By law, are prospective employers required to honor an applicant’s request for time to consider accepting or declining a job offer?

Gary Gansle, I have advised and assisted clients in union co…

There is no employment law I'm aware of that requires a potential employer to hold open an offer of employment for a minimum amount of time.  Nor am I aware of any law that requires employers to accommodate an applicant who wants Offer A and requests that Offer B remain on hold for some period of time as a backup plan.  No employer wants to be your Plan B.

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Who are the best seed, angel and VC stage investors who have a background in financial services?

Matthew Bartus, I have represented both companies and investors…

FTV Capital. http://www.ftvcapital.com/
Their LPs are all large financial institutions, and they can utilize that network. They are later-stage investors, not seed, as far as I am aware.

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Should interns be paid in the voluntary sector, or is experience its own reward?

Gary Gansle, Labor & Employment Partner at Dorsey & Whitney

In the U.S., unless the "internship" meets a very strict standard, payment of the minimum wage is required, and "experience" alone cannot be the only compensation.  To qualify in the U.S. as an intern, one important factor that must be present to avoid having to pay minimum wage, is that the intern cannot be providing any material benefit to the company.  In essence, the internship is designed to provide a benefit to the intern, and one of the hallmarks of a proper intern is that it is a net drain on the resources of the company providing the internship.  Accordingly, when contemplating offering an internship, unless you feel confident that you can meet the strict legal standard required in the U.S., the best practice is to pay the minimum wage required, especially if the company hopes to obtain some productive assistance from the intern.

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Do the implications of hiring independent contractors differ state to state?

Gary Gansle, I began my practice as a labor and employment s…

As with most legal issues here in the United States, there are federal and state laws that may apply; Independent contractors among them.  The federal IRS has guidelines it applies when examining this issue, and there are state agencies that apply their own differing standards.  So, there are definitely legal differences in how independent contractors are treated under state law vs. federal law and under the laws of different states.  However, many common principles customarily appear throughout the different analyses.  Chief among them is control over the means of production.  Classic independent contractors control their own means of production: they use their own tools, work wherever they want, choose their own work hours, and are not closely supervised.  This concept usually forms the core of the independent contractor analysis, whether undertaken by federal agencies or the many different states' agencies.

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Is it atypical for founders to vest more than 25% of their equity after one year? What are the potential issues?

Matthew Bartus, Startup lawyer for most of my career at Dorsey …

The default standard, certainly in the Silicon Valley region, is 25% after one year of service, then followed by monthly vesting over 3 years. I typically advise founders to start the vesting when they began working on the company, because that is the most defensible position when dealing with an investor that wants to change the vesting. So, I would say that the most typical arrangement is 25% after one year of service to the company. Other arrangements might be appropriate under different circumstances, it’s just a matter of judgment and circumstance.

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Is there a Jewish network in the Silicon Valley startup scene?

Matthew Bartus, Corporate lawyer to startups; VC/M&A specialist…

The Jewish High Tech Community (http://jhtc.org/) is a very active organization that puts on many great networking and speaking events. We are very involved with that organization.

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What are standard PTO/vacation policies for a 20-employee start-up?

Gary Gansle, Labor & Employment Partner at Dorsey & Whitney

While there is a certain allure to "we have no policy," the absence of a policy can increase the risk of liability when some employees start to take off more time than a particular manager thinks is prudent. Consider the following scenario: A female of Chinese ancestry works at a hard-charging startup in a business unit that routinely has multiple tight deadlines. Her manager thinks 2 weeks of vacation is reasonable and prudent under the circumstances (since, after all, getting the team to meet deadlines is part of the manager's performance objectives). Another employee, male and caucasian, worksin a less busy unit (let's say finance) and has a manager that thinks it is fine to take off 4 weeks a year, as long as it is not at month-end. If both employees take three weeks of PTO, the manager of the female employee will likely apply a different standard for "reasonable vacation use" than the manager of the male employee, resulting in a substantially heightened risk of a claim of discrimination. Leave and disability accommodationissues are also implicated because it becomes difficult for the employer to objectively articulate limits on how long an employee can be out in the absence of a policy written prior to the request for leave/disability accommodation.

Typical policies accrue 10-30 days of total paid time off per year (depending on what amount the Company thinks is appropriate/reasonable), with a cap on accruals (since California and some other states prohibit "use it or lose it"). By providing a set annual accrual, the message to employees regarding how much PTO is appropriate to take per yearis clear and consistent. The employees still have the responsibility and the flexibility to schedule it (with the manager's approval) throughout the year.Furthermore, a written PTO policyalso provides managers a clear metric to determine when employee absences become "excessive" (negative PTO means excessive absence or poorly managed vacation).So, for all these reasons, I think a formal PTO policy is the way to go.

