Mergers and acquisitions of any size require both pre- and post-closing strategic planning. One of the most challenging—yet often overlooked or underappreciated—components of an M&A transaction for a buyer can be acquiring or merging workforces. The newly formed venture must reconcile employee structure, personnel policies, benefit plans and arrangements, and past employment practices. Formation of the new venture may also be an opportunity to introduce “best practices” or other new workforce management tools whose implementation was impractical absent the transaction. The buyer and seller must carefully define and, after due diligence, accurately price reserved and acquired employment liabilities and effectively manage their defense.
Nixon Peabody’s attorneys provide comprehensive due diligence and integration counsel on labor, employment, and benefits issues for buyers and sellers in merger, acquisition, investment, joint venture, and other strategic transactions. We deliver experience and insights that can be vital in structuring and negotiating the strategic transaction and effectively managing the resulting enterprise or reserved employment liabilities. Care in developing a labor, employment, and benefits plan for the strategic transaction optimizes transactional and implementation efficiency, improves compliance, reduces litigation risk, influences employee expectations, and shapes employee relations.
Labor, employment, and benefits solutions
Labor, employment, and benefits issues in strategic transactions vary by industry, transaction size, and jurisdiction. The interests of buyers and sellers also affect the approach to employment issues in the transaction. Our labor, employment, and benefits solutions generally involve:
- Workforce transition: determining, scheduling, and documenting business justifications for integration of seniority lists and workforces and for workforce reductions caused by redundancies; developing employee communication strategies; and meeting litigation and compliance challenges by, for instance, preparing separation agreements and WARN Act notices. Buyers and sellers must negotiate the allocation of both historical and new risks arising from the seller’s workforce management and post-sale transitions.
- HR and payroll policies/practices: integration of workforce management systems and consideration of wholly new management systems, such as individual employee contracts for some or even all employees, innovation disclosure and award programs, and alternative dispute resolution (e.g., mandatory mediation and/or arbitration of disputes).
- Wage-hour compliance: review of exempt-nonexempt classification practices and payroll practices more generally.
- Labor relations: anticipating and minimizing exposure to successor employer obligations and union organizing campaigns; determining and managing existing and/or competing representation claims; reviewing existing and negotiating new union contracts.
- Immigration compliance: review of current employee eligibility; maintenance or procurement of proper visa status of critical management and technical employees.
- Management and employee training: EEO, union-free workplace, etc.
- Safety and health: workplace audits and OSHA compliance.
- Intellectual property: protection of newly acquired trade secrets by agreements and enforceable noncompetition and nonsolicitation agreements; innovation disclosure and award programs; unfair competition avoidance strategies.
- Employee benefits and executive compensation: evaluation of ERISA and other benefit plans; identification and advice concerning potential buyer and seller liabilities arising from multiemployer plan withdrawal, underfunding of pension and retiree health plans, COBRA health care continuation, and change-of-control and severance arrangements; advice regarding integration of employee benefit programs, including alternatives for plan mergers, terminations, and spin-offs; and counsel concerning employee notice and benefit distribution issues.