Pre-Startup Question

I have been working for a pre startup company with a memo of understanding that I will be compensated for all my work if the company ever gets funded. My concern is, if this company is funded, there is no guarantee that I will be hired for a full time position. Is there any kind of precedent that allows me to ask for an agreement that will assure that I have a job when and if the company gets off the ground? I am not looking for any kind of guaranteed salary or a specific position to be named within this agreement, just an agreement that I will have a job. I don't want all this sweat equity to be for nothing in the long haul. Any advice would be greatly appreciated! Thanks!

1 answer  |  asked May 19, 2004 4:11 PM [EST]  |  applies to Pennsylvania

Answers (1)

Christopher Ezold
Answer depends on whether you are an employee or an equity owner

Before I respond to your question, I must state that we have not met, you have not retained us as your attorneys, my response is for informational purposes only and is not legal advice, and that my responses to your questions will almost certainly change based upon facts not provided in your questions.

That being said, my response depends on whether you are an employee or an equity owner. You state that you are 'working' for the company, but also that you are putting in 'sweat equity.' If your work provides you with an equity interest in the company, then you may not have a legal right to wages while you are working. If not, you may have a legal right to at least minimum wage.

It would probably be impossible for the company to promise you an unspecified job now. Legally, promises that are vague and speculative are difficult to enforce, even if codified in a contract. Practically, if there is no definite position for you when the company starts up, then it would be unwise for them to promise one.

You can still attempt to guarantee yourself some compensation; you can negotiate a contract promising payment, equity or other consideration for your work. If a position is clearly going to be available, then that could also be on the table.

Regardless, unless you are getting paid now, there cannot be a true guarantee from a 'pre-startup' company that you will see the fruits of your labors. The incidence of failure for startup companies is too high for any guarantee.

If you wish to discuss this issue further, feel free to call me at the number below.

/Christopher E. Ezold/
Nancy O'Mara Ezold, P.C.
401 City Line Avenue,
Suite 904
Bala Cynwyd, PA 19004
(610) 660-5585

posted by Christopher Ezold  |  May 20, 2004 3:43 PM [EST]

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