Service Agreements with Employees and Consultants
What are the most important issues regarding each of the following:
- Services by independent consultants?
- Services by junior/mid-level employees?
- Services by a founder or other key employee?
- Protecting proprietary information and inventions from consultants and employees?
- Agreements by Company to indemnify officers, directors, employees and agents?
These Core Legal Issues are addressed, respectively, by 5 Documented Core Legal Solutions: the Consulting Services Agreement, the Junior/Mid-Level Employment Letter Agreement, the Founder/Key Employee Employment Agreement, the Proprietary Information and Inventions Agreement and the Indemnification Agreement.
What You’ll Get
Analysis and review of the nature and significance of the various issues relating (i) services by independent consultants, (ii) services by junior/mid-level employees, (iii) services by a founder or other key employee, (iv) protecting proprietary information and inventions from consultants and employees and (v) agreements by Company to indemnify officers, directors, employees and agents.
Consulting Services Agreement
The Consulting Services Agreement is a Documented Core Legal Solution with a third party who provides services to the company in the capacity of an independent contractor (which may or may not be “full-time”) rather than an employee and addresses various material issues in connection with that relationship including the following:
- Description of consultant’s services and compensation.
- Assignment by consultant to the company of all ownership rights in consultant’s work product.
- Risks in California of using the standard “work made for hire” characterization of work product.
- Definition of – and obligation to protect – “Proprietary Information.”
- Consultant’s warranty of quality and originality of consultant’s services.
- Non-competition during term of consulting agreement and after.
- Rights and obligations of parties upon termination of the Consulting Services Agreement.
- Restrictions on each party’s right to assign, transfer or subcontract its obligations.
- Parties are independent contractors, not partners, joint venturers or agents.
Junior/Mid-Level Employment Letter Agreement
The Junior/Mid-Level Employment Letter Agreement is a Documented Core Legal Solution with a third party who provides services to the company in the capacity of an employee (which may or may not be “full-time”) rather than an independent contractor employee and addresses various material issues in connection with that relationship including the following:
- Primary duties of employee.
- Representation and warranty of availability and absence of conflicting commitments.
- Salary and terms of payment (including provisions for applicable withholding and payroll taxes).
- Employment benefits, including stock options, if any.
- Incorporation by reference of company’s Proprietary Information and Inventions Agreement.
- “At-will” term of employment.
- Restriction on other business activity without written consent of company.
- Non-competition during the term of the employment agreement and after.
Founder/Key Employee Employment Agreement
The Founder/Key Employee Employment Agreement is a Documented Core Legal Solution to address the same Core Legal Issues addressed by the Junior/Mid-Level Employment Letter Agreement, together with the following Core Legal Issues:
- Specified term of employment (rather than “at will”) and events justifying “termination for cause.”
- Severance and other benefits not otherwise provided to junior/mid-level employee.
- More detailed description of duties, title and place of performance and “constructive termination.”
Proprietary Information and Inventions Agreement
The Proprietary Information and Inventions Agreement (“PIIA”) is a Documented Core Legal Solution designed to protect company proprietary information and inventions from employees who have access to such information during employment (and may well have invented or otherwise created such information as part of their employment by the company), including the following Core Legal Issues:
- Representations by employee affirming (i) no agreements conflicting with the PIIA, (ii) no violation of agreements with or rights of any third party, (iii) no use or disclosure of employee’s or any third party’s proprietary information and (iv) no retention of confidential information of any prior employer or third party, whether or not created by employee.
- Declaration of company’s ownership of all intellectual property rights to inventions, works of authorship, know-how and information made, conceived or reduced to practice by employee during his/her term of employment, but only to the extent permitted by California Labor Code Section 2870.
- Definition of “Proprietary Information” and agreement to hold it in confidence and not disclose or use (except in connection with employment).
- Restriction on solicitation or encouragement of employees or consultants to leave the company during employment and for a period of time thereafter.
- Restriction on competition during employment and for a period of time thereafter (generally not enforceable in California).
- Survivorship of certain provisions and liability of successors and assigns.
- Injunctive relief in addition to other remedies.
The Indemnification Agreement is a Documented Core Legal Solution that – if authorized by the Articles – enables a company to indemnify its officers, directors, employees and agents. The Core Legal Issues addressed include the following:
- Who can be indemnified?
- Is indemnification mandatory?
- Is indemnification permitted if the Indemnitee is wholly or partly unsuccessful in litigation?
- In litigation, can expenses be advanced? Do they have to be repaid if the proposed Indemnitee is wholly or partly unsuccessful?
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