Am I required to keep employees when I buy a business?

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Am I required to keep employees when I buy a business?

I am taking over a business that is incorporated. The tax id and name of the business will change. I will be continuing to provide the same services, but will not be tied to the previous business. Am I required to keep the employees? If so, if I choose to terminate one or more, am I liable for unemployment claims, or is the old business/owner liable?

Asked on August 8, 2017 under Employment Labor Law, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Are buying the actual corporation? Or are you leaving the corporation behind and buying just the assets--e.g. the intellectual property, accounts, inventory, equipment, any real estate, etc.? That you will have a new TIN implies you're not acquiring the corporate structure itself, but we'll answer both ways for completeness.
BUYING CORPORATION: since you are buying the entity which would have signed and is bound by any employment contracts, IF any employees have employment contracts preventing termination, you are stuck with them. Otherwise, you may terminate any employees you wish. Because there is continuity of employer--it is the same corporation--the corporation is liable for unemployment.
NOT BUYING THE CORPORATION: you would not be bound by any contracts unless you voluntarily "assume" or take them over, so you can let anyone go--or simply refuse to hire anyone--regardless of contract. If you never let them work for you at all--i.e. their last paycheck is from their old employer, not you, and they did not perform any work for you--then you are not responsible for unemployment, since you never employed them at all. If you did employ them--i.e. you let them work for you--before later firing them, then you would be responsible for unemployment.
Remember: employment in this country is employment at will. Only an in-effect written employment contract guaranties employment.


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