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What You Need to Know About Employee Rights in Mergers and Acquisitions

Most people have a basic understand about their rights as employees. If not, they can always rely on legal aid like business lawyers if the going gets tough. One little thought of aspect, however, is what might happen if your company undergoes a merger or acquisition. 

It happens all the time. Microsoft has acquired 225 companies since 1987 with Zenimax, owners of id Softworks and Bethesda Softworks, being the latest. These acquisitions and mergers can include hundreds to thousands of employees. So, what are your rights when this happens? Here’s what you need to know. 

Understanding Mergers and Acquisitions

Corporate heads and managers rarely give a straight answer during either. There are promises of increased profits greater productivity, and fewer expenses. However, these things benefit upper management, investors, and the acquiring or merging companies. 

For employees, the number one thing to expect is layoffs as the superior of the two companies works to “trim the fat” in the name of profit margins. Other less-than-favorable aspects mergers and acquisitions include:

  • Confusion from role shifts
  • Internal power struggles
  • Workload increases
  • Clashing or organizational or company cultures
  • A large gamble on your investment in company stock
  • Fellow employees leaving for competitors or generally being less engaged

In a merger, the above instances are often more likely. Mergers happen when two companies consolidate into one, which can bring about a lot of stress and tension if done improperly. Acquisitions are when one company purchases another, which is when you should absolutely expect layoffs.

It isn’t always bad, though, so don’t start stressing just yet. This is how companies grow and employees can benefit from that growth as well as decreased expenses in plenty of cases. The trick is knowing your rights no matter what the outcome ends up being. 

What You Can Do

“Panic” is the worst option. Instead, start identifying where you have legal standing now. Reviewing any existing employment agreements or contracts is the first step in gaining that knowledge. You want to look for any termination provisions such as only being fired for a good cause or a certain amount of notice time beforehand, both of which protect you and are legally binding rights. 

Severance pay is another key area to look for. If your employer ends your employment during the contract term, severance can ensure you walk away with a nice check in hand to act as a financial buffer. Noncompete agreements are also critical, as they can limit your ability to get a new job after a layoff. Check to see if the agreement mentions mergers or acquisitions. 

W.A.R.N.

Next, there’s the federal Worker Adjustment and Retraining Notification act (WARN). This requires prior notice to termination for certain types of larger companies. Some states also have their own WARN laws, which may include benefits or pay after a layoff. You will need to research this act on a state and federal level to see if your employer applies. 

On the other hand, you could always speak with an attorney. They can answer WARN questions as well as others, like what happens to discrimination lawsuits or employee benefits after the fact. These San Bernardino workers’ compensation lawyers, for instance, have handled workers comp cases opened prior to mergers and acquisitions. The legalities can be confusing, so speak with legal aid if you have questions.