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  1. #1
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    Ex-employee wants to be paid

    So I closed a very nice deal a week and change ago, very nice payout, wonderful. I split it with a broker who sent me the deal, wonderful.
    This broker who sent me the deal was introduced to me by an ex-employee of mine. The ex-employee never had a written contract with me, and I told him that deals coming through this other pipeline, I would give 30% of my profits to him, I of course was assuming he'd work the deals.

    Very soon after he introduced me, he ended up getting a job elsewhere, and in essence stopped working for me. I almost funded a deal with this other broker 6 months ago, and the other broker wanted to make sure that there were no "issues" with my employee, and I told him why I don't think there is anything owed, and, as a final nail in the coffin, I officially fired him. He really stopped working for me well over a year ago.

    Now we funded this in a way that the employee might have a claim. So I wanted to hear from the CEOs here, from the employees here.....

    This deal would never have happened had my ex-employee not introduced me to this other lead source.
    Do I owe my ex-employee money?

    (I'm posting this since we did not have a contract, so we're trying to figure out the industry standard for these things.)
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  2. #2
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    Micah,

    If the ex-employee made an introduction that ultimately earned a fee, I would compensate them in some form as a gesture of good faith. It's a small world and possibly all parties involved remember the gesture.

    Best,

    KH
    Seacoast Business Funding, a division of Seacoast Bank
    Kevin Henry-VP Business Development
    Kevin.Henry@SeacoastBF.com
    561-623-1872
    www.seacoastbf.com
    Boynton Beach, FL

  3. #3
    Senior Member Reputation points: 31954 Funder Mark's Avatar
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    I would say no.

  4. #4
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    Quote Originally Posted by Kevin Henry-Seacoast View Post
    Micah,

    If the ex-employee made an introduction that ultimately earned a fee, I would compensate them in some form as a gesture of good faith. It's a small world and possibly all parties involved remember the gesture.

    Best,

    KH
    Kevin, thank you for the kind words, and that's absolutely something I would like to do. However, if we come the conclusion that I owe him something for forever, he'll want and demand money for EVERY deal that I ever do with this other broker. I want to know from the community..... is there a monetary debt that I owe my ex-employee, or do I just owe him a debt of gratitude.
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  5. #5
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    Oh, PS Kevin, yes, I understand as a direct lender that you pay your ISOs even if it's been years since the original introduction. He was an independent contractor, but that doesn't necessarily mean that he wasn't beholden to the standards of an employee. Does that change anything in your mind?
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  6. #6
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    Quote Originally Posted by abfunders View Post
    Oh, PS Kevin, yes, I understand as a direct lender that you pay your ISOs even if it's been years since the original introduction. He was an independent contractor, but that doesn't necessarily mean that he wasn't beholden to the standards of an employee. Does that change anything in your mind?
    Micah,

    No it does not. When making the payment tell this person you did this because of the original intro on a deal. Pay this person something as a token and explain that it does not mean they are getting paid on all deals going forward as they are no longer an employee. Payments in the future will be made on a case by case basis as there is no agreement in place, but you may offer some form of compensation as a good faith gesture.

    Best,

    KH
    Seacoast Business Funding, a division of Seacoast Bank
    Kevin Henry-VP Business Development
    Kevin.Henry@SeacoastBF.com
    561-623-1872
    www.seacoastbf.com
    Boynton Beach, FL

  7. #7
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    I agree with Kevin. Pay him a ONE TIME finders fee or connection fee, not a commission. If he has real sense he’ll appreciate it and it may lead to more referral business. At worst it only helps your reputation and credibility.



















    www.B2BRecon.com - The point when a merchant transitions from bank to alternative financing is when you strike.







    Quote Originally Posted by Kevin Henry-Seacoast View Post
    Micah,

    No it does not. When making the payment tell this person you did this because of the original intro on a deal. Pay this person something as a token and explain that it does not mean they are getting paid on all deals going forward as they are no longer an employee. Payments in the future will be made on a case by case basis as there is no agreement in place, but you may offer some form of compensation as a good faith gesture.

    Best,

    KH

  8. #8
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    It can only help Micah. It may even help to re-establish some professional connection. While someone may not have worked out in the short term, perhaps they can be of use for the future. Paying them a one time compensation (like, hey thanks for the referral) will show you are stand up. Which we know you are, of course.

