Employment Contracting: Equity Potential?
One of the key issues often ignored in employment contracting is the future; specifically, the potential future relationship of the parties and key details that will govern that future. It's a natural tendency to take a "wait and see" approach when entering a new working environment; however, failing to address potential growth in such a relationship may have a negative impact on both employer and employee. Leaving an employment relationship open to "wait and see" allows uncertainty to creep in. -- What do I do once the term is up on the contract? Will the employee stay? Is the employer looking to hire?
To combat any potential anxiety in the "wait and see" approach, try and define whether an equity interest is an option upfront. It is commonplace in an employment agreement to set forth a timeframe wherein equity will be discussed, and thereafter, defined by way of a "buy-in" agreement. Depending on the type of legal entity the medical practice is established as will determine what equity is actually called; for example, if the practice is a Professional Corporation equity holders are called shareholders, if the practice is a Professional Limited Liability Company equity holders are called members, and if the practice is an Limited Liability Partnership equity holders are called partners.
For additional information on this topic, please contact Jennifer Kirschenbaum at (516) 747-6700 ext. 308 or at Jennifer@Kirschenbaumesq.com.
This email is for education and discussion purposes only and does not constitute legal advice. To access prior healthcare email newsletters or articles visit: www.kirschenbaumesq.com/healthcarearticles.htm.
