Mergers and acquisitions reached historic levels in 2021, and while 2022 had lower deal volumes, coupled with the ongoing concern that 2023 may continue on a downward trajectory, it is imperative for corporate buyers and sellers to know about labor and employment issues associated with these transactions.

Acquiring or selling a company can be an exciting and complex process, but it also comes with a host of legal and regulatory considerations that can have significant legal, financial and reputational implications. Effective and thorough due diligence will aid in avoiding labor and employment pitfalls. Though not exhaustive, here are some important labor and employment issues to consider when purchasing or selling a company.

1. Wage and Hour Liability

A potential hidden liability in an asset acquisition is the seller's past wage and hour violations under the federal Fair Labor Standards Act (FLSA). Even when the potential liability is identified by the purchaser and the parties have negotiated contractual terms in an asset purchase agreement for the purchaser not to assume such liability, the purchaser may still have exposure for such wage claims when it is deemed a successor under federal common law.

Wage and hour claims under the FLSA can result in significant liability to an employer. Most FLSA claims are brought as a collective action (similar to a class action) on behalf of all similarly situated employees. This can often lead to hundreds of thousands of dollars in...

Read Full Story: https://news.google.com/rss/articles/CBMilwFodHRwczovL3d3dy5tb25kYXEuY29tL3Vu...