But as soon as you incorporate, take on cofounders and investors, and adopt a title, you're essentially working at the direction of the organization. Your equity is likely subject to a vesting schedule and (given the right constellation of agreement among the other founders and investors) you could even be 'let go'.

Also, the IRS doesn't enforce minimum wages and labor laws, so its definitions aren't necessarily relevant. (For example, it will tax equity compensation that doesn't count toward minimum wage calculations.)

So you may be right, but I'm not yet convinced. The strict letter of the law seems to suggest that corporations must pay even their founders minimum wages.

And if there's some 'bright-line' rule that clearly tells us when this is not the case, I've never heard it. (For example, if "5%" is traditionally enough ownership, by statute or administrative ruling, to count someone as an owner rather than employee, that would be very good to know -- you could have exactly 20 equal founders and no investors and still have founders bootstrap with their own donated labor.)

I'm pretty sure it's tricker than that because there are a number of high profile executives with their $1 salaries and now even some of the bank folks that are in non-executive positions that have elected to take no salary. It seems like those would be more prone to scrutiny than unpaid interns.