Is my employment contract still good if my company gets bought out?

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Is my employment contract still good if my company gets bought out?

I have an employment contract with my employer. I was just informed they got bought out by another company by a email the only question the new company is asking me is how much do I make a hour? Should I be worried that my contract is no good anymore and my wages and benefits might be gone or cut down?

Asked on February 13, 2012 under Employment Labor Law, Ohio

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The critical factor is how was your company purchased:

1) If the company is a corporation or LLC and the corporation or LLC itself was purchased (e.g. the buyer bought all, or at least a controlling portion of, the shares of stock, or a controlling or complete interest in the LLC), then the employment contract is still in force. That is because the entity--the corporation or LLC--which is the other party to the contract is still in existence and in business; it's just owned by a new person or entity. The contract remains in force because you are still working for the same corporation or LLC with which you contracted.l

2) But if the company was a sole proprietorship or partnership, or it was an LLC or corporation and the buyer bought the assets (e.g. inventory, name, goodwill, intellectual property, customer lists, equipment, accounts receivable, etc.) only, then the contract is almost certainly no longer good; that is because the buyer did not take over the entity with which you had contracted. In this case, the buyer is only bound by those contracts it assumes, or specifically agrees to be bound by.


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