Valencia, CA asked in Business Law, Contracts, Employment Law and Mergers & Acquisitions for California

Q: My company just merged. Does the new company that formed have to honor my contract ?

My contract states I will be provided a free health plan or stipend towards another plan. The newly formed company is not providing this and rates have gone up to over 2K a year. Does my new employer have to honor my contract if they are not firing me or providing a new contract for me to sign?


1 Lawyer Answer
Neil Pedersen
Neil Pedersen
  • Westminster, CA
  • Licensed in California

A: Your post is not entirely clear about your relationship with this company, nor does the post have additional information needed to provide a clear, reliable answer. Assuming you are an employee, and not an independent contractor, when your employer sells to another company, such that you are now working for a completely different entity, the new entity is only bound by the contracts of the prior company if contractually it agreed to do so in the sale documents. If you stopped working for the first company and started working for the different company, you are usually entering into a new employment relationship, and the terms of that new relationship are determined by the new employer.

On the other hand, if the sale of the company was simply one owner selling the entire company to another person, who continues to run the same company, then likely any agreements of the prior company are to be honored by the new employer, unless the agreements are subject to the at will employment relationship which allows the new owner to change the terms and conditions of employment at any time and for any or even no reason.

There appear to many moving parts here. An attorney would need to review your prior employment contract, the terms of the sale of the business, and the circumstances of your new employment to give you an answer you can rely upon.

Good luck to you.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.