Legal: Employment Law

Legal: Employment Law

August 3, 2020 by investor

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

In launching your startup you must consider employment law. 

You should check to see what contracts your prospective employee may have signed with a former employer around non-competes, non-solicitation agreements, and assignment of inventions. 

A non-compete means the employee cannot work for another company that competes with their former employer. If they signed one with a previous employer who is a competitor, then this may be an issue. 

A non-solicitation agreement prevents an employer from approaching your employees to hire them away. 

Assignment of inventions means the prospective employee must sign over their right to inventions during their work at your company.  

All employees should sign a non-disclosure agreement regarding their work at the company.  

All employees should have a contract that defines they are working ‘at will’, which means either the employer or the employee can terminate the relationship at any time.

Also, if offering stock options, this should be documented as well. 

Classification of employees is a key issue as the taxing authorities will see if you have misclassified an employee as a contractor to avoid paying payroll taxes and meeting minimum wage requirements.

There are also wage payment laws that require payment for hourly workers at a certain frequency such as biweekly.


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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.

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