SENIORITY/ACQUISITION

System · February 2002

We are in the process of purchasing another business in the state of Arkansas. Our corporate office is located in Missouri. What is the general rule as to how to calculate seniority for the employees who are coming into our business? Is it common practice to allow them to keep their seniority when it comes to calculating vacation time and eligibility for other benefits, but change their hire date to the date of acquisition? What other areas do we need to be mindful of as far as seniority? Any help will be appreciated.

Gary Jiles AR · February 2002

>We are in the process of purchasing another business in the state of
>Arkansas. Our corporate office is located in Missouri. What is the
>general rule as to how to calculate seniority for the employees who
>are coming into our business? Is it common practice to allow them to
>keep their seniority when it comes to calculating vacation time and
>eligibility for other benefits, but change their hire date to the date
>of acquisition? What other areas do we need to be mindful of as far
>as seniority? Any help will be appreciated.
>

Gary Jiles AR · February 2002

>We are in the process of purchasing another business in the state of
>Arkansas. Our corporate office is located in Missouri. What is the
>general rule as to how to calculate seniority for the employees who
>are coming into our business? Is it common practice to allow them to
>keep their seniority when it comes to calculating vacation time and
>eligibility for other benefits, but change their hire date to the date
>of acquisition? What other areas do we need to be mindful of as far
>as seniority? Any help will be appreciated.
>

In Arkansas there is no rule of thumb. Most of employers making an acquisition will make the hire date the date of acquisition. Further, it is a mixed bag on whether seniority is kept for purposes of vacation time and eligibility for other benefits. I have seen it about half and half, i.e., half the time the employees keep their seniority for vacation time and benefits and the other half of the time they do not. It goes without saying that the employees will be happier with retention of seniority for vacation and benefit purposes.

Gary D. Jiles
Editor
Arkansas Employment Law Letter
JACK, LYON & JONES, P.A.
Attorneys At Law
3400 TCBY Tower
425 West Capitol Avenue
Little Rock, Arkansas
(501) 707-5545
E-mail: [email]gdj@jlj.com[/email]

Gar · February 2002

[font size="1" color="#FF0000"]LAST EDITED ON 02-19-02 AT 10:46AM (CST)[/font][p]I don't know about the legalities, but to assure a smooth transition, it would behoove your firm to let those folks keep their seniority for beneift/vacation purposes. I readily recall a situation while I was on an HR assignment for a former employer (major telecommunications company) some 8 years ago. Initially, we didn't do that and we wound up with nothing less than a mutiny. The techies, who were able to get other jobs at the drop of a hat, threatened to walk. We in HR warned management but, as in many instances, they didn't listen. After the outcry, management changed its mind REAL quick.

Jen D · February 2002

Don't forget that any benefit plans governed by ERISA (e.g. 401(k) & pension) must be considered. The plan documents should explicity state whether prior service counts toward eligibility, the calculation of benefits, and vesting. Check with an ERISA attorney or your plan's recordkeepers for the specific considerations for each type of plan.

SENIORITY/ACQUISITION

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