I am a 40% owner of an S-Corporation in Virginia. I have not received a paycheck in over a year. I felt I was making a sacrifice to help the company survive a down turn in sales. My partner (60%) just fired me. Am I owed back wages and vacation time; can I file for unemployment? He is going with the argument that I am an owner, not an employee. My sacrifices will be added to the partners' account of monies lent to the company. I feel I should have the same rights as any employee. I truly feel victimized.
-- Steve
A.
The law generally weighs in favor of finding an employment relationship in these types of circumstances. However, there are a lot of factors that have to be taken into account. Your co-shareholder may also have a good argument that you are essentially self-employed because you are an owner of the S-corporation. You can get more information from the IRS website here.
Another practical issue to consider is how you would get paid what you think you are owed. Since you have not been paid in over a year, it appears the corporation doesn't have the money anyway so who are you going to go after? If the other shareholder is somehow personally liable, it could be argued that you would be personally liable, too, since you are a co-owner and presumably also a director and officer of the company. One alternative to consider would be to take action to dissolve the corporation. Go see a business or corporate attorney immediately to get some advice on what your best options might be.
