FLSA Liability Follows Asset Purchase

Companies are bought and sold on a regular basis, and a question often arises as to whether the new owner is responsible for wage and hour violations. The Seventh Circuit Court of Appeals , in Teed v. Thomas & Betts Power Solutions, LLC, looked at just such a situation where one company bought another company’s assets at auction. The Court ruled that FLSA liability is imposed on a purchaser, even where there is an explicit contractual disclaimer, unless there is good reason to avoid it. The Court found that to rule otherwise would frustrate the statutory goals of the FLSA by, because a “violator could escape liability or at least make relief much more difficult to obtain.”