Everyone is critical to the success of a small business. This is especially true if a group of people own the company. Everyone must pull their weight and contribute. Sometimes, that’s not possible because a co-owner is abusing substances or suffers from a psychiatric or emotional disorder. As much as you want to support this person and get them back to health, it would be best to focus on the business and its success. Below, our friends at Focus Law LA explore the steps you should take if a business partner’s impairment is affecting your company’s operations.
Try To Get Them To Help
The first step is to have an honest, if difficult, conversation in a private, supportive environment. Be factual and not accusatory or play a blame game. You want this person to help you with your business and want them back in a position where that can happen. You want to remove the obstacle in the way. Tell them you think they need time away to get themselves right. Offer resources that may be helpful.
One of the toughest aspects of these situations is that the affected partner may be in denial. It may be a symptom of their condition, or they just don’t want to admit to themselves that the situation is as bad as it is. As bad as they feel about themselves, they may feel even worse about the fact that they’re harming others and a business they care about. Your discussion may be the “bottom” they must hit before recognizing they need help.
What To Do If They Don’t Want Help
If your partner doesn’t agree to take time off to regroup and put themselves in a good situation, you must act professionally, not angrily. You want your business situation to improve without, as much as you can, making your partner’s situation worse.
This is one situation why there are ownership agreements. If you were proactive when the business started, or at least before this situation became an issue, you should have a contract that binds all the co-owners.
The agreement should cover situations where problems between co-owners may harm the company and spell out different options for handling them. If you have more than one partner, you should be able to make crucial decisions without the one facing these severe challenges. The agreement should also cover how the business will be run if a partner is incapacitated.
The last resort is removing the partner from the business. They may be disruptive, unwilling, or unable to contribute to the company or actively harm it. They may waste money or say or communicate things to customers, suppliers, or employees that are false, irrational, or an attempt to shame or embarrass the company or its employees. The agreement should also include a mechanism where others can buy a partner’s ownership interest through a “forced” but fair and previously agreed-upon mechanism.
If you don’t have an ownership agreement, state laws may cover when a business partner can be forced out. Whether you have an agreement or not, you must consult an attorney experienced with business management issues. There may be any potential challenges this troubled partner may be able to raise if they sue their other partners. You need to make sure you’re doing things properly to prevent legal action, or at least reduce the chances one will be successful.
Employment Anti-Discrimination Laws May Apply
A wrinkle in this situation may be that this person is not only a co-owner but also an employee. They may be on the payroll as such, or they may claim they’re acting as an employee and misclassified. Depending on the applicable federal or state law, it may be illegal to fire someone in their situation because it may be considered disability discrimination.
Their psychiatric disorder may be a disability if they can perform their job with or without reasonable accommodation. If someone is actively abusing substances, they’re probably not protected, but if they’re being treated for a substance abuse disorder and staying clean, they may be protected.
This may be a tough situation compounded by the fact you may unknowingly violate a law or create the grounds for a lawsuit by your partner. Retain the help of a business partnership lawyer to get you through this situation quickly and with as little disruption as possible.