Legal Question in Employment Law in California

Hello,

My business partner and I have been working on trying to start a company. One of my son's friend who recently was layed off and was collecting unemployment offered to help us but for free, since he did not want to lose his unemployment insurance benefits. My partner agreed to have him help us. After about 2 months of his help, it was obvious to both parties that he was not suited to work with us.

After a few days, we received a demand payment for his time, of 391 hours during the past 2 months. Please keep in mind, we mutually agreed to no compensation either stock, cash or anything. He wanted $20 per hour and claims that he will sue us if we don't pay.

Please note that he was collecting unemployment this whole time and he wanted to pay this amount as a "bonus" or expense which we refused. We would like to submit his letter which details out his work hours to the EDD state agency (California) and advise them of a potential fraud case.

Our position is that we do not want him to claim both UI and claim wages from us (we are not incorporated yet, but have a company name and web site waiting to be incorporated very shortly).

What would you recommend we should do? Turn this guy in? Or contact the attorney he has engaged and warn him about the UI fraud case that his client has on his hands.

1 Answer from Attorneys

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