The law regarding employees is nuanced. Do it wrong and the Department of Labor might come knocking. Penalties for violations can be severe.
You may discover to your horror that something was amiss, that you must back pay to every one of them at a fair market value for all the time they gave you, plus pay back taxes on their missed wages, back unemployment insurance, and other back-dated fees. Suddenly your no-cost venture would jump to a six-digit or seven-digit government ordered cost. Figure three 'helpers' turned into back-dated employees with a year or two years or three years of salaries and taxes and other costs due for each of them, and suddenly your little mistake costs a half million dollars, maybe a million dollars, maybe even more. That's before punitive damages and a tax evasion lawsuit (which can mean jail time) are threatened.
It is not an area for guesswork. The cost of business lawyer time is very cheap. If you aren't comfortable with the cost, you might think of it as insurance against a potentially expensive error. We pay insurance hoping it is never an issue but knowing the risks are real. Failure to clear this type of action with your lawyer makes those risks all the more dangerous. You might be far better paying either a minimum wage or some other "valuable consideration" of a few dollars (determined by your lawyer) paid at each milestone. Get your lawyer's input. It is inexpensive by comparison.
Edited by frob, 13 July 2014 - 02:07 AM.
Yes. Talk to your business lawyer.