Historically, Massachusetts courts routinely ruled that it was a violation of the Massachusetts Wage Act to fail to pay an employee who had been promised payment for her work only after the employer received sufficient funding. For example, in Stanton v. Lighthouse Financial Services, Inc., U.S. District Court Judge Nancy Gertner found not only once, but twice, that John Stanton was an employee under the Wage Act, was entitled to payment of deferred compensation under his employment contract and confirmed that there was no carve out from the Wage Act’s requirements for startups. In reaching her decision, Judge Gertner reasoned that a deferred compensation agreement where the compensation was forfeited violated the Wage Act provision prohibiting the entering into of a special contract to avoid Wage Act obligations. Since Stanton, a number of Massachusetts state and federal court cases have ruled that compensation contingent upon a company’s receiving certain levels of funding were wages that were required to be paid in accordance with the Wage Act and required such wages to be paid promptly and upon termination of employment – even if funding had not then occurred.
In what could be viewed as a new twist, Superior … Keep reading
For entrepreneurs starting a new business, the focus often is on developing the products or services being offered by the business and, maybe, financing for getting (and keeping) the business off the ground. Yet, regardless of whether the business offers products or services, no business can succeed without people. Therefore, setting up proper intake systems for hiring at an early stage is critical in order to limit exposure to employment issues as the business grows. One easy way to do this is by using a hiring/on-boarding checklist like the one set out below. While this checklist is not intended to be a comprehensive list of issues that all businesses need to consider when hiring, it should provide at least some general guidelines for hiring and on-boarding new employees. Every state has different laws applicable to hiring and on-boarding, so be sure to check your applicable state’s laws.
Prior to hire:
- Prepare job application (for Massachusetts employees, you cannot request criminal history information and must include a statement that requesting the candidate to undergo a lie detector test is unlawful).
- Prepare employee handbook, including “at will” status, hours of work, absence policies, anti-harassment/anti-discrimination policies (be specific about no retaliation and
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Just as in romance, employer-employee relationships often are at their best in the courting stage. During the after-glow of an initial hire, many employers wish to make new employees feel welcome by sending confirmatory offer letters. Yet, in that warm and fuzzy moment, employers also should keep in mind that they may be binding themselves to certain obligations to which they never intended to be bound.
To minimize regret when the employer-employee relationship goes sour, here are my top six tips of things to avoid in offer letters:
- If you intend for the employee to actually stay on for a set period of time, the term may be included, but be sure to couch the term as “anticipated term” and allow yourself the ability to terminate the relationship before the end of the term. If the employment is “at-will,” specifically state “your employment is at-will, which means that you or the company may terminate your employment at any time for any reason or no reason at all.”
- Avoid stating compensation as an annual salary. For example, state that the compensation to be provided an employee is $X per week, which is the equivalent of $Y annualized. A promise of
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