I work in Texas and the company I work for was just bought out by a second company. Both companies have the same payweek, Friday - Thursday. The sale of the company was finalized on a Tuesday, the 5th day of the workweek. The new owners are saying that the 38 hours I work during the first 5 days of the workweek are separate from the 20 I worked the last 2 days of the workweek as it was for different employers.
My research on the internet has lead me to believe that this meets the requirements to be classified as Joint Employers and OT should be paid. My interpretation is that both companies are equally responsible for the extra pay but that doesn't really concern me.
I just can't find a case exactly like this even though it sounds like it would come up quite often.
Anyway my appreciation to all who choose to reply with opinions and or advice.

I would say that you are correct, however, I am not the resident payroll expert here.

I do have one more question. How much notice, if any, were you given regarding being changed over from one company to another? In other words, were you notified that those hours would not be paid at an overtime rate BEFORE you worked them?

The company that I work for does catering and concessions for an arena.(http://www.bellcountyexpo.com/index.cfm) and I'm the #2 man at the facility for food services. I'm a non-exempt hourly employee and as anyone in food service managment can guess I regularly get overtime and have been paid for it up untill this particular week. I also have no doubts that my overtime pay will be paid for in future weeks.

Yes I did know about the buy out a few months before it was finalized. A week before the pay period ended we were notified that we would be doing two payrolls for the period covered but nothing specific was said about OT.

I don't believe however that advanced notice would matter in this situation as if I'm correct in asserting that the two companies were Joint Employers and I worked the OT hours I couldn't waive the right to overtime pay even if asked to, at least it wouldn't be binding.

I'm the resident payroll expert here (sigh), and unfortunately, I don't have a clear cut answer for you. However, this doesn't sound like the true definition of "joint employment". You worked for Company A, which was bought by Company B. Effective with the date of the sale, are you now an employee of Company B? Is Company A still doing business as Company A? Did you get a paycheck from Company A for the first 5 days of the workweek and a check from Company B for the last 2 days?

Company B has kept the name of Company A for use on the food service side of the house. It has not been made clear yet if company A will be issuing a seperate paycheck for the pay periord or will give the money to Company B to include in a single paycheck.

What I've read...

Joint employment will be found where the employee performs work which simultaneously benefits two or more employers or works for two or more employers at different times during the week if one of the following conditions are met:

1) There is an arrangement between the employers to share the employee's services;for example, to interchange employees.

2) One employer is acting directly or indirectly in the interests of the other employer in realtionship to the employee.

3) The employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by or is under common control of the other employer.


Seems there was definatly an arrangement to share services, as before the sale was final some were notified (mostly in the accounting and IT depts. at HQ) that they would not be working for company B. Since Company B just accepted some of us as thier employee's without new applications or an interview process I believe that would be the definition of interchanging employee's.

And Since Company A made some changes in the way we do our daily tasks at the request of Company B before the sale was final, it could be argued that condition 2 was met as well.

OK, but what I'm saying is that I'm not convinced that the two companies were related until such time as the sale was completed. If anybody else wants to jump in on this, please feel free. :p

Again I'm not sure myself. The closest example I could find goes like this.


If and EMS worker is employed at a particular hospital and works 40 hours. Then on his time off works for a staffing service that the same hospital uses to fill in when needed. If that EMS worker is sent to that paticualr hospital he is entitled to OT even though he is getting paid from 2 seperate companies, the hospital and the staffing service.

This is apperently settled case law.

The point I'd argue

If I were the employer (especially the employer who now owns the business), I'd say that the sale is the effective termination of all employees (and this is supported by Texas law, which calls it that). Any employee who worked more than 40 hours in the work week would be due overtime. You didn't. You worked 38 hours for 'employer A'. You then worked 20 hours for 'employer B'.

If I were the employee, I'd argue that my job didn't substantially change, and I was entitled to overtime pay for the hours in excess of 40. I think you may have found the only legal basis for this position in the concept of joint employment, but I, too, am skeptical that this would hold enough water to matter. There would be a substantial burden of showing that the two employers were related, and I think the sale as of a date certain would show that they are not. Further, the cessation of operations by 'employer A' would indicate that they aren't still in the business, at least not at Bell County Expo Center--a wonderful facility, by the way.

Given my choice between the two positions, I'd rather have the former--and I doubt that you would prevail in a claim for overtime for this workweek. :(

That is a good argument Texas709. If Texas law upholds that the sale of a company is in effect a termination and rehire of all employees that makes the case more difficult. I don't neccessarily agree that a person can be terminated by one company and hired by a seperate non related company without any documentation or notification. But if that is the way the law has been settled....

The law doesn't deal with the issue of termination and rehiring by a separate company. It's far more explicit that that, for part of the equation. The Texas Payday Rules (Sec 821.25 of the Texas Admin Code) says that "for purposes of Sec. 61.001 (7)(B) of the Act (The Texas Payday Law), the sale of an employer's business is a termination of employment with all the employer's employees."

This section is used to require that accrued vacation pay, holiday pay, etc. is paid at the time of termination, if the employer's policy requires payment for those amounts. I would, if arguing the point, claim that that provision also constitutes a termination of employment for other purposes, e.g., payment of overtime and the end of the work week.


The idea of assuming employment with a different company is a separate issue, and is one that is not dealt with in the Payday Law. Of course, the Payday Law does not deal with the issue of overtime, either.

Who knows how it will work out? That's why we have adjudicating and investigative bodies, and why we pay counsel to take these things to court.

Wow, thanks, Texas709. Maybe I was trying to overthink the thing. Or maybe you did that for me. :rolleyes: :D

Welcome, PattyMD--

We're all here to try to help each other find the way, and I have benefitted from this forum as much as anyone. I appreciate the chance to see a bunch of issues, and some divergent points on how they can be handled.

As we used to say in the old days in Austin (immediately post Armadillo WHQ)

Onward: Through the Fog!

I don't know that 61.001(7)(B) would apply since overtime is compensation under 61.001(7)(A). 821.25 specificlly references 61.001(7)(B) and is labeled "Fringe Benefits".
Overtime pay is not a Fringe Benefit it is owed as a matter of law persuant to FLSA.
If they made the argument anyway wouldn't it conflict with the fact that the vaction pay, sick leave ect was not paid. It was simply rolled over onto the new owners books. (It is possible that the old owner paid the new owner for these which might change the argument).


I'm not really trying to play devil's advocate I simply find it enjoyable trying to interpret some of these laws. I should note that I have also sent the question via the DOL's website and will post any response I get.