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Old 01-09-2010, 12:01 AM
 
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Does this sound typical for those that have been through it?

Employee's are encouraged to apply for their positions and it is rumored re-applying is only a formality

All employees will start out as new employees... drug testing, employment application, background check. (Non-Union)

Existing Employees with Paid Time Off (vacation time) will be paid for the hours on the books... no other options.

Many would actually prefer time off since no one has been able to use vacation the past 9 months... (Moratorium)

Consequences or negative tax consequences in getting a lump sum for accrued vacation hours?

Existing Employee's will loose all sick time in the extended illness bank... majority have the max of 480 hours... apparently, there is no way to preserve this benefit? Is this correct?

As a "New" employee, the rate of PTO accrual will also be reset... so someone with 15 years on the job at the same desk will have the same as someone with 1 year with the company.

Some employees may be offered independent contract positions instead of employee status... especially those that must be available on call 24/7

Some employees have 20 plus years on the job... the company is making money... no packages have been offered and none are expected except for CEO and CFO. Local companies typically offer one week pay for each year on the job in the industry.

Lastly... what happens to on going medical treatments or those on maternity leave when Insurance Coverage is switched... new deductibles... no coverage for per-existing?
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Old 01-09-2010, 12:05 AM
 
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I can't answer all of the questions, but a good friend of mine worked for a company that was bought out when she was six months pregnant and the new insurance policy wouldn't cover her pregnancy. Unfortunately her husband was laid off at the time. He managed to find a job and add her to his coverage only a few weeks before she delivered. The pregnancy was high-risk and if they hadn't gotten coverage they would have been ruined financially. So I would say yes, pre-existing conditions and maternity leave coverage could be dropped.

Unless the company is in a state like Maryland which prohibits pre-existing clauses for everyone.
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Old 01-09-2010, 12:48 AM
 
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Thanks Kodaka... I've been getting a lot of related questions that I can't answer.

One thing I've learned... the difference between private sector and public sector is like night and day when it comes to employment issues...
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Old 01-09-2010, 05:45 AM
 
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It does not sound typical, but probably legal. It also does not sound too smart on the part of the new owners.

Paying out vacation in $ rather than time will have no significant tax consequences. You will be taxed on the additional money, because you earned it. The week that your vacation is paid out, the taxes will probably be taxed at a fairly high tax bracket, but this will even out at the end of the year. As an example, if you earn $52K in a year, and have $1K paid out as vacation, for that one week, you will be taxed as if you earn $104K per year (artificially high). When you do your taxes at the end of the year, your actual tax liability will be based on your $53K of actual earnings. (standard disclaimer-I am not a tax guy. Examples are approximate. Don't live your life based upon one anonymous guy's advice on the internet)

Employment is generally 'at-will', and since this is a non-union shop, the new owner can technically fire the whole lot of you, hire whoever he/she wants, and offer pay and benefits at whim. Sounds as if they are actually doing this.
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Old 01-09-2010, 11:58 AM
 
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You probably want to familiarize yourself with HIPPAA so that you know what your rights are. I know it is complicated (and some people still say that there are no problems with the system) but it is my understanding that they cannot not cover pregnancy. In addition, if you are covered now it is also my understanding that the new insurance is very limited for pre-existing clauses. Just don't let coverage lapse for more than 63 days.

Frequently Asked Questions about Portability of Health Coverage and HIPAA (http://www.dol.gov/ebsa/faqs/faq_consumer_hipaa.html - broken link)

Regarding vacation and sick time, companies can do pretty much whatever they want unless there is a state law saying they can't which as far as I am aware of, most do not. It isn't smart for the company to do so because as soon as they can, the good employees will jump ship, and I wouldn't blame them! Taxes will even out regarding being paid in a lump sum.
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Old 01-09-2010, 03:50 PM
 
Location: New Jersey
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One of the greatest difficulties in these areas arises from the fact that most of us have come to think of things such as paid vacation and sick days as rights that full-time workers are legally entitled to. In fact, they are not employee rights, but rather benefits that arise from employers' efforts to be competitive with other companies.

As the economy changes -- so will competitive edges among employers, who are coming to see that they can offer less and still get quality employees. The exception to this are benefits provided through a contract, for example with a union. To be changed, the terms of the contract must expire or be renegotiated.

Perhaps the easiest way to understand the ramifications of this situation the OP describes is to look at it in basic terms as the law would:

(1) an employer terminates a group of people;

(2) the people seek to go to other jobs -- some of those people get new full-time jobs at a different company (the acquiring company); some people get contract assignments at a different company (the acquiring company); some seek employment elsewhere.

(1) The first issue is the termination that became effective with the sale of the previous company. The fact is that in most states in this country employers have the right to discharge their employees at will for any reason, be it good or bad. It's called "employment at will." You are considered an "at-will" employee unless you have an employment contract usually negotiated by a union; nonunion workers rarely have this form of protection.

