Am I considered an employee in my s-corp after termination?

Full question:

I formed an s- corp with two other partners 6 years ago. They have since terminated me on grounds of professional misconduct . I thought I would sue for wrongful termination but then I thought...how am I an employee to be terminated? The three of us started this company and each have 3 equal shares( I just got outvoted...very limited articles in incorporation...we were naive and just wanted to get started). Is it just understood that if you are in an s corp that you are an employee and would there have to be an 'employee agreement forms' signed? We have none of those. Actually we all considered ourselves in a partnership until the &__% hit the fan! Now they don't talk like that anymore, spouting' this is an s- corp , not a partnership. Am I screwed? Please advise.

• Category: Corporations
• Date: 04/07/2025
• State: South Carolina

Answer:

The outcome of your situation depends on the specific facts and documents involved. If your removal was conducted through proper judicial procedures, there may be grounds for an appeal. The process for removing an officer is governed by the corporation's bylaws and contract law principles. I recommend consulting a local attorney who can evaluate your circumstances and documents.

In South Carolina, the term "employee" includes an officer but not a director, unless the director takes on duties that classify them as an employee. According to South Carolina corporate statutes:

• Appointment as an officer does not automatically create contract rights (S.C. Code § 33-8-440).
• Officers can be removed by the board at any time, unless they were elected by shareholders (S.C. Code § 33-8-430).
• Shareholders can remove directors with or without cause, depending on the articles of incorporation (S.C. Code § 33-8-108).

Given that you have no formal employee agreements, your status as an employee may not be clear-cut. It's essential to seek legal advice to understand your rights and options moving forward.