Beit Midrash

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based on ruling 72092 of the Eretz Hemdah-Gazit Rabbinical Courts

Financial Security for a Partner/Worker? – part II


Beit Din Eretz Hemda - Gazit

Adar II 25 5782
Case: The defendant (=def) wanted to start a business with the significant funds at her disposal. She enlisted the plaintiff (=pl), a divorcee whom she had dated briefly, to help her. Def first paid pl’s consulting firm for his time. Later, pl quit his job to work with/for def. This gave pl greater work flexibility so he could manage child custody, and he received a minority stake in the LLC he opened for her (registered in Delaware). Pl started working for def on Apr. 1, 2012. They seemed to be in the midst of finalizing an "employment agreement," which had not yet been signed, when def informed pl, on June 10, that she would no longer pursue his proposed course of action and that their "partnership" was over. Pl is suing for: $20,000 for work before Apr. 1; $29,110 for salary from Apr. 1-June 10 (prorated from a $150,000 yearly salary); $18,500 for expenses; $150,000 for severance pay; $7,900 in worker’s benefits. Def responds that she never hired pl; he was a partner in a business venture that never saw profits. The term "employment" that she did not oppose in the proposed contract was just to convince custody court that def had financial stability. Def denies that pl worked seriously for her and demands the return of $52,100 she gave him as a loan (until there would be profits). (Much of our information comes from extensive emailing between the sides.)

Ruling: [We saw last time that pl was a salaried worker in addition to a partner.]

The idea of pl returning the money already given based on its being a loan is to be summarily rejected. There is no documentation or hint of these payments being a loan, except for one line in an email by pl to def, which is clear by context to be a sarcastic joke. Also, a sizable part of def’s payments were given soon after the firing, which would make no sense if that which was given has to be returned. The post-firing payment is also proof that def did not believe that pl had embezzled significant funds from her.

From the detailed logs that pl sent def before she fired him, which she never effectively questioned, it is clear that pl did significant work on behalf of their joint venture. Beit din cannot know if pl’s work fully lived up to expectations in quantity or quality, but no evidence was provided to make us believe that pl did not deserve full pay for the time of his employment, before and after Apr. 1.

The weakness in pl’s claims is that he did not bring evidence that def reached a point of gemirut da’at (a firm decision) of the extent of her financial commitments to him. Perhaps he made a mistake by not demanding that def sign a contract before he started work, as she might have agreed to do so, or it could have been that she would have balked at the prospect of commitment. These conjectures are only of moral significance, as legally the issue is that there was no commitment to specific terms other than that he would be paid for his work.
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