Description:
Is it legal or practical for startups to bring on full-time team members who receive only stock or options instead of cash pay? What should founders know about labor-law and minimum-wage compliance, tax implications for recipients, vesting schedules, and how equity is valued at early stages? When is equity-only reasonable versus offering a modest salary plus equity, and how can founders structure offers to attract and retain talent while managing risk?
2 Answers
Why do you imagine someone would trade guaranteed cash for a promise that may never pay off, and have you considered how that shapes the candidate pool and incentives? Have you checked whether your jurisdiction treats unpaid full time work as minimum wage violations or creates payroll and withholding obligations when equity is issued as compensation? What about visa holders who legally need wage statements or the team member who cannot afford to eat while waiting for a liquidity event? Could a small stipend, milestone cash, or a restricted stock purchase with an 83(b) option and clear repurchase rights be a less risky attractor while keeping your runway intact?
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