It started with a dream, and then you built your business from the ground up, often time employing family members to help with the work. But what do you do when the family members think their compensation is not fair, and how do you reconcile their compensation with those of non-family employees. Michael C. Van, a business lawyer Salt Lake City entrepreneurs can turn to, answers these difficult questions.
While every family business situation is different, often compensation discrepancies arise when the founder of the business and the younger family member do not agree on what is fair compensation. The founder, who worked hard to get the business started, likely went without a paycheck or had a little paycheck when starting the business, and wants to teach his children to work hard and pay their dues before getting a raise.
The children often just look at the situation from their base pay rate and the hours they are putting in at work. Both sides need to understand what the other considers compensation. Housing, vehicles, equipment or supplies might be a big factor in compensation in addition to the base pay rate.
One of the best ways to determine compensation is for the parties to sit down and talk to each other about what they consider compensation and what the market wage is for the work that is done. A lawyer Utah businessmen can rely on, can help determine compensation and put it in writing in the business agreement or company bylaws.
Additionally, in most situations it is best to pay the family employees and nonfamily employees a market wage. This helps to eliminate the resentment between employees when they feel they are treated unfairly.