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“frozen out” of the company in breach of the majority

owner’s fiduciary duty.

B. Deferred Compensation in Start-Ups

We have seen many well-intentioned start-up

companies find themselves in trouble for the

compensation agreements they have made with their

original key employees. The start-up “team,” knowing

that some time may pass until either the company begins

generating revenue or obtains outside funding, often

agrees to defer portions of their compensation for a

period of time. This is a logical approach under the

circumstances, but recall the broad and often severe reach

of the Wage Act- if the relationship sours and the

employee sues the company, the deferred portions of his

or her pay can become a huge liability for the company

and its officers.

68| Rules of the Road