An employee quit and has filed paperwork to get back pay.

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I am selling the business so who is responsible for paying the debt? I own a small daycare and have just gotten in over my head. One of my employees quit because she was caught taking money from me. I owe her around $3000.00 in back pay. I am in the process of selling my business and my question is if she files against me who is responsible me or the new owner. I have the intention of paying her but will need time to come up with the amount owed.

I have always had a hard tiime paying my employees because in daycare you can only pay people when you get paid. The employee that I am talking about has worked for me for over a year and this has always been a problem with the payroll but has stayed anyway. I have tried to take out a loan but have not been able to. I have someone who wants to take over the business but I need to see if the ex employee will come after me or the new owner.

A: It depends in part upon how the purchase is structured and how your business is set up. Although it’s complicated, the big picture is that if you sell your entire business to the buyer, then the new buyer will have the liability. If instead you sell only the assets of the business, then the new buyer will not have the liability. There are exceptions to this, and you will want to consult with a lawyer who does these kinds of deals for small businesses. I would think that you will have leverage against her as a result of her taking money from you. You have to be careful to use this leverage in a legal way.

In addition, you will want to talk to a lawyer who is familiar with whether you really have to pay the back pay, as well as (heaven forbid!) additional penalties owed as a result of the delay. You may have an argument that you don’t need to pay some or all of the back pay, depending on how much the former employee took from you or otherwise hurt your business.

Published By:

Gunderson, Denton & Peterson, P.C.
1930 N Arboleda #201
Mesa, AZ 85213
Office: 480-655-7440
Fax: 480-655-7099

Answered by , Arizona Employment Lawyer
Re-posted from AVVO Legal Questions & Answers.

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