California Employment Law
California Employment Law Questions Answered by Legal Experts
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The first question you need to assess when resigning in a situation like this, is why exactly you are resigning, and if there could be any potential legal implications for making such a decision.
Yes I am here.
Why are you choosing to resign?
I am one of three founders. The working relationship amongst us has deteriorated despite some counseling. In addition, on several occasions the other founders have excluded me from business discussions and meetings. We have had difficulty raising our first round, which is 35% committed. But the other founders feel the time has been too long. Finally, we are pivoting the business model and it really diverges from where we started. But really the botXXXXX XXXXXne is that it has become impossible for me to lead and I am concerned about my risks.
So you want to leave amicably? Or you think the company is headed in the wrong direction and you are getting out because you do not want to open yourself up to liability in the future?
The latter. In my view we are past amicable, although I strive to be civil.
I am concerned about current liabilities and also taking investment on one premise and then completely pivoting. The incoming board member is supportive of the pivot if we hit some of the milestones outlined in the pitch. However, I am concerned about the other founders somewhat cavalier attitude about that.
I think I understand. Legally, the one thing you want to make sure you avoid is a claim for defamation. This could occur if you make any false statement of fact about any individual or entity. So, when giving your resignation, it is best to focus on the accomplishments that you did have over the past year. You can specifically state that despite what was a very tough environment inside the company, you think the teams were able to accomplish a significant amount. This allows you to keep a positive reputation within the company, especially because you never know where someone is going to be in the next 5 or 10 years.
You can talk about how you started with the company, some positive experiences that you had, and even discuss the disappointment that your company hasn't transformed into the vision that you had for it.
Here is a draft of what I wrote:I offer my resignation effective Friday April 12, 2013. Over the past two years Max, Jill and I have worked hard to create a business around a groundbreaking product, in the midst of a rapidly changing education technology environment. That challenging environment has contributed substantially to our difficulty in raising our first round of capital; we have gone through many iterations of the business plan and appear to have finally settled on the most likely to succeed. In addition, due in part to a very difficult cash flow position we have been unable to release product and begin the process we strive for, product / market fit. I anticipate the Max will step in as interim CEO and Jill will continue as CFO. I am happy to work with the BOD to find a suitable replacement for the CEO position.
I think I can make it more positive and focused on achievements. What do you think/
I think that it is definitely a good start. However, you want to leave the people who are currently working for you with some kind of positive feeling and reinforcement. I definitely think it would be a good idea to add a sense of positivity into it, because again, you never know where people are going to be in the next 5-10 years.
Can I show you one more iteration?
I offer my resignation effective Friday April 12, 2013. Over the past two years Max, Jill and I have worked hard to create a business around a groundbreaking product, in the midst of a rapidly changing education technology environment. Despite a challenging cash flow position we have been able to create a platform that has great flexibility and is best in class. The demo products we have produced have attracted serious attention and led to great potential in the market. A challenging fundraising environment has contributed substantially to our difficulty in raising our first round of capital; despite that we have continued to operate. As expected for a start up our strategy has gone through many iterations but we appear to have evolved to the most likely to succeed. I anticipate the Max will step in as interim CEO and Jill will continue as CFO. I am happy to work with the BOD to find a suitable replacement for the CEO position.
That definitely sounds much better. It is slightly difficult to say that you should add this, or add that, without creating an attorney client relationship. However, if you were so inclined, you could talk about specific things which you have accomplished that are positive, or you could state something such as "No one said it was going to be easy. When we started this company, we knew that it was going to be a multiyear transformation and something that is going to take a significant commitment to this company's customers and investors. I have the utmost faith that Max and Jill will carry you all into the future."
The reason I say this, is that the only other type of claim that could be brought against you is known a tortious interference, or intentional interference with contractual relations. This could occur if you were to intentionally damage the business in some way. While nothing you say in the second version does this, I just wanted you to be aware of all of the legal ramifications.
But, the second iteration is definitely much better than the first.
Does that make sense?
Not a problem. Have I fully answered your question today?
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