In this case, individuals were terminated by a company under one management/ownership when the company was sold; they have been offered the opportunity to apply with a potential new employer (the acquiring company) -- which BTW is not required by law.

In these situations involving the closing or sale of a company -- or a of a segment of a company -- the only requirement under federal law is that companies with 20 or more affected employees must give the group being terminated at least 45 days notice of the termination (no such requirement exists for individual terminations).

In addition, there are no federal regulations governing the termination benefits that may be provided -- except that if they are offered, they must be applied equitably among all the affected people. "Equitably" generally means that if a severance package is provided, it must follow an eligibility structure similar to the structure in place in the former company. For example, if benefits are based on job level or on length or service, the same structure must be used to provide benefits in the severance package.

Otherwise the elements in the severance package -- or even the existence of a severance package at all -- is at the option of the soon-to-be former employer (usually decided in consultation with the acquiring company). In practice, packages are nearly always provided to ensure that the company maintains its intrinsic value until the acquisition process is complete. Neither side wants people still on the job who are so angry over perceived mistreatment that they either destroy the business out of their anger or allow the business to significantly deteriorate.

The obligations of the former employer end as they would with the termination of any former employee. The difference is that when the original employer ceases to exist (sold to another company), the benefits it offered cease to exist. For example, a terminated employee would normally be able to pick up COBRA coverage to continue medical benefits in their former employer's plan; when a company ceases to exist, its plans are terminated.

You might consider checking the labor laws in the state where this is occurring. Some states have added additional requirements for local employers.

(2) The second issue is the employment terms that people are offered by the new management/ownership. The only legal obligations that the new company has are:
(a) to evaluate these people by the same standards it would use to evaluate other applicants; and
(b) to treat "new hires" from this population as it would any other new employees -- that includes compensation, benefits, etc. -- whether the new hires are on staff or working on contracts.

For example, if the new company's medical plan requires a "waiting period" for enrollment or for "pre-existing conditions" for new employees, the same would apply to those hired from the acquired company (unless, as part of the acquisition negotiations, exceptions were guaranteed for new hires from the acquired company).

The HIPAA link provided by DressageGirl above is an good reference for how affected employees might proceed on the medical coverage issue.
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Old 01-09-2010, 05:03 PM
 
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I knew I could get lots of good information here

Thanks for the 45 day notice rule... didn't even think of that one... the company has 60 employees... forty of which are full time.

I've been through transitions before... it was 100% seamless... the only thing that change was the issuer of the payroll checks... vacation, vesting, seniority all remained the same back in 1995 and 2003.

Looks like this will be a clean sweep...

If an employee is offered employment and declines... would declining effect unemployment benefits? The scenario could happen where persons are offered contract employment or reduced hours/wages.

Only the top... CEO, CFO and CMO have employment contracts. They can be terminated at will upon payment of 1 years salary...

California does protect accrued vacation and requires compensation at the prevailing wage...
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Old 01-09-2010, 05:04 PM
 
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Also it seems like if the the employees are really being terminated, they could elect cobra if they were in the middle of medical procedures. Not sure about that though.
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Old 01-09-2010, 06:40 PM
 
Location: New Jersey
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Quote:
Originally Posted by jdm2008 View Post
Also it seems like if the the employees are really being terminated, they could elect cobra if they were in the middle of medical procedures. Not sure about that though.
No COBRA available if the company is being sold. That company's benefits plans cease to exist when the first company is acquired by the second company. See excerpt from my post #6 above:

Quote:
Originally Posted by diorgirl View Post
The obligations of the former employer end as they would with the termination of any former employee. The difference is that when the original employer ceases to exist (sold to another company), the benefits it offered cease to exist. For example, a terminated employee would normally be able to pick up COBRA coverage to continue medical benefits in their former employer's plan; when a company ceases to exist, its plans are terminated.
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Old 01-09-2010, 07:16 PM
 
Location: New Jersey
3,814 posts, read 8,024,695 times
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Quote:
Originally Posted by Ultrarunner View Post
If an employee is offered employment and declines... would declining effect unemployment benefits? The scenario could happen where persons are offered contract employment or reduced hours/wages.
To qualify for UI, you must be willing to take available work if it is "comparable" to the work you have done in the past.

The determination of "comparable work" is usually based on one's training and education, experience, pay history, and location.

In New Jersey, the determination of "comparable work" can also include: the degree of risk involved to one's health and safety; one's physical fitness and prior training; one's length of unemployment; one's prospects for securing local work in one's customary occupation; and the distance of the available work from one's residence.

The effect of declining a job offer in your scenario would depend on whether California would determine the offer to be for "comparable work" under that state's definition at this time in the economy.
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