Equity feels free when the company has no value yet. That is exactly why founders give it to their first hire without asking whether there is any way to take it back. BKK Roundtable is a video series from Bean, Kinney & Korman where attorneys from different practices work the same problem at one table. One set of facts, handed from practice to practice, so you can see exactly where the answers diverge. Twelve months in, the business is growing and the owners are ready to hire. Bean, Kinney & Korman attorney Jennifer O. Schiffer opens with the check-up she runs first: pull out the operating agreement or the shareholders agreement and ask whether it still describes the business that exists now. Roles get reassigned and companies pivot, and the document rarely moves with them. Maureen E. Carr then takes the first non-owner employee. Before anyone starts there has to be a payroll system and registration to pay employer-side and unemployment taxes. Then the classification question, exempt or non-exempt, which she recommends getting advice on rather than guessing at. Then an offer letter for a rank-and-file hire, which is not legally required but creates the paper trail. Then a basic handbook, written against the law of every state where the people actually work, which in a remote workforce can be twenty states rather than one. Evan St. John takes the case where the new hire is also getting equity. Founders reach for equity because it costs nothing while the company has no value, and he asks them to slow down: whether this is somebody they want as an owner for years, and whether the agreement gives them a way to remove that person if it does not work out. He offers phantom equity as the safer instrument, a contractual right to a share of the sale proceeds with no vote and no say in running the company, which also keeps the capitalization table small enough to sell. The three of them close with one thing each to do this week. “A lot of people who are starting new businesses want to give away equity rather than compensation, because right now it's free to give away equity, essentially. You haven't developed value in the company and you may be low on cash at the moment.”