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

UPDATED: Feb 13, 2012

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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