  9. #9
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    Quote Originally Posted by abfunders View Post
    So I closed a very nice deal a week and change ago, very nice payout, wonderful. I split it with a broker who sent me the deal, wonderful.
    This broker who sent me the deal was introduced to me by an ex-employee of mine. The ex-employee never had a written contract with me, and I told him that deals coming through this other pipeline, I would give 30% of my profits to him, I of course was assuming he'd work the deals.

    Very soon after he introduced me, he ended up getting a job elsewhere, and in essence stopped working for me. I almost funded a deal with this other broker 6 months ago, and the other broker wanted to make sure that there were no "issues" with my employee, and I told him why I don't think there is anything owed, and, as a final nail in the coffin, I officially fired him. He really stopped working for me well over a year ago.

    Now we funded this in a way that the employee might have a claim. So I wanted to hear from the CEOs here, from the employees here.....

    This deal would never have happened had my ex-employee not introduced me to this other lead source.
    Do I owe my ex-employee money?

    (I'm posting this since we did not have a contract, so we're trying to figure out the industry standard for these things.)
    Well you know I am not in the funding business so I can not speak to an "industry standard", but I have been in some form of business since middle school, when I would access BBS's and sell and swap various digital things..

    Since you don't have a legal contract to help with any kind of guidance, I think this falls on what you as a person feel as if you think should do. One thing that stuck out to me that you said was "This deal would never have happened had my ex-employee not introduced me to this other lead source"... So that fact alone would then lead me to ponder if I should show some sort of "token" of my appreciation to the employee.

    A few questions regarding this...

    Will giving a "token of appreciation" put you, of your finances in a stressed position?

    Would you care if this person showed up at your funeral and gave his honest account about how he made things happen for you, and how there was this 1 account that you left him hanging?

    Does this person have any influence in the marketplace? Where as if he/she gave their honest account regarding this, it could possibly shade you in a negative way?

    In what regard do you hold operating above board without reproach? Not only contractually but morally as well.


    Me personally, I have always operated fair and just, even if no contract is involved.. Your reputation and perceptions of you precedes you right? So I hold that in very high regard. I personally have tabs on people owing me money going back all the way back to 1997. I still have my flip phone Motorola StarTac with the Clip-On Organizer from 1997, that's when I 1st started keeping digital records of my various dealings, lol... On the "flip" side of that, I personally can say that I don't know of one single person that can honestly say I owe them anything or have some sort of open Tab on me..

  10. #10
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    Everyone who is out there, please add a line, even if it "you owe nothing" or "you owe something" or some story, I don't care. The more opinions I have out there, the more clear this case gets. I want to show this thread to my ex-employee.
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  11. #11
    I'd pay him a portion. No reason not to. At least make the gesture and come up with a figure you are comfortable giving. He can be upset or satisfied. If he does not get paid he will keep the bad taste in his mouth with good reason. If you pay him something fair he cannot be too angry. It is going to be a tough time out there for brokers for a while, so an initial intro payday would probably help him. If he ends up bad mouthing you along the way then that's his own problem.
    Direct Funder | MCA | Public Companies | Convertible Notes | Hard Money
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  12. #12
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    I'm changing the story a bit to make it more "balanced" as it happened (more balanced):

    I told said employee that I would give him 30% of the profits on the referrals made by this referral source.
    I found out that the referral source wanted a full 50% of the profits.
    I told my employee several months later that I was no longer able to pay him because I had to pay the referral source so much money. He was upset at that and said that I'm wrong.
    I close a deal a year later and now wants to get paid.
    He was working as a 1099, not a W9.

    Of course, he only agrees to be fired after I closed a deal with the referral partner.

    - Are you as an employer allowed to cancel a 1099's employee's agreement with you willy-nilly and never pay him again for work he did?
    - Also, how long do residuals generally last after an 1099 employee's contract is cancelled?
    - How much is bringing a lead source worth to an employer? If an employee brings in a lead source, should the employer pay him a fee for introducing him to the lead source?

    Is there money "owed" or just a "thank you" is due?
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  13. #13
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    1099 employee? isn't a 1099 classification a non employee?

  14. #14
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    Quote Originally Posted by fundingsmbs View Post
    1099 employee? isn't a 1099 classification a non employee?
    Excellent point. He wants to be classified as an employee to get the benefits of residuals and that I can't fire him easily, and the benefits of the ISO/1099 which allowed him not to work for me on the side and hope for me to work my magic. It took 2 years! Trying to get him to understand that just because he has an email address at the company, doesn't mean he's not an independent contractor.
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  15. #15
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    Micah, all the questions you are asking should be clearly outlined in the ISO/Agent agreement you have with this person. As far as 1099 goes, there is no such thing as a 1099 employee, they are an independent contractor.

