Since most startups don’t have a large reserve of cash during their early days, it is common for startups to compensate founders and early employees solely with equity. While this allows startups to conserve what little cash they have, this practice could ultimately be very costly for the company if it runs afoul of wage laws. In today’s post, we discuss various ways that startups may expose themselves (and in some cases their founders, directors, and officers) to liability for violating wage laws, and some steps companies can take to limit that liability.

While the attorneys in our firm do not practice employment law specifically, we come across these issues frequently when working with startups and think it is something founders...

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