Ask HN: How to handle employment agreement for first employee?

[carnivalclown]

Myself and my cofounder have made an agreement with another developer to come on as our first employee but we have $0 funding currently and have strictly sold him on ourselves and the idea. We brought him on right as we're a few weeks away from beginning to beta test our new app. The agreement we came up with is 4% equity with market salary once we get funding but incrementally. We had him sign an NDA and spoke to one attorney about drafting employment agreement and that's when I realized I don't have enough information to work with. We are hoping to avoid major legal fee's right now and get to work immediately on the actual code with this person while protecting our new company / project / IP etc. What are possible courses to take? What is the cheapest / safest?

Can we have a rather simple bare-bones employee agreement drafted that just states the fact that we're currently not paying him any salary but he's entitled to 4% equity over the vesting period and once funding comes in as discussed he'll begin getting paid immediately? Even better, could we hire him as an independent contractor for say $1/hour and have him sign an IP & compensation agreement that allows us to move forward working towards our beta asap?

Any information greatly appreciated! And yes we are going to speak with attorney buy they are expensive too...

[davismwfl]

Just stop now. He is not an employee if you aren't paying him. Equity is not compensation. What you are asking him to be is essentially a 3rd co-founder.

there is nothing wrong with bringing someone aboard like this but call them what they are and make the equity worth their risk.

And technically you can sign a contract with him as long as there are mutual benefits. But you are on a bad footing IMO if you try to pay him next to nothing.

If you truly need this person that bad and you can't afford him then you should just accept it for what it is, you need another co-founder.