The Third Circuit Court of Appeals recently held that an employer can be liable for its predecessor’s violations of the Fair Labor Standards Act. Thompson v. Real Estate Mortgage Network, No. 12-3828 (3d Cir. Apr. 4, 2014). The Third Circuit joins the Seventh and Ninth Circuits on the list of federal circuit courts that have extended successor liability – a doctrine which has been applied to violations of Title VII, the NLRA, ERISA, the MPPAA, and the ADEA – to violations of the FLSA.
In light of Thompson, every employer in the Third Circuit that intends to acquire another business should fully vet its predecessor’s wage and hour practices for the three-year period that precedes acquisition. Such employers should also take into consideration that owners, officers, and other supervisory personnel may be personally liable for violations under the FLSA.