Businesses with funds tied up in the recently failed Silicon Valley Bank wrestled over the weekend with the question of how to pay their employees, plus the risk of state and federal fines for late wage payments.

But fears that companies’ bank deposits wouldn’t be accessible plus ongoing uncertainty about financial markets serve as “a wakeup call” for businesses to have contingency plans for when they can’t make payroll on time, said Kathleen Caminiti, an employment lawyer at Fisher & Phillips LLP in New Jersey and New York. These could include plans for temporary furloughs when needed, or for issuing paper checks if the problem is a technology glitch instead of a lack of accessible cash, she said.

The immediate cash crisis at venture capital-backed technology companies was largely averted Sunday night, when federal regulators announced a plan that would give Silicon Valley Bank depositors access to their money starting Monday. The plan also covered deposits in Signature Bank, which New York banking regulators shut down on Sunday.

“Looking at the liquidity crisis that loomed over the weekend, employers were really between a rock and a hard place,” Caminiti said. “They might not have had access to their funds, but they may have still been exposed to significant damages and penalties, as well as the potential for personal liability” for company executives.

The penalties...

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