Category Archives: Employment Law

Can a Profits Interest Agreement Help Your Dallas Company?

One of the biggest challenges that business owners face is keeping key employees. The smaller the business, the more reliant owners become on intricate personnel. You may be wondering what tool you can use to entice efficient employees to stay long-term.

Profits interest agreement
One way to motivate your best employees to stay is through a profits interest agreement. In short, a profits interest allows an employee to retain an interest in the profitability of your company without having to invest his or her own money into the business.

Key benefits for the employee
A profits interest agreement not only benefits you, but is also benefits the employee. For example, recipients:

  • Feel a sense of ownership and pride about where they work
  • Reap financial profits that are in addition to their normal salaries or wages
  • Have no immediate tax consequences

Key issues to be addressed by your profits interest agreement
There are some key issues that your recipient needs to understand about your company’s profits interest, such as:

  • Tax consequences for any future cash distributions
  • Holding no rights to vote or perform member acts
  • Having no claim to anything in the event the business liquidates

Professional help
Making sure your profits interest agreement is done correctly is critical. You don’t want to find yourself “giving away the farm” or in litigation down the road. An experienced Dallas employment attorney can help you with all the nuances of your profits interest agreement. Let experts handle the legalities while you reap the rewards of keeping key employees long-term.

If you are looking to create a profits interest agreement, you should call one of our Dallas employment attorneys at the Ferguson Law Group at (972) 378-9111.

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An Employer’s Perspective on Negotiating an Employment Agreement in Texas

There is more to preparing a Dallas employment agreement than simply hiring a person to fill a position. There are a lot of factors to consider and any employment agreement should be prepared carefully to avoid potential litigation that could prove costly.

When a written employment agreement should be considered
Though employment agreements are often prepared when hiring top management positions, they should also be considered for:

  • Sales executives, especially if they work on a commission basis
  • Independent contractors
  • Positions not covered in the employee handbook

Key components to consider
When preparing and negotiating an employment agreement, you should address:

  • Severance packages: Though it would be nice if all of your top employees stayed around forever, it is not realistic. You need to consider what you will give employees in the event you have to let them go or downsize your company.
  • Non-disclosure and non-compete clauses: The last thing you want is to have to compete with a former employee who knows your trade secrets.
  • Arbitration and mediation issues: You need to be prepared in the event you find yourself in court.
  • Compensation: The compensation structure, including salaries and bonuses, should be detailed in your employment agreement. This will help avoid confusion.

It’s not uncommon for an employee to sue an employer. An experienced Dallas employment attorney can help protect you from unwanted and unexpected litigation. A lawyer can help you prepare your employment agreements that will essentially protect your bottom-line.

If you are looking to fill a position and need to prepare and negotiate an employment agreement, you should call one of our Dallas employment lawyers at the Ferguson Law Group at (972) 378-9111.

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