Can employer have me sign a contract that I will not be paid until they make a profit?
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Can employer have me sign a contract that I will not be paid until they make a profit?
The church we attend has decided that they would like to open up a childcare center. They approached me and asked me to be the director when they became aware of my experience. When I officially start working with them I will be a salaried exempt employee of the school which they have incorporated with it’s own EIN, licenses, etc. that is separate from the church. One of the church leaders has proposed asking me to sign a contract stating that I will not be paid until the school generates enough income to cover it’s monthly expenses. They still expect me to market the school, set up the classrooms, hire employees, enroll students and complete all work duties in the meanwhile. Is this something they can ask me to do as an employee? My initial reaction is to propose to them that we just wait and open the school once our enrollment level reaches the minimum number of students to cover our expenses. I asked for a meeting with them next week to discuss.
Asked on July 12, 2017 under Employment Labor Law, South Carolina
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
This is legal so long as you agree to it: the law allows two parties to come to essentially any agreement they want about employment, compensation, etc. You cannot be unilaterally forced to accept it, though they could refuse to hire you for the role unless you were to agree.
Do not take the job: as an attorney, a former small business owner, and the son of an accountant, let me assure you that the concepts of "profit" and "income" are very malleable and very easily manipulated: they could structure expenses, investments into the business, etc. in such a way as to *never* show a profit or net income and so never pay you. Or, without any bad intentions, the venture could simply not work out. There is no reason why you should volunteer your precious time to them; if this is worth doing, it is worth them paying their director. It's one thing for them to pay you a relatively low salary (but still something you find worthwhile, at least short term) with a contractual guaranty of more money when income passes a certain mark, to incentivize you to do what you can to grown income as fast as possible; it is another thing to not pay you at all.
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