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Privacy Policies for Startups: Building Trust (and Legal Compliance) from Day One
If your startup collects any personal data - like email addresses, names, payment details, or even IP addresses - you need a Privacy Policy. And not just any policy: it must be clear, compliant, and up to date. A strong Privacy Policy builds user trust and keeps your company out of legal trouble.
Active vs. Passive Terms of Service: What Your Business Needs to Know
For startup founders and entrepreneurs, implementing Terms of Service and Privacy Policies isn’t just a legal checkbox. It’s a strategic choice that affects user engagement, compliance, and protection against disputes. The way you implement these terms - active vs. passive - can significantly impact your business.
Terms of Service for Startups: What to Include and Why It Matters
If your startup has a website, app, or software platform, you need Terms of Service (ToS). These aren’t just formalities - they’re binding legal contracts that define how users interact with your product and limit your legal exposure.
Invention Assignment Agreements (CIIAAs & PIIAAs): Who Owns the IP?
Startups thrive on innovation. But unless you secure ownership of intellectual property (IP), the very assets that drive your company could walk out the door. That’s why founders use Confidential Information and Inventions Assignment Agreements (CIIAAs) and Proprietary Information and Inventions Assignment Agreements (PIIAAs).
FAQs
Open allCan I make an offer letter verbal instead of written?
It’s not recommended. A written letter avoids disputes, creates clarity, and provides a paper trail if questions arise later.
Do startups need both an offer letter and an employment agreement?
Yes. The offer letter provides a summary of terms, while a formal employment agreement can cover more detailed obligations, protections, and restrictions.
Is an offer letter legally binding?
Most offer letters are not legally binding contracts, but they do outline expectations. Binding obligations often come from separate agreements, like equity grants or confidentiality agreements.
Should startups get resignations in writing?
Yes. Even a simple email confirmation helps avoid disputes later and provides documentation if questions arise with unemployment agencies.
What should startups include in a final paycheck?
All wages earned, plus unused vacation or PTO if state law requires it. Bonuses or commissions earned up to the last day should also be included.
Can employees who quit still collect unemployment?
In most cases, no. However, if they resigned due to unsafe conditions, harassment, or other “good cause,” they may still qualify.
Does it matter legally if someone quits or is fired?
Yes. Terminations usually trigger more legal and financial obligations, including unemployment eligibility and faster final paycheck deadlines.
What’s the best way to tell the team about a termination?
Keep it professional, brief, and focused on the business. Avoid sharing details about performance or personal issues. Frame the update around the company’s future direction.
Should founders always use a separation agreement?
Not always. For low-risk terminations, it may not be necessary. However, in cases involving layoffs, complaints, or sensitive situations, a separation agreement can reduce potential disputes.
Do startups have to pay unused vacation after termination?
It depends on the state. For example, California requires payout of unused vacation, while other states leave it to company policy. Check your state’s rules before finalizing pay.
Can a startup fire someone without giving a reason?
In most at-will employment states, yes. However, firing must not be based on discrimination or retaliation. Documenting valid business reasons is strongly recommended.
How often should startups review classifications?
At least annually, or whenever roles change significantly. Job responsibilities, not just titles, determine exemption status.
Do all salaried employees qualify as exempt?
No. Salary alone isn’t enough - the role must also meet the duties test.
What happens if I misclassify an employee?
You may owe back overtime pay, penalties, and attorney fees. Regulators can also audit your payroll practices.
What does “exempt” mean under employment law?
It means the employee is exempt from overtime pay requirements, usually because they earn a salary and perform executive, administrative, or professional duties.