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Does vacation time come along when co. is sold?

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  • Does vacation time come along when co. is sold?

    I'm an exempt manager. I accrued 2+ weeks vacation time in the three+ years I've worked for this restaurant.
    The owner filed for chapter 11. Another company bought the chain.
    Our last paycheck from bankrupt owner did not include vacation pay.
    Am I correct in assuming that the new company has 'PICKED-UP" our owed vacation time since they didn't pay us for it when they issued us our first paychecks?

  • #2
    No, you can't really assume anything. If you are in a state which prohibits vacation "use-it-or-lose-it" policies (such as California), it is probable that the acquisition agreement included all vested liabilities, including vacation. However, you have nothing to lose by inquiring of the new HR Dept., your district manager, or the new owner, depending upon how big the new company is.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      Sale of Company is Termination...

      Don't know where the question originated, so I can't say for sure, but in Texas, and in some other states, a sale of a company is considered a termination of all employees. At that point, the seller (old owner) is liable for any accrued or current costs of employees, and the buyer (new owner) starts clean. This also applies to implementation of policies, so things like vacation may not accrue on the same basis.

      It's good to get a statement from the buyer as to what, if any, policies of the seller will remain in effect, and if the buyer will assume liability for accruals for its "new employees".

      Case in point, when a large wireless phone provider based in GA acquired a large wireless provider based in WA (2004), nearly all employees were retained for at least a while. Sorting benefits, and computing entitlements was a logistical nightmare.

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      • #4
        Texas, I believe that whether the sale of a company necessarily results in the termination of the employees by that company depends on the type of sale it is.
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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        • #5
          Thanks for the info. I am in Ca. The new division president keeps yelling that any vacation time is a gift. I know that I haven't forfeited any vacation time as I've yet to be paid for it by anyone.
          Seems to me the ball is in the employers court. If they wanted us to start as new employees on the day they took over the company, they should have paid out what was owed us in vacation time.
          'course, I've been wrong before!

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          • #6
            I agree with you. If you end up forfeiting the vacation, then you have reason to file a claim.
            I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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            • #7
              I take a little more aggressive stance. In California, the sale of a business constitutes a termination of employment (see DLSE Manual 15.1.11). As such, all wages and vacation pay are due immidiately upon termination.

              Even if they eventually pay the vacation, the employer would still be liable for waiting time penalties as they did not pay the vacation immediately. This means that they would have to pay one days pay for each day that they delayed paying the vaction, up to 30 days. Thus, if they take 30 days to pay the vaction, each employee would get an extra 30 days pay.

              Vacation is a gift. They do not have to give it to you. However, like any gift, once they have given it to you, it is yours and they can't take it away.


              Michael Tracy
              Attorney
              http://www.gotovertime.com

              Disclaimer: The above response is a general statement of California law. It only assumes the facts that are stated in the message. The above response does not serve to form an attorney-client relationship.
              Michael Tracy
              Attorney
              http://www.laborlawradio.com

              Disclaimer: The above response is a general statement of the law and should not be relied upon as legal advice. It only assumes the facts that are stated in the message. The above response does not serve to form an attorney-client relationship.

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              • #8
                Good to have your perspective, Michael. However, could not the vested vacation be included in the liabilities assumed by the new company as part of the acquisition agreement?
                I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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                • #9
                  Well, that depends on who my client is... (just kidding).

                  In terms of the vacation being assumed by the new company, this is not what the law requires. The law is clear that the sale of the business is a termination. The new buyer may not be solvent, and it is unfair to asked the employees to assumes the risk that a new buyer will be able to pay for benefits that are already earned. As such, they are due on the sale of the business.


                  Michael Tracy
                  Attorney
                  http://www.gotovertime.com

                  Disclaimer: The above response is a general statement of California law. It only assumes the facts that are stated in the message. The above response does not serve to form an attorney-client relationship.
                  Michael Tracy
                  Attorney
                  http://www.laborlawradio.com

                  Disclaimer: The above response is a general statement of the law and should not be relied upon as legal advice. It only assumes the facts that are stated in the message. The above response does not serve to form an attorney-client relationship.

                  Comment

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