Since making headlines in April for his decision to raise the minimum wage for all employees at his company to a comfortable $70,000 a year, Dan Price, the CEO of Gravity Payments, has hit some hard times.
Two of his “most valued” employees quit after his announcement, he’s lost a few clients over fears of fee hikes, he faces a lawsuit from his own brother who owns a minority share in the company, and he is now renting out his house to make ends meet.
Price, 31, was making close to $1 million when he slashed his own salary to $70,000 to help pay for the salary increases. Now, he’s dealing with a number of business and personal issues that threaten to unravel his livable-salary plan. He told The New York Times:
“I’m working as hard as I ever worked to make it work. I’m renting out my house right now to try and make ends meet myself.”
Price’s announcement reportedly cost him a few customers who feared his salary plan would require fee hikes — others disliked the plan because they saw it as a political statement. On the plus side, Gravity Payments has taken on a dozen clients who support the plan, but they won’t start generating a profit for another year.
While most employees would be happy about getting a raise, others didn’t like the fact that unskilled workers would be making just as much as they did. Maisey McMaster, 26, was one of two valued employees who quit Gravity Payments after Price’s announcement. She explained:
“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump.”
When she talked to Price about her concerns, he reportedly painted her as being selfish. “That really hurt me. I was talking about not only me, but about everyone in my position,” she said.
Grant Moran, 29, also quit over similar issues. He explained:
“Now the people who were just clocking in and out were making the same as me. It shackles high performers to less motivated team members.”
Price responded to the incidents by saying, “There’s no perfect way to do this and no way to handle complex workplace issues that doesn’t have any downsides or trade-offs.”
On top of that, Price’s older brother, Lucas Price, filed a lawsuit two weeks after the announcement accusing his brother of taking millions out of the company while curbing his powers as a minority owner. Lucas Price, who owns 30% of Gravity Payments, provided Gravity Payments with seed funding when his 19-year-old brother started the company in his dorm room in 2004.
To say the least, the lawsuit has anchored Gravity Payments with legal fees at a most inopportune time. Dan Price said of the lawsuit to the Times:
“We don’t have a margin of error to pay those legal fees.”
While the road ahead of Price is anything less than smooth, there are no signs as of yet that he’ll let up on his revolutionary plan to make minimum wage a livable wage.