This ^^, have had my fair share of working for small companies like this as a regular employee.. and when they fight, at home, after hours, being dragged into their BS.
The good news is that such companies are not able to weather the current economic storm, so hopefully they will be wiped off the face of the earth before long.
Yes and no. While the company I am referring too employed someone close to me and it was crappy some days they did pay her a salary and she gained valuable experience there. The company produces a good product and should not go out of business (I hope) as they manufacture locally and employ a few people, family and non. However, it was hard working there due to the favouratism. The person I know was far better qualified than one of the owners kids to do certain work but it always went to the kid who would not do it properly, etc. One kid would have a fight with her boyfriend and then be so upset she could not work for 3 days and that was fine but another employee was almost turned down leave for their honeymoon. Stupid things like that.
Fact is every company has its own crappy stuff to deal with, from small all the way up to big corporate companies. You know what you sign up for, so its best to suck it up, and if you can't deal with that particular flavour of crap you are always able to look elsewhere. Its better to not get too emotional about it and not burn bridges. Does not help anyone or change anything in my experience other than how easy it is to get a reference.
Running your own company is fairly hard judging by the low success rate of those who start a business so if someone can build a successful company and wants to run it a certain way lets face it, it's their company, they can do what they want. The law is well and good but in my experience possession is nine tenths of the law. Going the legal route against an employer also means the relationship will break down to the point where you could never work together again and future employers may not want to hire someone willing to drag them through court. This is why most people just quit if they don't like the way things are done, regardless of what any law says.