Fired Employees And/Or Frozen-Out Shareholders an Essay

35 Pages Posted: 20 Feb 2010 Last revised: 21 Mar 2010

Date Written: 1996


The thesis of this essay can be stated as follows: Shareholder-employees should be able to recover for loss of employment, within the cause of action provided by corporate law, where the termination violates public law, breaches the agreement among the shareholders, or is unsupported by legitimate business purposes. In Part II, this essay presents the employment model, including the paradigm of employment that the law builds on, the starting premise of employment law, the roles of private and public law, and the remedies afforded for violations of an employee's rights. In Part III, this essay develops the corporate model, discussing much the same topics and focusing on the ways in which the courts have analyzed freeze-outs of shareholders through termination of employment. Parts II and III highlight Minnesota law, although the issues and solutions discussed are generic across American jurisdictions. In Part IV, this essay discusses the interaction of employment and corporate law. Under Minnesota's “innovative” statute, when a shareholder suffers a loss of her capacity to contribute her labor to the enterprise, this interest should not be obscured by the capital interest, but rather protected by the rules of employment law and valued for its own sake.

Keywords: Employment law, corporate law, Minnesota law, 302A.751, Business Corporations Act, MBCA, minority shareholders, closely held corporations, shareholder-employee

Suggested Citation

Schmedemann, Deborah A., Fired Employees And/Or Frozen-Out Shareholders an Essay (1996). William Mitchell Law Review, Vol. 22, 1996, William Mitchell Legal Studies Research Paper No. 1996-01, Available at SSRN:

Deborah A. Schmedemann (Contact Author)

William Mitchell College of Law ( email )

875 Summit Ave
St. Paul, MN 55105-3076
United States

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