Partner or Employee?

(condensed from ruling 74003 of Eretz Hemdah-Gazit Rabbinical Courts)


Case: The defendants (=¬def) are a couple who embarked on publishing a magazine. They brought in the plaintiff (=pl) as a senior member of the team. The magazine was never published, and def ended pl’s involvement in less than a month. Pl says he was promised 10,000 shekels a month for the first three months. Def claim that, as they always do with senior staff members, pl was a partner, who is paid only from profits, which never materialized here. Pl presented as evidence an e-mail in which def wrote that 10,000 shekels for pl was a business expense. They also asked pl to fill out a 101 worker form and sent him a message that they were firing him. Def bring as evidence that they did not register him as a worker, as would be required by law.

Ruling (of majority): All agree that both defs had rights to make decisions on behalf of the company, which pl did not have, and that they ended pl’s employment unilaterally. These are clear indicators that there was no partnership.

P'ninat Mishpat (704)

Various Rabbis

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Therefore, pl was either an employee or a contractor, the difference being that a contractor, as an independent, does not enjoy the same legal protections of payment that an employee has. The law requires every employee to receive at least the minimum wage for their work. This would preclude the worker’s salary to be dependent on the employer’s profit, so that he could not possibly receive less than the minimum wage. This is a law that we rule is binding, and the gemara(Bava Batra 8b) already talks of even a local society setting binding minimum wages.
Both in halacha and by law, this status is not determined by registering a worker but by the actual nature of the relationship. Beit dinconsiders it probable that pl was an employee (not a contractor and certainly a partner) because he needed def’s approval for his actions, there were not set tasks/goals for him to receive payment, and other than having a higher salary, there was no difference between him anddef’s other employees.
There is a question whether, beyond minimum wage, pl was promised 10,000 shekels on condition or not. The only discussions on wages were held between pl and the female def. All agree that femaledef raised the idea that pl’s salary would be conditional and that plvoiced displeasure. Pl said that the conversation ended with his salary being unconditional, and def does not remember but stresses that this was always their practice. However, personal practice is irrelevant unless it was known to the side with whom they interacted (Igrot Moshe, Choshen Mishpat I:75). Def’s claim is weakened by the fact thatthroughout society (which is significant – see Shulchan Aruch, CM 330:5), pay on condition is uncommon.
In a case of conflicting claims, the first rule is that the one who wants to extract money (in this case, pl) has to bring proof. Even in a case where the plaintiff is certain and the defendant is not, the defendant is still not obligated to pay (ibid. 75:9). However, when all agree that there was an obligation and the question is whether it was paid, the certain plaintiff beats the doubtful defendant (ibid.). It can be demonstrated from the Rashba (details beyond our scope) that when there was cause for obligation but with the possibility of a condition to exempt, it is equivalent to a definite obligation and possible payment. Therefore, pl is believed that he was promised pay unconditionally.