Sale of Assets Impact Wrongful Termination Claims
The sale of businesses is a regular occurrence. From small’mom and pop’ shops through to large multinational corporations, business are sold all the time. The way in which a company is sold can impact employee severance packages and rights, especially in the context of wrongful termination claims.
Wrongful termination is defined as an unlawful discharge of an individual that violates state or federal law. Such violations can include discrimination, harassment, and retaliation for whistleblowing or complaint filings, organizing a union, breach of contract, and/or violation of the at-will employment relationship. Compensation for wrongful termination can include severance pay, damages and/or reinstatement of employment.
Many of our readers tell us they have been fired because of favoritism, run-of-the-mill bullying (not based on a protected characteristic), personality conflicts, general unfairness or posting something on social media that their boss didn’t like. In these cases, a wrongful termination claim probably would not go far.
How Does the Sale of Assets Impact Wrongful Termination Claims?
However, some of our clients were fired after a purchase due to misconduct. In these situations, the purchaser is required to provide severance pay, reasonable notice and/or redundancy payments (under the duty to mitigate). A purchaser who does not do so could be exposed to wrongful termination claims from the terminated employees.
In non-unionized workplaces, the key thing to understand about the sale of assets is that ownership of the employer does not change as a result of a share purchase. In fact, a share purchase is just a change of shareholders. The company continues to exist as the same legal entity, and the existing employees continue to be employed by that corporation.
If the company is purchased by a different corporation, then it may be necessary for the old corporation to provide severance payments, reasonable notice and/or redundancy pay (under the duty to mitigate). In this scenario, the new corporation will need to negotiate with the current employees as to what their terms will be post-purchase, and how to proceed with any changes to the employment terms.
While it is rare that a wrongful termination case goes to trial, the process of filing a lawsuit places an employee in a stronger negotiating position and can help them prove their case. In our survey, we found that readers who hired lawyers were more than twice as likely to receive a settlement or award compared to those who did not. An experienced attorney can also assist in drafting or reviewing purchase agreements to clarify liability responsibilities.
If you have been wrongfully fired, an experienced attorney can help you pursue appropriate compensation including severance pay, damages and/or unemployment benefits. In addition, an attorney can ensure you receive the full severance package that you are entitled to under state and federal laws. Contact an attorney for a free consultation today.
