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Buying a Business in Texas? Don't Buy a Lawsuit!

Posted by William Pigg | Aug 08, 2019 | 0 Comments

In Texas, make sure that when you buy a business, you aren't buying a lawsuit brought by a disgruntled current or former employee you didn't know about.
 
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 workforce;
  • 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;
  • Whether he produces the same product. Rojas v. TK Communications, Inc., 87 F.3d 745 (5th Cir. 1996)

Remember: "If it ain't written down, it don't exist!"

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.  

About the Author

William Pigg

William A. “Bert” Pigg received his J.D. from Tulane University School of Law in 1995 and his B.A. summa cum laude from Fordham University in 1992. Licensed in Texas and Louisiana, Mr. Pigg practiced law with a firm in New Orleans until Hurricane Katrina, after which he became a solo practitioner...

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