    Employees receive W2, IC receive 1099

  16. #16
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    i would tread lightly on the 1099 vs w2 as well. if you gave them promises of income, email addresses, and it appears he/she was a employee, some states have challenged 1099's to be deemed employees and than all the benefits of an employee apply. there are some class actions (i.e. UBER) on this subject matter. most employment is at will , however, so, unless there is an employment contract overriding at will, not much they can do once you terminate.

  17. #17
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    Quote Originally Posted by fundingsmbs View Post
    i would tread lightly on the 1099 vs w2 as well. if you gave them promises of income, email addresses, and it appears he/she was a employee, some states have challenged 1099's to be deemed employees and than all the benefits of an employee apply. there are some class actions (i.e. UBER) on this subject matter. most employment is at will , however, so, unless there is an employment contract overriding at will, not much they can do once you terminate.
    Excellent point! Of course, there were no promises of income (commission only) and no hours he had to work. But of course there were some servicing that I expected him to do, and when he got a "real" job elsewhere, he stopped logging into the email entirely. But yeah, I did tell him up-front that I get to decide...
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  18. #18
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    Once an employee leaves a company he does not get anything even if he deals funds the next day.I pay if they got the signed docs before they left, but that is just being nice. Referrals are a different story

  19. #19
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    We had some binding arbitration.
    Good news is .... the CEOs were right. I released him a year ago, I don't have to pay him on deals after that release.
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  20. #20
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    I might pay a referral fee anyway, but that depends on if it's financially worth it.
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  21. #21
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    On post #9 I deduced that this was probably a moral thing and I detailed a few ways one could try to self evaluate and decide if it's "financially worth it".

    Curious regarding on how you will process this morally, and what info will you use to come to the conclusion that it is or is not financially worth it?

    Care to share your thoughts and walk us through your internal processing?
    Last edited by Winning; 06-25-2020 at 12:34 PM.

  22. #22
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    Winning, it's a personal decision you're asking, and you know it.

    What am I going to do? I'm working it out now. Someone needs to be

    The problem is that this 1099 worker dropped out of the industry entirely, and then for a long time he was waiting to POUNCE on me when I closed a deal. He had this other broker egging him on as well. The issue is that if I have to pay him, or have to keep paying him, then there's another broker in the chain, and that's waaaay too many hands in the pockets, especially when this other broker often has to pay his group as well.

    On the one hand, it's not fair to treat me as a dishrag. On the other hand, he will probably complain about this experience for years. I've lost binding arbitration before as well and it hurts.

    I'm trying to balance, like you said, my own financial stability, how much I made on the deal and how much I gave up to others already (it was already split 50-50), the "I deserve it" attitude that I don't want to feed.

    Additionally, it has to be enough money for both the other broker involved and the one who sued me, feel like I gave them more than they deserved. So I have to negotiate both with the other broker and my ex-1099 guy to try to make them BOTH happy, so the introducing guy will continue to send me business! I think I did come up with a solution that nobody loses on and doesn't add to the broker chain in any way, I'm stilling waiting on the other broker to agree so that we can sign on it.
    Micah Markowitz | mmarkowitz@abfunders.com | 855-33-GO-ABF (direct)

  23. #23
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    Hold up, wait a second!

    Sued you???

    I would think this makes this a whole lot more complicated than what the forum members and I was thinking.

  24. #24
    Noob Reputation points: 10 merrillcash's Avatar
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    I have been a 1099 contractor for many different customers. (8) I find that if they decide they are not going to pay you then most of time if there is no contract in place I did not get paid.

    There was one customer that paid me to send them all client information after I changed to another client. The information was not used when doing work for the new client.

    Suggest pay something for goodwill and karma.

  25. #25
    Senior Member Reputation points: 4876 FUND3R1's Avatar
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    Quote Originally Posted by abfunders View Post
    Kevin, thank you for the kind words, and that's absolutely something I would like to do. However, if we come the conclusion that I owe him something for forever, he'll want and demand money for EVERY deal that I ever do with this other broker. I want to know from the community..... is there a monetary debt that I owe my ex-employee, or do I just owe him a debt of gratitude.
    No momentary debt, I would just owe him on a debt of gratitude. If he was smart he would of made sure there was a partnership/referral agreement in place.
    FUND3R1

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