The concepts that apply to the sale of a company's assets or a company's stock do not always carry over in like fashion to the claims or potential claims that employees have against the selling or acquiring company. Employment law and labor law have developed their own concepts for dealing with the transfer of employee's rights. There is some variation between various laws, such as the National Labor Relations Act and the Fair Labor Standards Act, and these variations are discussed in this chapter. The concept of "joint employers" is also discussed and companies should be aware that they may be acquiring liabilities without realizing it because of the inter-relation between two separate companies. Most areas of the law recognize a clear cut distinction between two separate legal entities, but this chapter explains how this does not necessarily apply to employment law.

This chapter explains the numerous legal questions that arise under the common law and under the many employment statutes as a result of these practices. Most of the various federal (and state) statutes contain no detailed definition of the terms "employer" and "employee." Thus the job of defining these terms has been left to the courts. Considerable authority developed however under the common law and under the early statutes, particularly the National Labor Relations Act and the Fair Labor Standards Act, both passed in the 1930s. The definitions developed under those statutes have been adopted by the courts in interpreting Title VII and the subsequently enacted statutes. The net result is a broad interpretation of these terms, meaning that, for many purposes, the leased or temporary employee will be regarded as an employee of both the official employer and the company leasing his or her services. What to do to deal with this possibility is given major emphasis in this chapter.