I did some business development work for a tech company on a contract basis. The CEO stated that I would be paid in crypto when I started the work in the spring of 2020. He added a clause to the contract stating, “The company may elect to pay in USD.”
I struck out that part of the contract because if I was going to risk getting paid in crypto, and the price all of a sudden appreciated, I didn’t want the company to revert to paying me in USD.
In August 2020, I received payment for the contract work in cryptocurrency. Since then, the prices of cryptocurrency have skyrocketed. As of this moment, the crypto that I received payment in has gone up 700%.
“ ‘I have worked with this person for many years, and he has a tendency to try to change the terms of payment after agreeing on a certain way of operating.’ ”
Today, I received an email from the CEO stating something along the lines of, “Since you did not generate any revenue for the company and are not currently doing any follow up work, please send back all of the crypto received in August 2020. You can invoice the company for the hours worked in USD.” So basically, stating that I can invoice in USD at seven times less than what the crypto is worth today!
Please note that there have been several other people trying to sell the company’s solutions. It is a startup and so far, they are still trying to generate their first dollar in sales. The purpose of the contract was to generate sales and it included a commission component, but the understanding was that I would bill hourly for cold calling and emailing people, generating proposals, setting up meetings, participating in and leading pitches, etc., with the goal of generating revenue.
I am not really sure what to do. I have worked with this person for many years, and he has a tendency to try to change the terms of payment after agreeing on a certain way of operating.
What do you think is a fair solution? Should I return some of the cryptocurrency for hours worked? What should I tell this employer?
You can email The Moneyist with any financial and ethical questions at email@example.com.
No. Alas, no. No, thank you. Absolutely not. Ask me again in 2121.
If the value of the cryptocurrency fell 700% since August 2020, would he want to pay you in dollars? If it suddenly dipped by that amount today, would he follow up with his employees? Not on your nellie. Your employer should abide by the terms of his contract, and any efforts to break that contract with guff about how employees didn’t do X or Y, which means they should be paid one way or another, are sharp practice at best and open him up to a lawsuit at worst.
“A contracted employee has even more job security: he or she cannot be fired for any additional reason identified in the contract,” according to Console Mattiaci Law in Philadelphia. “A contract can contain a variety of terms for employment including job duties, pay, and protections against termination, but it is against the law for an employer to contract away an employee’s right to minimum wage or to his or her right to collect unemployment.”
“ Whether it’s bitcoin or ethereum, paying employees in cryptocurrency is a risky practice for both the employer and the employee. ”
Even if the contract said you could be paid in either dollars or crypto, asking for the salary back is an entirely different matter.
“A contract is a contract is a contract,” says Eugene Lee, a labor lawyer based in Los Angeles. “Neither you nor your employer can breach a contract without facing the consequences. That is, unless the contract says it’s OK. This is why it is so important that employees keep copies of any contracts they have signed with their employers.”
Whether it’s bitcoin BTCUSD, -2.78% or ethereum ETHUSD, -0.55%, paying employees in cryptocurrency is a risky practice for both the employer and the employee. The value of the currency can rise and fall, as you have experienced, and there are tax issues for both employer and employee on the appreciation of that currency. Your employer must make a record of the value of the cryptocurrency on the date of payment and employees must report their W-2 in dollars, not crypto.
Fair warning: You may be sitting on a 700% profit today, but that could change in an instant.
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