The purchase or sale of a business in California involves intricate legal considerations, particularly regarding the rights of and responsibilities to employees. Both the buyer and seller need to consider employment ramifications.

For Buyers:

As the new employer, the buyer will need to comply with a host of California requirements and disclosures. Employers new to California should pay special attention to regulatory requirements and may wish to consider arbitration agreements, employee handbooks, meal and rest break policies, timekeeping requirements, and other California-specific obligations. If the acquisition involves a reduction in force, additional considerations will be necessary. Finally, the acquirer may inherit existing policies and practices that could subject them to liability.

For Sellers:

Sellers also need to consider their obligations. Sellers of a business with employees should carefully manage the transition to ensure compliance with state requirements. This involves:

• Providing written notices to employees about the sale and its implications.
• Ensuring clear communication regarding any termination of employment.
• Securing express written consent from employees if there is any intention to transfer obligations to the new business owner.

It is essential, whether buying or selling a business with employees, for business owners to consult with experienced employment lawyers. This ensures compliance with employment laws and helps mitigate potential risks.