Legal Question in Business Law in California

Whether it is theft or not would require information about intent; embezzlement is a subspecies of theft and with the right facts, it might rise to that level. Also, either actual or constructive fraud generally require some misrepresentation or withholding of facts showing an intent to deceive (see Civil Code sections 1572 and 1573). Facts showing the required deception may or may not be present.

Nevertheless, it is an improper act and almost certainly both a breach of contract and a breach of fiduciary duty.

Partners serve the partnership without compensation, unless they have an agreement with the partnership to be paid for services. See Corporations Code section 16401(h). The law presumes that partners will take money out by sharing profits, and their services will be donated, except as agreed, and a majority of the partnership interests must resolve any "difference" that is in the ordinary course of business, while a dispute over a matter outside the ordinary course of business requires unanimous action (CC 16401(j). So, a salary change would at least require the approval of a 50% partner.

The counter-argument may be something like "...but he was doing all the work!" or "that's what he was worth!" If true, maybe the partners should have reconsidered the earlier agreement. Nevertheless, there is a pretty clear breach of the partnership contract and a breach of fiduciary duty by both the writer of the paychecks and the recipient. Fiduciary duty of a partner to the other partners and to the partnership itself is discussed in Corporations Code section 16404 and a partner's or the partnership's right to sue is discussed in 16405. If I were planning a (civil) suit, I would include causes of action for the breaches (contract and duty) and for actual and constructive fraud, expecting to win on the former and hoping to win on the latter.

Nevertheless, if the partnership business has promise, and the father and son admit making a mistake of judgment, it might make more sense to negotiate a settlement of the dispute. In the process, hire a lawyer who can explain how a partnership should be run, and consider converting to an LLC or corporation for liability and managerial purposes.