Does an acquiring company have to abide by employment agreements of the company they purchased?
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Does an acquiring company have to abide by employment agreements of the company they purchased?
I transferred jobs 5 months ago and as part of the negotiation process I was able to get 15 days of vacation per year. This was reflected in the final offer letter that was signed by me and the company representative. Since then my company has been acquired by another and they are telling me that as of next year I will only get 10 days of vacation. Is there anything I can do about this?
Asked on December 1, 2011 under Employment Labor Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
The key issue is probably how was your company acquired? If the acquirer bought the actual business structure of your company--i.e. if you company was a corporation or LLC, they bought they actual corporation or LLC itself--then they would be bound by any agreements your old company had made. In that case, from what you write, you may be able to enforce the terms of the offer letter against them.
However, if it was an asset purchase--that is, the new company bought the assets (customer lists, equipment, inventory, good will, intellectual property) of your old company but did not buy the company itself, then they are only bound by those agreements they specifically assumed, or voluntarily agreed to take over/take on.
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