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Can you share your Quora answer on WordPress?

Matthew Bartus, Corporate lawyer to startups; VC/M&A specialist…

I added a separate section to my blog at http://www.mattbartus.com/q/ and imported the RSS feed using FeedWordPress. I couldn't get RSS Poster to work but I believe others have been successful (I think it conflicted with my theme).

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What startups or other companies currently reside at Pier 38 in San Francisco?

Matthew Bartus, Startup lawyer for most of my career at Dorsey …

Automattic (WordPress) is there, along with True Ventures. GigaOm was there, but I'm not sure if they have moved.

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How is co-founders/investors sweat equity handled in a convertible note deal?

Matthew Bartus, Corporate lawyer to startups; VC/M&A specialist…

There might be a few missing variables here, but I believe the answer is simple: sequence of events. Typically the founder equity is issued first. So at the time of company formation, the founders would each own 50% of the equity. All equity events subsequent to that will dilute the 50/50 equity split proportionately.

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How often do convertible debt provisions (discounts etc.) survive a Series A VC round?

Matthew Bartus, I have represented both companies and investors…

I don't think it is generally correct that 2/3rds of the time the VCs wipe out the debt conversion discounts. The discount is dilutive to the founder and pre-Series A existing stockholders, not the Series A investor. The Series A investor will negotiate a certain ownership percentage (either directly or through a valuation discussion), and the allocation of rest of the equity is generally not their issue. (Although they will prescribe a certain size of option pool to be sure there is adequate equity for new hires, but that's a separate issue.)

One exception to this that I have seen is where the prior terms are so draconian that the founders/management team don't own enough equity to be sufficiently incentivized (in the investor's opinion). In that case, I have seen some request to change to the terms. However, that would be an outlier example and not the norm.

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How can I use my law degree to get into the startup world?

Matthew Bartus, Startup lawyer for most of my career at Dorsey …

Pretty much the best way is a combination of what Adam and Nick stated: either (1) don't practice law, rather go work for a startup, or (2) work at a startup-focused law firm…. if you are good you will eventually be recruited by one of your clients (and you'll have the benefit of knowing the team before you join). Chris also has a good point although there will be a lot fewer of these types of opportunities.

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How should a newly-funded startup evaluate outside law firms and attorneys?

Matthew Bartus, I have spent over 15 years at law firms big and…

I wrote a blog post a while back listing five questions that startups should ask a prospective law firm. You can find it here:http://www.mattbartus.com/five-q…

In summary, the questions I presented are listed below, and the post has information about why those questions are important:

1) Do you work extensively with startups?
2) Are you a full service law firm?*
3) Are you the partner that will be doing my work?
4) How much will this cost and are you flexible on billing?
5) Can I call your references?

* Question #2 proved to be quite controversial with my solo-practitionercolleagues, but we should all be able to agree that you ought to know what services your law firm can and cannot provide.

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What law firm is representing Goldman Sachs in the 2011 Facebook deal?

Matthew Bartus, Corporate lawyer to startups; VC/M&A specialist…

I don't know for sure, but I wouldn't be surprised to see their regular outside counsel Sullivan & Cromwell (www.sullcrom.com) involved. S&C is one of the top corporate law firms in the world, and would excel at any issue involving interpretation of securities laws (which is apparently an issue in the Facebook transaction). S&C has been Goldman's primary outside counsel for a *long* time. I was doing work for Goldman when I was at S&C 14 years ago.

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Are Business and Technical Advisors for startups typically asked to sign IP assignment agreements in addition to an NDA?

Matthew Bartus, Startup lawyer for most of my career at Dorsey …

Yes, it is common, however the assignment provisions are far less onerous than you'd find in a consulting or employment type IP assignment. They typically provide that IP developed in providing the advisory services belong to the company. I have very rarely found this causes an issue with bringing on advisors, and when there has been an issue you merely revise the language.

This type of provision is important so that not only the company is confident in the chain of title of any IP created, but later investors and acquirors will also look at this during due diligence.

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I am founding a startup. What questions should I ask the lawyers I am considering hiring?

