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Conducting due diligence in connection with an acquisition
involves, among other things, the identification of material risks.
Historically, acquirers have not focused too heavily on employment
practices as these risks have more often than not been considered
either too individualized, esoteric and anecdotal, of too low
value, or too remote. Times have changed. The rise of wage-hour
collective and class action claims in the last dozen or so years
has elevated risks posed by the methods companies use to pay their
workers to a level where a serious review of a target's labor
and employment practices, including pay practices, has become a
requirement to avoid unknown risks. But in order to understand how
to avoid these risks, the acquirer needs to know where to look
first, and then protect itself in the definitive documentation.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.