You quit your job to go all in.

You handed over a check — maybe $10,000, maybe more. You worked 60-hour weeks. You bought supplies, hired staff, handled the schedule, covered shifts when people called out. You did everything a business owner does.

Except for one thing: you were never actually made an owner.

No membership interest was ever transferred. You were never added to the operating agreement. The LLC was never updated to reflect your stake. Every time you asked, you got the same answer: "I'm still working out the percentages." Or: "Let's get open first and then we'll deal with the paperwork."

And then one day — after all of it — you're handed a severance agreement instead.

This happens more than most people realize. And when it does, the legal consequences for the person who made those promises can be severe.

Why a Verbal Promise of Business Ownership Isn't Enough — But Also Isn't Nothing

Here's the hard truth: under Louisiana law, if you were never formally admitted as a member of an LLC, you are not an owner of that LLC. Membership requires more than a handshake. It typically requires documentation — a transfer of membership interest, an amendment to the operating agreement, or at minimum a written agreement establishing your rights.

The person who made you those promises knows this. Their attorney knows this. That's why, when things fall apart, they hand you a settlement agreement designed to get you to quietly accept far less than what you're owed.

But here's what they may not have counted on: the absence of a formal membership interest doesn't mean you're without legal recourse. In fact, it may mean you have more claims — and stronger ones — than you'd have had as a minority owner of a struggling startup.

What You May Actually Be Owed

When someone promises you ownership, takes your investment, puts you to work, and never delivers, multiple bodies of law come into play simultaneously.

Your Capital Investment Is Not a Gift

If you contributed money — whether called an "investment," a "loan," or even a "pre-formation capital acquisition fee" — that money doesn't disappear because you were never made a member. You may have a claim for its return under theories of unjust enrichment, breach of implied contract, or fraud. The same applies to unreimbursed business expenses you paid out of pocket on the company's behalf. Those aren't write-offs for the business you never owned — they're debts owed to you.

If You Worked Without Pay, That's Wage Theft — Full Stop

This is where things get serious for the person who made you promises.

If you worked — truly worked, not just planned or dreamed — and you weren't compensated because you believed you were an owner building something of your own, the law may treat that unpaid time as wages owed, not sweat equity voluntarily contributed.

Under the Fair Labor Standards Act (FLSA) and the Louisiana Wage Payment Act (La. R.S. § 23:631–634), the question isn't what you believed about your ownership status. It's whether you performed compensable work. If you did, and you weren't paid, you may have a claim for all unpaid wages from the day you started working to the day you first received a paycheck — and unpaid overtime if you worked more than 40 hours per week and were misclassified as exempt.

And unlike most employment claims, the federal government has made these claims exceptionally powerful: FLSA violations automatically double the damages owed through liquidated damages. Owe someone $20,000 in back wages? The actual exposure becomes $40,000. Plus mandatory attorney's fees. Plus Louisiana penalty wages.

The FLSA Doesn't Care What Your Title Was

One of the most common defenses in these cases is: "She was a manager. She was exempt."

This argument fails far more often than employers expect.

Under the FLSA, an exemption from overtime must be proven by the employer — not assumed. Exemptions are narrowly construed against the employer. A title alone means nothing. What matters is what you actually did every day.

If the majority of your time was spent doing the same work as hourly employees — running food, serving customers, bussing tables, working the floor — no title protects the employer from its overtime obligation. The law calls this the "working manager" problem, and courts have repeatedly ruled against employers who tried to classify floor-level workers as exempt managers simply by giving them a managerial title and a salary.

There's also this: if you were told you were an owner and therefore not tracking your hours, the burden shifts to the employer to disprove your hours worked. If they didn't require you to clock in and out, their failure becomes your advantage.

The Severance Agreement Is a Red Flag, Not a Resolution

If you're in this situation right now — and someone has just presented you with a settlement agreement, release, or NDA — stop.

Do not sign.

These agreements are typically drafted to release the employer from every legal claim you have, silence you from telling anyone what happened, and lock in a fraction of what you're legally owed in exchange for your signature.

The fact that there is a settlement agreement on the table tells you something important: whoever is on the other side knows what they owe, and they're trying to make it go away cheaply.

Consulting a lawyer before you sign doesn't just protect you — in many cases, it substantially increases what you ultimately recover.

The Numbers Are Bigger Than You Think

Here's what surprises most people who come to us after a situation like this.

When you add together unpaid wages from months of uncompensated work, unpaid overtime at time-and-a-half for a year or more of 60-hour weeks, FLSA liquidated damages that automatically double the wage claim, and Louisiana penalty wages for failure to pay after written demand — a claim that feels like a $15,000 problem on the surface can become a $140,000 legal exposure for the employer.

That is a very different negotiating conversation.

What to Do Right Now

If you recognize yourself in any part of this:

Don't sign anything. Not the severance agreement. Not the NDA. Not a settlement. Not until you've spoken with an attorney.

Preserve everything. Text messages, emails, bank records showing your investment, receipts for expenses you paid, the original promise however it was made, and any documentation of your hours or schedule.

Write down what you remember. Your recollection of hours worked, conversations about ownership, and the verbal promises made to you is evidence. Courts in FLSA cases are required to credit employee testimony on hours worked when employers failed to keep records.

Talk to a business attorney — not just an employment lawyer. These cases live at the intersection of employment law, business law, and sometimes fraud. The strongest representation understands all three.

Business Law Group Represents Clients in Exactly This Situation

At Business Law Group, we represent founders, partners, and employees who've been promised a seat at the table — and then shown the door instead.

We handle the full picture: the wage claims, the investment recovery, the exemption rebuttal, and the business dispute underneath it all. We work on contingency for wage and overtime cases, which means no upfront cost to you.

If this is your situation, we want to hear from you.