1.
5 Ways to Reduce
Employment Law
Risks For Early
Growth Companies
#EmploymentLawRisk
Karen Reinhold, Esq.
Shareholder
Hopkins & Carley
Glenn McCrae
Chief Strategy Officer
Early Growth Financial Services

2.
About Us

3.
Why Worry About
Employment Law Risks?

4.
Risk 1 – Hiring Key Team Members with
Previous Employment Agreements
• Covenants not to compete
(limited issue)
• Covenants not to solicit
customers
• No-hire agreements
• Liquidated damages clauses
• Covenants not to solicit
employees

5.
Standard Non-Solicit Clause
Employee will be called upon to work closely with other
employees of XXXX. Employee expressly agrees that during
employee’s employment with XXX and for one (1) year
thereafter, Employee will not solicit, take away, or assist any
other individual or business in soliciting any employee of
XXXX.
In addition, all information about such employees, which
became known to Employee during the course of Employee’s
employment with XXXX, and which is not otherwise known
to the public, is a trade secret of XXXX and shall not be used
by Employee in soliciting or taking away employees of XXXX at
any time during or after termination of Employee’s
employment with XXXX.

6.
Case Study: Non-Solicitation Clause
• VP Engineering of NewCo solicits former colleagues
from OldCo
• Three key OldCo engineers follow VP to NewCo
• OldCo sues NewCo claiming loss of key engineers
caused product line to fail, resulting in a loss of
$100M revenue
• Case ultimately resolves favorably for NewCo, but
only after eighteen months litigation and $2.5M in
legal fees
Reduce your risk: Make sure you have agreement in which
you ask employees not to breach any prior agreement.

7.
Risk 2 - Compensation Agreements
with Deferred Payment
• Deferred compensation
agreements that condition
salary payment on funding
or other contingencies
• Bonus plans with ill-
defined terms and
conditions that create
vested rights in employee
Reduce your risk: If you want to defer compensation – don’t
call it a “salary;” call it a “bonus” with specific terms.

8.
Risk 3 - Classification Issues
• Are you using
independent contractors
who are really employees?
– How serious is this?
• Exempt vs. Non-exempt
employees
– Salary and job
classification
– Overtime!
– Programmers
Reduce your risk: Proper employment classifications.

9.
Risk 4 - Confidential Information –
Are You Protecting It?
• Are documents and a process
in place for onboarding?
• Designate point person for
tracking/collection
• Do you have any other
process/policy in place
regarding use of or handling of
confidential information
during employment
• Exit process
Reduce your risk: Put necessary documents in place to
protect information that is proprietary to your company.

10.
Risk 5 - Four Written Policies You
Should Have Even With Few Employees
10
Anti-harassment policy
Equal employment opportunity and non-
discrimination policy
Meal period and rest break policy (if you
have non-exempt employees)
Computer, PDA and social media policy
Reduce your risk: Written policies as part of onboarding
process and posted as necessary.

11.
Takeaways:
Simple Steps to Massively Reduce Risk
• Onboarding process that
identifies and manages
restrictive covenant issues
• Review compensation
agreements for pitfalls
• Scrub independent contractors
• Set up simple employee
classification system
• Audit confidential information
issue-anything needed
• Get the basic written policies in
place now
11

12.
Thanks and Q&A
•
Hopkins & Carley, A Law Corporation
70 South First Street
San Jose, CA 95113
T: (408) 286-9800
@HOPKINSCARLEY
Karen Reinhold, Esq., Shareholder
kreinhold@hopkinscarley.com
12
Glenn McCrae
gmccrae@earlygrowthfinancialservices.com
2033 Gateway Place, 5th Fl.
San Jose, CA 95110
T: (415) 320-5753
@EARLYGROWTHFS