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Company being purchased- what to do with unused vacation time
Benefits & Compensation
Company being purchased- what to do with unused vacation time
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
If a CA company is purchasing another CA company, do they have to pay employees out on their unused vacation time? Or can they allow those hours to carry over into the new company?
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Company being purchased- what to do with unused vacation time
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Company being purchased- what to do with unused vacation time
posted at 7/27/2011 9:59 AM EDT
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Posts: 12
First: 3/18/2011 Last: 8/17/2011 |
If a CA company is purchasing another CA company, do they have to pay employees out on their unused vacation time? Or can they allow those hours to carry over into the new company? |
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Company being purchased- what to do with unused vacation time
posted at 7/27/2011 10:42 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
Unless the employee is covered by a collective bargaining agreement or unless the employee had what is called a "Change of Control" event, the acquiring company probably does not have to pay out vacation.
I am assuming that this is a stock purchase and not an asset purchase. Please confirm. |
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Company being purchased- what to do with unused vacation time
posted at 7/27/2011 11:32 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
The acquiring company would not have to, but the company being acquired in all likelihood would have to.
California Labor Code 227.3 states that "...When an employment relationship ends, all vacation earned but not yet taken by the employee must be paid at the time of termination." The acquisition most likely ends the employment relationship with the company being acquired. |
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Company being purchased- what to do with unused vacation time
posted at 7/27/2011 11:37 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
Nork-this may be one for the labor lawyers as the person remains at the same desk doing the same work then their is a question of whether or not termination occurs. So called "Same Desk" rules.
May come down to my original question regarding stock or asset purchase/sale |
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Company being purchased- what to do with unused vacation time
posted at 7/28/2011 4:51 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
In an asset purchase, all employees are terminated by the company they were previously working for. Therefore they should be paid out all termination obligations and given a term date as of the asset purchase date.
Go through your termination checklist and make sure everyone is provided what they are entitled to as if they were involuntarily terminated. Note there will be no COBRA because there will be no employees or employer and thus the all the Life, disability and health plans have ended. Asset purchase means that the company has no ongoing employees and thus no continuing health plan. All benefits stop immediately, payroll ends, everyone gets paid severance if entitled, but in general, employment has ended. All previously terminated staff on COBRA will need to be notified that the group plan that they were a part of has ended. Disability claims that are in payment status will continue. If the company that is purchasing the assets wishes to hire some or none of the employees that is a new beginning for those employees with a new employer. Generally this means a clean slate, no seniority or service credits, no obligations for the hiring company unless something is specifically stated in the asset purchase agreement. I strongly urge you to read the asset sales agreement and understand the rules of engagement as staff will have a lot of questions. |
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