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California-New Organization taking over existing company

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  • California-New Organization taking over existing company


    We are in the process of moving an existing company from Organization A to Organization B. The employees for the company will not lose their jobs, so they will not even notice the change. However, their paychecks will now come from Organization B (instead of A).

    I know that when an employee quits (or is fired) their final paycheck needs to be ready for them on their last day. The change for this to take place is 6/1/09. The closing date for Organization A's payroll happens to be 5/31/09 and the employees will receive their paycheck on 6/2/09. My question is, does Organization A need to have the employees' check ready on 5/29/09, or can it wait for the normal pay run?

    Thanks so much for your response!

  • #2
    Is this a simple restructuring or is Company B buying Company A?
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


    • #3

      Thank you for responding. We are a nonprofit foundation that raises money for a K-8 school. We took on an after school childcare program; however, we have decided that the childcare program should be under a different organization. The new organization has a different Tax ID number than us, and a different board of directors, so we are completely separate. However, the childcare program has not changed. They are keeping the same name, the same program director, and the same employees. There are going to be very little changes.

      Briefly, we are handing them over the company along with all the money we have in the checking account. We did not profit from it at all. The school we fundraise for will profit from it being under either organization.

      I am the bookkeeper of the original organization and I want to make sure I stay within the law. We are also paying out the PTO, so the employees are leaving our organization to be with the next. I would like to run the payroll on the regular scheduled date, but if that is illegal, than I better do what is right.

      Thanks again!


      • #4
        Let me cogitate on this for a little bit. Is Company B a completely new company?
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


        • #5
          Yes, company B is a completely new nonprofit organization with a new Tax ID number. When I said that they are keeping the same name, I actually meant that the dba Childcare Program has the same name, not the organization. We are the "School Foundation" Organization who had a dba "Childcare Program" and the new organization is the "Other" Organization, who effective 6/1/09 is going to be dba as "Childcare Program."
          Last edited by MHami; 05-28-2009, 07:54 PM.


          • #6
            Originally posted by Pattymd View Post
            The reason I wanted to get the story straight is because my understanding is that the sale of a company automatically is consideration a termination of employment. Even if the employees are immediately "hired" at the new company.

            Hi Patty,

            This is something you wrote on another thread, but think it applies to my situation. Based on this comment, it would be my understanding that the employees need to be paid today. We discussed this at the board meeting last night and thought that they should be paid today as well. Even though we are handing over the company I have always wanted to handle things as though it were a "sale" of a company.

            I was just hoping because this is normally the last day of our pay period that I could go through the normal payrun. No biggie, just more work for me.




            • #7
              Yeah, re-orgs, mergers, acquistitions, etc. are always more work for the person who does payroll. BTDT.

              Good luck.
              I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


              • #8
                A sale, acquisition or complete change in ownership does act as a termination. You are correctly paying out the PTO. You should also pay final pay on the date of "termination," the last day of ownership. (The Board should have helped you out here by structuring the "sale" date to be on your regular pay day.
                J.E.B. Pickett
                Wynne Law Firm
                California Wage & Hour Class Action Attorneys.

                Disclaimer: This response and any materials or content provided by this response are for general informational purposes only and should not be relied on or considered as legal advice. Under no circumstances does this informational response, directly or indirectly, establish or intend to establish an Attorney-Client relationship.


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