Matthew Bartus, Startup lawyer for most of my career at Dorsey …

I wrote a blog post a while back listing five questions that startups should ask a prospective law firm. You can find it here:http://www.mattbartus.com/five-q…

In summary, the questions I presented are listed below, and the post has information about why those questions are important:

1) Do you work extensively with startups?
2) Are you a full service law firm?*
3) Are you the partner that will be doing my work?
4) How much will this cost and are you flexible on billing?
5) Can I call your references?

* Question #2 proved to be quite controversial with my solo-practitionercolleagues, but we should all be able to agree that you ought to know what services your law firm can and cannot provide.

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Can you get fired for your FB status that’s not in English?

Gary Gansle, Labor & Employment Partner at Dorsey & Whitney

The fact that your facebook status is not in English has no bearing on whether its content would constitute grounds for termination. Provided that you are an at-will employee (as is the default in virtually all, if not all, U.S. jurisdictions), unless your facebook status was an expression of some sort of protected activity (as in the case reported in the NY Times recently where the employee was posting criticisms of her supervisor among FB "friends" that were co-workers, constituting what the NLRB deemed a form of concerted, protected activity under the National Labor Relations Act), then you are subject to termination for any reason or no reason, with or without cause. There are always some exceptions, but the general answer is "yes."

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

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How does law protect people from being fired "illegally"?

Gary Gansle, Labor & Employment Partner at Dorsey & Whitney

While the default in the U.S. is employment "at-will" — meaning the employer can terminate the employee for any reason or no reason, with or without cause or notice — the law does prohibit terminating employees for some specific reasons that congress and/or state legislatures have deemed improper. Those "improper" or unlawful reasons generally fall into one of two primary categories:

1. Because the employee belongs to a protected class enumerated by law (e.g. race, religion, sex, sexual orientation, etc.), or;
2. Because the employee has engaged in some form of "protected activity" (e.g. making a report of harassment/discrimination, filing a workers comp claim, making a workplace safety complaint, whistleblowing on some other unlawful activity at the company, nascent union activity, exercising leave rights, etc.).

In the facebook example you cited, the employee engaged in conduct that is arguably protected by the National Labor Relations Act. Under the NLRA, employees are allowed to engage in "protected, concerted activity" such as talking to each other about their working conditions, including their supervisors and their supervisors' conduct. This type of activity is considered the earliest form of union-type activity, and the NLRA prohibits terminating an employee for engaging in unionizing activities. So, while "we simply don't need you anymore" is generally a proper basis for terminating an employee, it isn't if the reason they are no longer needed is because they are a member of a protected class or because they have engaged in some legally protected activity.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

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How much of workplace protections against sexual harassment is dictated by law, and how much by company?

Gary Gansle, Labor & Employment Partner at Dorsey & Whitney

The law of sexual harassment essentially prohibits unwelcome sexual conduct, or adverse action directed at someone because of their sex, that is so "severe and pervasive" that it alters the terms and conditions of the individual's employment. Most company policies prohibit such conduct well before it rises to the "severe and pervasive" standard in order to create a "fire break" between policy violations and legal violations. If the Company is doing it right, their policy prohibiting harassment is drafted and enforced in such a way that no employee can ever reach the "severe and pervasive" legal standard before the Company steps in and addresses it as a policy violation.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

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If the CEO of a company is having a consensual physical relationship with an employee, what are the best practices the Board can take to protect the company from liability if the relationship ends badly?

Gary Gansle, Labor & Employment Partner at Dorsey & Whitney

With your assumptions in mind, the best things that the Board can do to reduce the risk of liability are:

  1. ensure that the subordinate employee has no direct reporting obligation to the CEO and that the CEO has no input as to the subordinate's performance, reviews, and/or raises (possibly including a dotted-line reporting structure to a Board member);
  2. have the subordinate employee sign a 'love contract' that acknowledges the consensual nature of the relationship, the Company's anti-harassment policy, and the Company's commitment to enforcing that policy. The 'love contract' should also have the subordinate expressly acknowledge that if the relationship sours and the subordinate starts to experience any issues implicating the anti-harassment policy, that they will immediately inform the Board, otherwise the Company will presume that the situation remains non-problematic, and
  3. a memo to the CEO cautioning him/her of the serious ramifications of any reasonably perceived violation of the Company's anti-harassment policy and forbidding any sort of retaliation if the subordinate later terminates, or otherwise puts the brakes on, the relationship.

Even with all of those measures, some risk will remain because of the nature of respondeat superior liability. However, that risk can be mitigated somewhat by taking these measures and routinely checking in with the subordinate to ensure no problems are developing (and, of course, documenting those steps meticulously).

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

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