Reps & Warranties: Employee Benefit Plans
Essential Question:
What benefits-related commitments have you made to your employees?
In Brief:
Benefits plans (widely defined), equity or equity-like arrangements, and other obligations to your employees.
Plus compliance with related laws and regulations.
Don’t try to go it alone – the legal implications are complicated and specific.
Category: Continued Diligence & Fact-Finding; Risk Allocation
What is it?
Two parts: 1. Define and describe the benefit plans that you offer, as well as any profit-sharing, options, equity, or synthetic equity plans; 2. Make a series of statements about your compliance with the terms of those specific plans and with the laws around them.
When does it matter?
A Buyer wants to know about any obligations you have to your employees and where there are any outstanding liabilities or issues related to them. These questions become more complicated based on the extent to which you have union employees, pension obligations, or welfare and benefit plans with multiple other employers.
What to look out for?
First, it’s worth being aware of what might come up in this suite of representations, but know too that the state and federal laws related to labor and employment as well as tax standpoints represent a legal univers that is large, broad, and complicated. You’ll want to talk to your counsel about this specifically, ensuring that your lawyer understands the benefit plans that you have, and, to the extent that you offer a full suite of benefit plant, it’s incredibly important that you have a benefits lawyer help you think through these plans and represent them appropriately. Worth noting, too, is that the benefits you actually offer may be more capacious than you think they are. The law defines them as expansive enough to include all the perks and benefits you provide your employees, from tuition assistance to health club perks and beyond. Those all need to be included.
