The High Cost of Unpaid Internships for Your Startup

The High Cost of Unpaid Internships for Your Startup

Contracts, Copyright, Employment Agreements, Start-Up
Recently, one of our solo founder clients approached me to draw up some short agreement for some (student) unpaid interns he was considering bringing on with his startup. In this post, I touch on some of the things I explained to him after (very professionally, of course) telling him he might want to re-consider his company's plan. If you're a startup founder considering "hiring" unpaid interns to come and work at your new company, it is important that you understand the potential legal and business risks first. Is your startup's unpaid internship even legal? Yes, many business owners never even bother to consider this first, critical question regarding their new or established internship program. The answer is a very legal "probably, but it depends". While not necessarily illegal in and…
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Is Minimum Wage Required for My Startup’s “Gig” Workers?

Is Minimum Wage Required for My Startup’s “Gig” Workers?

Employment Agreements, Independent Contractor, Start-Up
Startup companies (particularly those in technology or e-commerce) typically rely on independent contractors to fill key roles in the early stages of development, design, and implementation. But not a few startups we advise also rely on short term, part-time, “gig” workers to make their business model go. These workers are typically paid by the end-customer through the startup's platform, which facilitates the transaction (usually for a cut). So, are such companies required to pay or guarantee a certain minimum wage to such workers? Minimum Wage and Arizona Law NOTE: I am only licensed to practice here in Arizona and, as such, this post deals strictly with the law of Arizona. You should research the law of your own state or consult a qualified lawyer in the state where you are…
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Is Your Customized Software a ‘Work for Hire’?

Is Your Customized Software a ‘Work for Hire’?

Contracts, Copyright, Employment Agreements, Independent Contractor
Your company just hired someone to help develop your new mobile app. Your agreement with this programmer or engineer does say that anything she creates for you is a "work made for hire". So your business is good, right? No way that the new hire can ever claim ownership to any of the deliverables, correct? In my Phoenix technology law practice, I hear this a lot as it pertains to software and app development.   Unfortunately, the term "work made for hire" or, more colloquially, "work for hire", is a term as misunderstood by companies as it is misused. "Work Made for Hire" Doctrine Explained Generally, a work that is subject to copyright is automatically the property of the person who created it (assuming that author has not transferred some or…
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Do Employees Have to Pay Back Training Costs if They Leave the Company?

Do Employees Have to Pay Back Training Costs if They Leave the Company?

Contracts, Employment Agreements
In competitive job markets like the current one, it is not unusual for employers (and firms working with them) to offer prospective workers training in specialized areas as incentive to accept employment.  For many businesses looking to develop staff in response to talent gaps, the investment in training can be significant. But what happens if the employee your company has spent weeks or months training quits or leaves to take another offer before the agreed-upon term of employment is up.  Can your company legally recover the investment in that employee from him/her? Liquidated damages provisions in Arizona employment agreements Under Arizona law anyway, where a contract (such as an employment agreement) provides for a party's remedy in the case of a breach by the other party, the provisions of the…
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Got DIBS? How AZ’s Independent Contractor Law affects Your Startup

Got DIBS? How AZ’s Independent Contractor Law affects Your Startup

Business Formation, Employment Agreements, Independent Contractor
In this post, we examine Arizona's "DIBS" independent contractor law and whether it matters what startup companies call their employees. To be more specific, whether an emerging business can (or should) characterize its workers as regular employees or "1099" independent contractors? The Contractor/Employee Classification Dilemma The choice of whether a new business should call their new employee a "contractor" or an "employee" can be a difficult one, but it's a choice that comes with very real consequences for the wrong choice.  Generally speaking, you as the employer ordinarily have the burden of proving that an actual independent contractor relationship exists by "clear and convincing" evidence.   The need for clarity on this issue is perhaps more important than ever.  State and Federal misclassification enforcement efforts have been on the rise.  To…
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