hear about your situation and hope I can help.

Unfortunately, since you are a partner in the firm, you wouldn't be due the ownership stake in the firm at the time of termination, whereas you would be due all wages that are owed to you at the time of termination.

It definitely seems unfair that the CEO draws cash from the company when he needs it, and is unwilling to cash out your parternship stake when you requested it, but, unfortunately, it isn't illegal for them to do so.

You would have a cause of action for breach of contract if you are not eventually paid the ownership stake that you are due, but this would likely be governed by the terms of your partnership agreement and not employment law.

I wish I had better news to give you, but I hope you appreciate a direct and honest answer to your question.
Joseph, Lawyer
Satisfied Customers: 5046
Experience: Extensive experience representing employees and management
Joseph and other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.
Joseph:

Does an embezzlement claim stand true in this instance? My CEO originally had me cut him a series of checks as he needed cash in 2011 in the amounts of $10,000-$20,000 (totaling $80,000). This resulted in several Profit & Loss spreadsheets to show that the revenue for that particular month was a Loss when it should have been a Profit if he had not taken money out. This was also BEFORE we rewrote the 8th edition of our Operating Agreement in early 2012 (where he then put in language at the advice of our lawyer that all capital contributions would be repaid to Partners). Those payouts in 2011 still effected our taxes, for better or for worse. There might not be much here, and I'm certainly not trying to fish here, but given mey previous comment to you, I hope you can see why I feel uncomfortable being in my mid-20s around a manipulative individual such as my boss when I am taking a financial hit from this firm, making far less than what his previous Executive Assistant made (and I'm a Partner). I want to ensure I'm not going to lose my job because I decided to take a stand against him. The guy is a bully and while there is a certain level of emotion behind this, I don't want to all of a sudden be told that I was voted out of the firm because I was considered "hard to work with" after standing my ground.

In addition to this, he has for the past two years said negative things about our other Partners, saying that this "isn't really a Partnership" and "they're just threatened by you because you're smarter and run circles around former C-Suite executives", then tell's me he permits me to "push back" on them. After pushing back in a professional manner, I'm then told by him (in the conversation last week where he switched it up to say this firm doesn't owe me a *explicit word* dime) that they now have ammo to use against me with regards XXXXX XXXXX I'm hard to work with.

Joseph, I have worked here for 4 years, starting as an Administrative Coordinator, to Executive Assistant to a Partner. I work very hard, extremely long hours, and have bag full of feedback that is very complimentary from ALL of our clients about the service I provide to them (project manager, administrative work, etc. - we are a management consulting firm). I feel like I'm now imprisoned after being hailed the secret sauce for so long from this firm to now being the individual that is "hard to work with". When I became a Partner, I felt it was a Partner's responsibility to push the firm, to enhance it in any way possible and to ensure I'm putting in the effort to maximize any branding opportunity out there. My Partners choose to barely be involved, thus my frustration with them along which my boss agrees to, but now he's switching it up on me.

Between all of this, him taking a business trip or two and telling me that if the Partners or his wife calls to ask, that it's client-related (even though it's not), to finding him responding to CraigsList ads while in London for young men (I have access to his email, not sure why he would send it from that account), I need to protect myself so that I don't lose anything, including my job or my own reputation.

Any advice would be helpful here. If you need clarification on any of this, I am happy to provide that to you.

Many thanks,

Jeremy

In addition to this,
Expert:  Joseph replied 2 years ago.
Hello.

There may be an embezzlement claim there, but it would be hard to prove that he was embezzling and not taking a loan for the amount or taking an advance on salary. Especially since he had you cut the checks and didn't use any 'underhanded' means of taking the money, it doesn't really seem like a case of embezzlement to me.

I understand your frustration and concern, but it really doesn't seem like that would constitute embezzlement.

However, if you are terminated as a result of your complaint about not being paid fairly, you would have a cause of action for wrongful termination in violation of public policy, alhtough, it is a difficult cause of action to prove and a hard one to get an attorney interested in, depending on the potential payout.
Joseph, Lawyer
Satisfied Customers: 5046
Experience: Extensive experience representing employees and management
Joseph and other California Employment Law Specialists are ready to help you

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