Wha to do if my boss sold his franchise to a new owner but new owner won’t pay me my vacation pay?

My boss sold his franchise and said my employment time would still count as the year. Once he sold it, I put in my notice and now the new owner won’t give me my vacation pay. He said my old boss has to pay since I earned my vacation through him.

Asked on June 8, 2012 under Employment Labor Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

It depends on how the franchise was sold.

If the company you had worked for was an LLC or a corporation AND the new owner bought that corporation or LLC, then you should still be entitled to whatever compensation or benefits (e.g. vacation) you had  earned, as per the policies in force when you earned it. The new owner could change those policies going forward, but should most likely have to honor amounts earned to date.

But if either the business was not an LLC or corporation, or if it was, but the new buyer did not actually buy the LLC or corporation (but instead, for example, purchased the assets of the business, without buying the business entity or structure), then the new owner is not obligated to honor your vacation pay. In this case, he did not actually buy the old business; what he really did is create a new business using assets of the old business and hiring its staff, but as a new and legally distinct business, is not obligated to what you may have earned from a previous employer.

In the event that the new employer is not obligated for the vacation, you *may* be able to hold  the old employer liable; it depends on the circumstances, and can be very complex to determine your  rights--you should consult with an employment attorney to evaluate the situation.

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