Legal Question in Business Law in Arizona

''Sweat Equity''

I am the sole proprietor of a business, and I have an employee who is now threatening to sue me for part ownership, based on his ''sweat equity.'' I hired him to help me start this business since he had experience in that field. Now he has informed me that he is due half of the company for his ''sweat equity.'' There has never been a verbal agreement, nor anything in writing to say that he would receive any part of the company, yet an attorney has written me a letter indicating his intention to file suit if I do not comply with his request. I have offered him an opportunity to buy an interest in the company but he is not interested in buying in, he feels he should receive it based on his work. How worried to I need to be?


Asked on 5/20/06, 5:41 pm

2 Answers from Attorneys
Peter Bradie Bradie, Bradie & Bradie

Re: ''Sweat Equity''

Worried enough to hire your own attorney!

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Answered on 5/20/06, 6:43 pm
James Jenkins Jenkins Law Center PLC

Re: ''Sweat Equity''

Your message does not state whether you and your busniness are in Arizona or Texas. The memo I receive does not state your name or address, or course, and is anonymous.

Be worried, because your employee is going to claim a partnership was formed, not an employer-employee relationship. There are ways to defend against this, but you have a really rocky road ahead that will be difficult. You need immediately to hire an attorney. If you want to schedule a free, no obligation consultation, and if your case is connected to Arizona, you can call 480.835.1500.

Best regards,

James D. Jenkins

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Answered on 5/20/06, 8:57 pm


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