The sale or merger of a business often uncovers employment problems that may scuttle the transaction, or impact the value of the business. In my employment law practice, I’ve seen a pattern of common employment issues businesses face when they are contemplating a transaction, or that emerge during due diligence. Below are the five most common of those issues:
1. Classification of employees as “exempt” or “nonexempt” under federal and applicable state law; and time clock and hourly pay policies, and compliance with federal and state overtime rules;
2. Classification of workers as independent contractors or employees;
3. Evaluation of benefit plans to ensure compliance with plan documents and federal benefits law, and evaluation of policies related to unregulated fringe benefits, such as vacation pay or sick pay;
4. Evaluation of whistleblower and harassment and discrimination complaint procedures;
5. Evaluation of employment contracts and restrictive covenants to ensure that the restrictions included therein will protect the seller and will inure to the benefit of the buyer.
A thorough review of employment policies and procedures and contracts will eliminate trouble in the process. AMM attorneys have experience guiding employers through these issues as part of our clients’ transactions. We can help employers address the crisis when it emerges as part of due diligence. More importantly, we can help employers improve their policies and contracts to maximize value and streamline transactions.