Getting Your Docs in Order: Hiring Documents for Startups

 

Whether it’s your first hire or your hundredth, paperwork is a part of the ball game. This is nothing new for experienced entrepreneurs and HR professionals, but for the rest, getting acclimated to hiring docs will help you keep things in order and avoid potential legal, tax and other issues down the road. We’ve compiled a list of the most common hiring documents to complete when making a hire. Your needs will vary and may be additional from state to state, but in general this list will cover them in large part.

 

Employee Offer Letter/ Employment Agreements: This document informs your new hire about key employment details. It usually includes the position for which the candidate is being hired and an overview of the job description. The letter will state salary compensation as well as any equity being given along with details. Other items include references to non disclosures, invention assignments and I-9s (we cover those below). And in applicable areas, it may also cover the terms of “At-Will” employment.

Non Disclosure Agreements (NDAs): The NDA is an important document that should not be overlooked, especially for startups. It basically prevents employees from disclosing sensitive information about the company and the work, both during and after employment. Most NDAs will also include a Non-Solicit, which basically prevents employees from poaching customers and other resources, and (if legal in the state) a Non-Compete, which prevents them from seeking employment with your competitors for a period of time.

Assignment of Invention: This establishes the employer’s ownership of intellectual property created by the employee while in the stead of the company. It should detail any carve-outs for the employee prior to working for the company, as well as provisions, if any, for its use afterwards.

Stock Options Grant: If part of your employee’s compensation includes equity, you need to include a stock options grant along with their employment offer letter. It should detail the number of shares, exercise price, expiration date and vesting schedule. It should also detail what happens to the options if they leave the company, as well as how the employee can exercise the options.

USCIS Form I-9: This form is used to verify the identity and employment authorization of employees in the United States. It is a required document for each and every employee a company hires, regardless of citizenship. You can learn more at http://www.uscis.gov/sites/default/files/files/form/i-9.pdf.

IRS Form W-4: This form is used to withhold federal taxes from an employee’s compensation. This form is used for employees of the company, and not for contractors. You can find Form W-4 here: http://www.irs.gov/pub/irs-pdf/fw4.pdf

IRS Form W-9: This form is for use with independent contractors. It does not need to be filed with the IRS, but should be kept in your hiring file to be available when filling out 1099s. You can find Form W-9 here: http://www.irs.gov/pub/irs-pdf/fw9.pdf

 

So there you go. A fun, sexy blog about hiring documents, right? Ok, maybe not, but make no mistake, getting these docs taken care of promptly and correctly can save you many a headache down the road.

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