If you buy a business from someone else - a "predecessor", you are what is called a "successor."
In Texas, Successor Liability for unpaid wages may attach depending on the following factors:
- whether the successor company had notice of the charge or pending lawsuit prior to acquiring the business or assets of the predecessor;
- the ability of the predecessor to provide relief;
- whether there has been a substantial continuity of business operations;
- whether the new employer uses the same plant;
- whether he uses the same or substantially the same work force;
- whether he uses the same or substantially the same supervisory personnel;
- whether the same jobs exist under substantially the same working conditions;
- whether he uses the same machinery, equipment, and methods of production; and
- whether he produces the same product. Rojas v. TK Communications, Inc., 87 F.3d 745 (5th Cir. 1996).
While it is not a foregone conclusion that you will be on the hook for a pre-existing employee wage-based lawsuit, don't buy the business without performing your due diligence with the advice and counsel of an experienced business attorney.
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