Insights from a Seasoned Startup Lawyer


Building a High Profile Web/Software Company

Hiring and Employee Obligations

Typically, when hiring an employee you want to make a formal offer supported by a written Offer Letter, signed by the company and signed as accepted by the employee. The Offer Letter should provide a salary, title, report to, and location – and reference that it is for a full-time position (or otherwise). The offer letter can provide for options with a reference vesting, and if it does, the grant should be subject to the approval of your Board of Directors. The letter should require proof of eligibility to work in the US (if so), and should state that the employment is at-will. You may want to reference benefits and/or potential bonus.

If the employment is truly “at-will”, which is most flexible for the company, then you should avoid an employment agreement. You should also avoid referencing trial periods, since if the entire employment is at will, there should be no difference in a trial period – trial period implies higher standard for termination after the trial period.

Before employment starts, you need to get a PIIA (Proprietary information and Inventions Assignment). This agreement should include a confidentiality provision and a restriction on soliciting other employees to leave the company. Many companies also include a non-compete after employment – but non-competes are of dubious effectiveness, particularly in California. I generally like to get the PIIA on the employee’s first day. If presented sooner, it might scare them away. On the first day, it seems a natural part of the onboarding process.

I’ve also found that a non-disclosure of salary can be helpful. It’s hard to enforce, but a good policy to prevent loose discussion and leveling issues. This can be added to your company policies under the Employee Handbook instead. You must have a well written and updated Employee Handbook, which each new Employee should sign off on having received.