Offering employee investment? Track response or lack thereof

Sometimes, you may want to offer certain highly skilled, key employees an opportunity to acquire an equity stake in the business. Be sure to have your attorney draft the contract. Then follow up by documenting either the employee’s signature or her objections and lack of agreement.

That way, you help eliminate any later claims that an unsigned agreement still created a contract.

Recent case: Katherine was hired to work on energy development projects. At one point, management offered her a 1% investment opportunity in a project. She did not sign the agreement at first, and instead began asking for different terms. Then, after she was discharged for unrelated reasons, she sued, demanding her 1% stake.

The court tossed out her claim since she could not show she actually signed the agreement or otherwise relied on the promise of profits. (Oster v. Caithness, ND CA, 2017)