What Happens to Your Wage Claim in a Company Takeover?

Posted on Monday August 23, 2021

Corporate transactions are highly common in California, and companies are constantly getting bought and taken over by other organizations. With new leadership can come many changes for employees, and this can be particularly concerning for employees who have minimum wage claims against their employer. 

If the original company violated minimum wage laws, the impacted employees can file claims to seek a judgment for all their unpaid wages. However, if the company subject to the judgment is taken over, what happens to the unpaid wages?

If you believe that you have an unpaid wage claim or have questions, contact a California minimum wage attorney right away. 

The Obligations of the New Company in Charge

Wage claims can go on for a long time, and a company might even delay in paying a judgment or settling a claim because the leadership knows the company might soon be sold. It can be stressful when a company takeover occurs, and you have money that you are owed. 

Fortunately, California labor law addresses this issue in an effort to protect workers. The law imposes successor liability, which means the company taking over is still responsible for paying judgments for wages or damages to employees. This liability can apply even if the wage judgments were not expressly addressed in the corporate transaction. 

Employees with wage judgments are considered to be creditors – even privileged creditors. A purchasing company can have successor liability for this debt if any of the following are true:

• The new company has substantially similar facilities, workforce, or services as the previous company
• The same people substantially control the workforce as before
• The new company has an agent who manages the wages of the workforce
• Operates in the same industry, plus a manager or owner is a family member of the employee with the judgment
• Other criteria that the court would find satisfactory to impose successor liability

If a new company took over and is refusing to honor your wage judgment, you should speak with a California minimum wage lawyer immediately. 

Fighting for Your Unpaid Wages

As minimum wage continues to increase in California, too many employers deprive their employees of the wages they deserve. If you think you did not get paid enough for all of the hours you worked, it is important to take swift action. Some companies fail to pay wages because they are in financial trouble, and a takeover or sale of the business might be imminent. You want to get your wage claim started as soon as possible so you can obtain a judgment. If your employer is taken over and you have not yet received a judgment or filed a claim, we can assess your legal options. 

Let a California Minimum Wage Attorney Review Your Situation

At Mara Law Firm, we handle complex minimum wage claims, and we help employees in all types of industries and situations throughout California. Call (619) 234-2833 or contact us online for a free case evaluation today.