Two Things You Must Do When You Hire a Developer

Disclaimer: I am not an attorney. You should consult an actual attorney like Jesse Jones for the actual agreements and process.

Frequently overlooked in the process of hiring a new developer are the two legal agreements that you must have before they start work.

Every developer (and probably every employee, period) must sign an Assignment of IP Agreement and a Non-Disclosure Agreement (NDA). By the way, this includes you and every other founder as well. As soon as you start a company, the company should own everything related to the product you’re building.

Assignment of Intellectual Property

The IP Assignment agreement establishes ownership of all work product while the employee is working for you. It covers not only the code that is written, but any ideas or concepts that are conceived as well.

There are several reasons why a good IP Assignment agreement should be in place with every developer, regardless if they are contract or permanent:

• It provides a clear chain of ownership for investors and potential future buyers of your company. If you’re trying to raise money, one of the first items on any due diligence list will be to ensure that the company owns all created intellectual property related to the product
• It prevents future disputes over ownership should a relationship end poorly. It is more common than you can possibly imagine to have a disgruntled employee leave a company and start their own company with some key concept or idea from a prior job

Non-Disclosure (or Confidentiality) Agreement

The NDA or Confidentiality Agreement is exactly what it sounds like. Your employees agree to keep all company information confidential for the time that they are employed and typically at least two years after they leave. This is particularly important if you have secret sauce in your app that other competitors might want to know about.

In today’s hyper-competitive environment, your competitors are constantly hunting your best employees. That’s just how the world works. Having a confidentiality agreement in place gives you recourse if they share confidential information with a competitor.

Just Remember

Having every developer (and really every employee) sign these two agreements as a part of onboarding with your company is an easy way to insure your company against future disputes around ownership and confidential information.

These two agreements are often a part of a larger employee contract, which can also cover other issues related to working at your company.

Your Assignment

Do you have IP Assignment and Confidentiality Agreements signed and archived for all of your current developers, contract or perm?

If your answer is no, the time to act is right now. If you’ve had work product created without agreements in place, the ownership of that work product is in question.

Have your attorney draft employee agreements that contain these two agreements and, if necessary, back date them to the start date for every employee.