Small employers have ripped me off a few times now. Whenever they want to pay you as a contractor (handled by the 1099 form in the US) instead of as an employee (the W2 form in the US), watch out. Mind, though, the W2 isn't proof against employer cheating either, it's only a little more protection than the 1099.
Startups will share the risks without properly informing their workers and getting consent to do so, and at the same time arrange not to share the rewards, should they be successful. The first official word you may get that the company is failing is that they can't make payroll, and this of course occurs when they owe you a month of pay. They knew money was running out and that if sales didn't pick up or more like start, they would be unable to pay everyone, but they refuse to talk or think about that because that's defeatism. Just before the end, they will likely crank up the stress levels, try to drive everyone to work extra extra hard. They're deluding themselves that mere hard work can get through the crisis, when the problem is that their idea was actually not much good. When it doesn't work, the crying and wailing comes out of the closet. How can you whine about the month of pay they owe you, when their precious business failed? Can't you see they're hurting more than you? Oh, and they'll beg you to keep working for free. Surely the business will succeed with just a little more time and effort.
Only way I've found to avoid getting screwed by a failing startup is to read between the lines. If it's not going well, get out before the money runs out. If they're lying to themselves, they sure aren't giving it to the workers straight. The government can't help you. Yeah, you can sue the employer, and win, but if the business really is broke you will get nothing. Compared to collecting, suing and winning is easy.
Life isn't fair that way. Hard work often isn't rewarded. The Protestant Work Ethic sometimes is a cruel delusion. All those conservatives who think "get a job" is the magic that separates a good citizen from a lazy mooching bum ought to experience failure after failure.