Verification of employment for stealth mode startup, USA [unpaid]

Question

Background information:

I have been working full time for a large corporation. Two months ago I left the full time job and joined a startup. I don't have any formal contract with this startup. However, the startup has funding problems and is unable to pay me. I am planning to join some other organization soon.

I mention on LinkedIn and my resume that I work with a startup. I know that the employment verification is usually done through some agencies like “The Work Number”. I know for sure that the startup does not voluntarily provide any information to any background check firm and the background check reports won't have any mention of this startup.

Question(s):

1. When I join my next job, how will the employer verify the employment with this startup (other than direct phone call/email)? Please assume the usual employment verification scenario (and not the "security clearance" kind)

2. Since the startup is not paying me, will this even be considered a (valid) job at all? Will there be any verification at all in this case?

3. [A question related to the question above] Please see this question also: Verification of unpaid volunteer experience, USA

Answer 1

Since you have no formal contract with the startup, you also don't have an NDA (non-disclosure agreement). So nothing formally forbids that you give the name of the people working on the startup and maybe the startup's name and address. Just talk beforehand with these people so you can collectively come up with a good plan on what info to disclose.

That being said, you've put yourself in a very awkward situation.

1. How do you expect payment without any formal contract?
2. Why do you want another job after just joining a startup that is that early in their development?
3. Why do you care about having this startup job being verified?

My reasoning is this: Maybe you feel like you need to justify quitting your last job, but maybe a simply "I wanted to work on a personal project" would do. You might sound reckless for quitting a steady job for a startup if a reliable stream of income was non-negotiable to you. Even worse if you've quit your job without some formal proposal that would allow you to reclaim undue payment in court. But if that's the case, owning up to the mistake maybe be better than exposing something your current colleagues need to keep confidential.

Then again, a two month gap in a resumée does not exactly look bad. I'd expect to be unemployed for longer than this should I lose or quit my current job while searching for a new one. For example this source informs that for May 2020, the average duration of unemployment was 7.7 weeks, but for 70.8% of cases, unemployment is lasting between 5 to 14 weeks.

The fact that you are not being paid is not exactly a problem, as if you were starting your own company, you'd expect not to receive payment for a while. The fact that you may have some informal agreement that prevents you from saying anything about this job is a bigger concern. The experiences you have and techniques/tools you've learn there may be of value, but again, I don't expect anyone to achieve something meaningful in only 2 months.

Your questions and your concerns may become more valid as this drags along though. If you've been 6 months or maybe a whole year and have nothing to show or means to confirm the job even existed may create further discomfort, but you are looking for a job as of now, right?