From our colleague, Ute Krudewagen

The CEO of an emerging growth company called me a while ago, a bit shocked after having seen the employment contracts that had just been issued to a couple of new hires in Hong Kong.  “How could they be longer than mine!?  Are you sure that is the approach we should take as we expand our operations?”

This CEO, like many US executives, employment lawyers and HR representatives, is accustomed to one- or two-page US-style at-will offer letters. But in many jurisdictions around the world,.
Continue Reading Top 10 Pitfalls in Managing Employment Contracts as You Go Global

Employers, from startups to public companies, need to be aware of the following requirements and take action by January 31st if they apply.  Section 6039 of the Internal Revenue Code requires a corporation to furnish a written statement to any employee or former employee who either (i) exercised an incentive stock option within the meaning of Section 422 of the Code (ISO) during 2013 or (ii) during 2013 first transferred legal title to shares acquired under the corporation’s employee stock purchase plan within the meaning of Section 423 of the
Continue Reading Employers: 2014 Deadlines to Furnish ISO and ESPP Information Statements and Returns

Our colleague Ute Krudewagen has put together a list of some key labor and employment issues to consider if and when you decide to take your US-based emerging company to overseas locations.

So you are ready to expand?

Your start-up is off the ground and running, U.S. offer letters and confidentiality agreements have been signed and compliance policies have been implemented.  It’s now time to hire your first employee outside the U. S.  This seemingly easy task is often easier said than done.  For many emerging companies, the road to a global workforce is paved with potholes.  How can you prepare for the Friday afternoon call from a frantic HR manager who wants to hire a salesperson who will go to a competitor if he doesn’t have an offer in his hands by Monday morning?  Can you afford to lose the candidate, and all the great opportunity that the candidate represents to the business?  How do you respond when asked about a sales representative who received an offer three months ago and has since then been working in Brazil, while being paid directly from the U.S.?  These issues are part of running an international business, however, with the right preparation and planning, these speed bumps can be leveled before they escalate.

The five issues Ute discusses for growing employers to consider before going global are:

  • Doing Business and Tax Considerations, Including Corporate Structure
  • Will you Expand by Hiring Employees, Independent Contractors, Third Party Agencies or Expatriate Employees?
  • Payroll & Benefits Processes and Costs, Including Witholding on Taxes and Social Charges (similar to Social Security)
  • Employment Agreements & Policies
  • Managing the Exit Strategy – Probationary Periods, Lack of At-Will Employment, Notice Periods and Severance

Continue Reading Top Labor and Employment Law Issues When Taking your Start-Up Global

Courtesy of our colleagues Merrili Escue and Nancy Kawano.
In part one of this two-part post, we told you that cutting the wrong corners, by deferring the payment of wages until the company has cash, or misclassifying employees as exempt (and therefore not paying overtime) or as independent contractors (failing to pay employment taxes, or satisfy wage and hour requirements) can be potentially disastrous. Our goal was not to traumatize you, but to inspire preventive action.

Today, in part two of our post, we provide additional crucial tips on how to avoid costly mistakes through proper documentation and record keeping before, during and after the employment relationship that will prevent or lessen the potential for costly disputes.  Being able to avoid these issues will save time in the long run and give you an advantage over your less knowledgeable competitors.

Continue Reading Costly employment mistakes emerging companies should avoid, part 2: documentation and record keeping

Courtesy of our colleagues Merrili Escue and Nancy Kawano.

Most startup businesses are faced with the challenge of making the most efficient use of every dollar of their financing.  As a result, creative cost-cutting measures are essential to increase available working capital. 

For the unwary employer, however, cutting the wrong corners can be financially disastrous and may crush the life out of a new venture with enormous penalties, possible double damages, expensive litigation and potential individual liability for officers and directors.  Two of these mistakes are thinking wages to employees can be deferred (or equity provided instead of wages) until the company has more cash, and  failing to understand who qualifies as an employee vs. an independent contractor and who is entitled to receive overtime pay. 

Below is the first of a two-part overview to help identify and avoid the most costly employment mistakes companies can make.  Part two will follow in DLA Piper’s next Emerging Growth and Venture Capital newsletter, which you can sign-up for here.

Continue Reading Two of the most costly employment mistakes emerging companies should avoid