When it comes to healthcare M&A, employment due diligence is crucial to ensure compliance with laws and regulations, as well as to prevent costly penalties. One important aspect of employment due diligence is understanding and complying with the Workers Adjustment and Retraining Notification (WARN) Act. This act requires employers to give advance notice to employees prior to any closing or mass layoffs, and failure to do so can result in significant penalties, including wage payouts and civil fines.
In the healthcare industry, where layoffs and branch closings are not uncommon, it’s important to conduct due diligence to identify any WARN-triggering events and ensure that all requirements have been met. With the healthcare industry being one of the largest in the country, the potential penalties for violating the WARN Act can be substantial and can negatively impact the bottom line of a healthcare organization.
Healthcare M&A and Immigration
Another important employment concern in healthcare M&A is immigration. According to the U.S. Bureau of Labor Statistics, foreign-born workers make up 5.2% of the healthcare labor force, and this number is even higher for certain roles such as hospital maintenance and personal care. Properly managing the immigration status of employees is crucial to avoid penalties and loss of talent. This includes ensuring that any necessary work visas are in place and that undocumented workers are not being employed in violation of laws.
Employment classification is also an important consideration in healthcare M&A. Misclassifying employees as independent contractors instead of employees can result in higher tax burdens or penalties, as well as legal liabilities with respect to potential wage and hour laws.
In summary, healthcare M&A transactions require extensive employment due diligence to ensure compliance with laws such as the WARN Act and to prevent penalties related to immigration and employment classification. By conducting thorough employment due diligence, healthcare organizations can mitigate risks and ensure a successful M&A transaction.”
[1] 29 U.S. Code § 2102 – Notice required before plant closings and mass layoffs
[2] 29 U.S. Code § 2104(a)
[3] 29 U.S. Code § 2102(a)3
[4] https://www.bls.gov/opub/ted/2016/foreign-born-more-likely-than-native-born-to-work-in-service-occupations.htm
[5] https://www.bls.gov/opub/ted/2016/foreign-born-more-likely-than-native-born-to-work-in-service-occupations.htm
