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