Categories: Technology

By Dustin E. Stark

Do start-up tech companies need an HR professional or employment counsel from the start?  A recent highly publicized incident involving a former GitHub Inc. employee suggests the answer is yes. 

Earlier this month, a GitHub employee quit her job and immediately took to Twitter, tweeting multiple complaints accusing the company of illegal gender-based discrimination.  News outlets picked up on these tweets, and the story spread quickly.  The former employee also gave an interview with TechCrunch, the information technology website, further outlining her complaints of gender discrimination.  In response to the rapidly developing public scrutiny, GitHub was forced to place one of its co-founders on leave while it investigates the allegations.

The type of damage control GitHub is being forced to engage in is expensive.  It ties up resources that a young, developing company would prefer to channel towards growth.  Although GitHub launched in 2008, the company lacked an experienced human resources leader until January 2014.  It is often harder, and more costly, to remedy employment discrimination problems after they take place, rather than putting measures in place to prevent their occurrence. 

Companies similar to GitHub can reduce exposure to potential lawsuits or government agency investigations by instituting appropriate written policies and employee training from inception.  Start-ups focus on getting their business off the ground, and unfortunately legal compliance or human resources issues can fall through the cracks.  Guidance from appropriate legal counsel, and having a dedicated human resources professional working with your company, can help develop the required employment law safeguards to guide and protect your company as it grows.  Oftentimes, start-ups focusing on growth and capital campaigns can lose sight of the important role of an HR professional in managing its human capital.  The HR professional is more likely to be employee number 50 than employee number 5, which can create exposure and undercut the substantive value that the start-up is working to create in the market.

Some small start-ups may falsely believe that federal, state, and city laws and regulations do not apply to them, due to their small number of employees.  However, even if your company is not as large as GitHub, the threshold number of employees required to be subject to federal, state, and city employment laws is often very low (sometimes as few as one employee).  Also, as your company grows and expands, it may be subject to an increased number of laws and regulations, which can increase exposure to legal liability.  The best practice is to have the appropriate policies and training in place before this becomes an issue.  As demonstrated by the former GitHub employee, start-ups employ tech savvy individuals that know how to use social-media to spread complaints when things go wrong.  Having the proper policies and training in place can help prevent these incidents, and limit the amount of damage control that needs to be done if they occur.

The goal of any start-up is successful and sustained growth.  By building a solid foundation of written policies and implementing appropriate employee training guided either by an in-house HR professional, in-house employment counsel, or through external counsel serving in a quasi-in-house role (a service EBG offers to clients), a small amount of caution on the front end can avoid distractions from this goal, and prevent exposure to large legal liability and costs on the back end.  In this regard, an ounce of prevention can be worth a pound of cure.

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