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Insights

Employee Termination for Startups: What Founders Need to Know

Firing an employee is one of the most difficult parts of running a startup. Whether due to performance issues, role redundancy, or a strategic shift, termination is not only a business decision but also a legal one. If handled poorly, it can lead to lawsuits, damage team morale, and affect your ability to attract future hires.

Exempt v. Nonexempt Employees: Main Differences Explained

Not all employees are treated the same under wage and hour laws. One of the biggest distinctions? Whether someone is exempt or nonexempt. Misclassification is a common startup mistake - with costly consequences.

Building Your Team Right: Effective Startup Onboarding Essentials

You’ve made your first hire - congrats! Now what? Onboarding isn’t just about handing over a laptop. It’s your chance to set expectations, build culture, and cover legal bases. Here’s how to do it right from day one.

Contractor or Employee? A Startup Founder's Decision Guide

Startups thrive on flexibility, and independent contractors often feel like the perfect solution. But the distinction between contractor and employee carries real legal weight. Get it wrong, and your company could face IRS audits, back taxes, wage penalties, and even personal liability.

Because without them, your startup may not legally own its core technology - a major risk in funding, acquisitions, or IPOs.

Generally yes, but enforceability can depend on state law. Some states restrict how broadly employers can claim ownership, so tailoring language matters.

Yes. Contractors often create code, designs, or strategies, and without an agreement, they may legally own the IP.

They serve the same function - assigning inventions to the company and protecting confidentiality. The terminology varies by company or industry.

Yes. Pair NDAs with confidentiality and IP assignment agreements to ensure ownership of work product and protection of sensitive data.

Yes, but courts often scrutinize them. NDAs that are too broad or vague are harder to enforce.

Two to five years is standard. Trade secrets may be protected indefinitely if defined clearly.

Most venture capitalists won’t sign NDAs at the pitch stage. However, some strategic investors or partners may sign if sensitive technical information is involved.

Yes. Even a short policy clarifying what licenses are acceptable and requiring license checks before use can protect your company from major risks.

It depends. Copyleft licenses like AGPL may apply even if you don’t distribute your code. Always check terms before using them in your backend.

You could face legal action, be forced to release your proprietary code, or lose investor confidence. Compliance is critical.

Yes, but it depends on the license. Permissive licenses (like MIT or Apache 2.0) allow it, while copyleft licenses (like GPL) may require you to open source your own code.

Be transparent, respond quickly to user requests, and show that you protect data. Investors and customers reward startups that treat privacy as a priority, not an afterthought.

Start with a clear Privacy Policy and limit the data you collect. These two actions cover many compliance basics and set a strong foundation.

Yes. If you collect data from EU or California residents, you’re subject to their rules—even as a small or pre-revenue startup.

Yes. Early compliance avoids costly fixes later and signals professionalism to investors and customers.

Fines can reach up to €20 million or 4% of annual global revenue, whichever is higher. Even small startups have been fined for violations.

Yes. If you have users in the EU or monitor EU residents online, GDPR applies regardless of where your company is based.

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