Best Practices for Ensuring Compliance with Employment Laws in M&A

Employment law compliance is a critical consideration in mergers and acquisitions (M&A). Failure to comply with employment regulations can lead to significant fines, penalties, and legal disputes. Here are best practices for ensuring compliance with employment laws in M&A transactions. Keep in mind, that this review should happen before your business is placed on the market.

Conducting an Employment Audit

Review Employee Classification: Ensure employees are correctly classified as exempt or non-exempt, and check for any misclassified independent contractors.

Examine Employee Contracts and Handbooks: Verify that contracts and employee handbooks are up to date and comply with current labor laws.

Check for Unresolved Claims: Investigate any ongoing employee disputes or unresolved claims that could pose risks.

Compliance During the Transition

Inform Employees About the Sale (maybe): Communicate the sale details to employees and explain any changes to roles, benefits, or company policies.

Transfer Employee Benefits: Make arrangements for transferring employee benefits, such as health insurance and retirement plans, to the new ownership.

Post-Acquisition Compliance

Update Employment Policies: Revise employment policies to reflect new ownership and ensure compliance with local, state, and federal laws.

Conduct Training: Offer training on new policies and legal requirements to avoid potential violations.