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I worked for a startup as a software developer. I never got an employment agreement. I never signed a NDA. I also never signed any non-compete document. In the beginning I was paid by direct deposit the expected amounts per month. (This was not a W2.) The amount kept shrinking during my 3 years there until I was working for like 6 months for free. During this time other people in the company were getting paid but that is another story. I have calculated the amount of money that I was owed, and it is fairly substantial. At least 85% of the code in the apps was created by me. This number might even be higher than 85%. There are a few shareholders (including myself) and some other employees. It looks like the company will declare bankruptcy. I am wondering what rights do I have to this code now?

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    You probably don't have any legal rights to the code but you need to ask an attorney, not the internet.
    – joeqwerty
    Aug 3, 2022 at 0:15
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    This is a legal, not a workplace question. Please ask a lawyer.
    – nvoigt
    Aug 3, 2022 at 6:20
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    "I never got an employment agreement. I never signed a NDA. I also never signed any non-compete document." Exactly what signed document do you have?
    – Nobody
    Aug 3, 2022 at 6:43
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    From a legal perspective, the company owes you nothing if there's no employment agreement (or similar contract promising payment for services rendered), and this is therefore irrelevant in regards to the main question.
    – Flater
    Aug 3, 2022 at 8:32
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    These kind of questions blow my mind. Who would continue to work in good faith when the person paying you doesn‘t…and seemingly almost immediately? Aug 3, 2022 at 8:50

2 Answers 2

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You don't have "rights" to the code. In theory, some might be awarded to you if you were a creditor, though without an employment agreement you can't prove you're owed "wages" or whatever you called the untaxed money they gave you each month.

It's possible some officer of the company would sign the rights to the code over to you in exchange for you signing something that you're not owed any money. Whether this is a good deal for them depends on whether there's any money for you to try to claim against, who else wants it, and whether your claim is likely to succeed. (My guess: no, everyone, and no.) Or they might do it to be nice since it's not useful to them now. But if you think it has value even without the company structure that was built around it, others might think so too. You can probably only find out by asking.

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  • From my understanding the people who are owed salary are the first people to get anything valuable from the company even before the shareholders. BTW there is only one officer and there is a board.
    – ashlar64
    Aug 3, 2022 at 0:11
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    That would only be relevant if you had been receiving a salary, eg having income taxes withheld. The claim would be strengthened by an employment agreement or an offer letter. If they just put money in your bank and treated you as a contractor, you're not an employee and you're not "owed salary", you're a vendor. In line with the other vendors like the landlord and the internet provider. Aug 3, 2022 at 0:14
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    To be honest, it sounds like they are trying to cheat you. They had a startup, they handed out equity like confetti, now they want to make the startup insolvent and "transfer" the IP to a NewCo, in which - surprise - they hold far more equity. Talk to a lawyer. Aug 3, 2022 at 6:03
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    Honestly I'd be questioning how much of the code is actually 'theirs' if they weren't paying you. Work must be produced by someone under contract for that work to belong to the contracting party. No contract = no work. But I'm not a lawyer so I'd recommend asking someone with actual knowledge of rules and laws. Aug 3, 2022 at 6:24
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    Note that OP might be a creditor. Even contractors are owed their agreed payment (but good luck proving it) Aug 5, 2022 at 18:07
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If you are really committed to pursuing this you should check with a lawyer.

Given your comment about filing a 1099 in response to Kate Gregory's answer you are pretty clearly a vendor rather than an employee. That does make the issue of whether the software was work for hire a bit muddier, but I think you'd still have very much an uphill fight. It sounds like there were other employees working on the software, which probably makes it a collective work, and is more likely to make it a work for hire, leaving you with no copyright claim.

You also mentioned in those comments that they want you to keep working on the software despite not being paid for some time. You could try to use that as leverage and negotiate an explicit ownership interest in the software. You have to do that before they declare bankruptcy though. Once they declare bankruptcy you are just another vendor in line for reimbursement. Also, the bankruptcy supervisor is going to be looking very hard at any transactions occurring right before bankruptcy which transfer value to a company with ownership in common with the now bankrupt company.

If the firm does enter bankruptcy you may be able to make an arrangement to take ownership of the code in settlement of the debt you are owed, but that will depend on the bankruptcy supervisor and whether any other creditors want the code, or whether it could be sold to raise cash.

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