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Other Key Terms of the Employment Agreem... > Ownership of Intellectual Property - Pg. 104

Staffing Up 3. 104 Profit-sharing plans. Profit-sharing plans include both immediate cash payout plans and deferral plans.A payout plan pays cash to eligible employees at the end of a stated period of time, typically at the end of the company's fiscal year.A deferral plan can take many forms.The company could make deposits on behalf of employees into their IRA or 401(k) plans. Deferral plans can have tax advantages for employees. Profit-sharing plans are more like retirement plans, have high administrative costs, and don't really reflect performance since the percentage is set as a percentage of salary and all employees generally receive the same percentage. Ownership. Some employers grant employees actual ownership in the form of stock options or shares.This is low cost, and it allows employees to participate in the company upside. However, there are high administrative costs, and additional shareholders can create legal headaches. 4. Termination Where the term of employment is at will , meaning that either party can terminate the relationship at any time for any reason by providing notice to the other, an employer generally has only to notify the employee and to be within the basic principles outlined in the Avoiding Lawsuits section of this chapter. Ownership of Intellectual Property A development house's main product is intellectual property ("IP"). Every day, employees come to work to create new IP in the form of copyrights, trademarks, and trade secrets (and rarely, patents). See Chapter 5, a Primer on "Intellectual Property," for more discussion of these. Unlike most other forms of property, however, Congress has legislated a set of rights that accompany that work of creation, even if someone else is paying you to do it. A company's intellectual property maintenance program has two major functions: · Laying the legal paper trail to make sure that it actually owns IP created by its employees.