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When 2 companies are going through a merger, and 2 sales ...
Sent to Legal Experts December 01 02:28 PM

When 2 companies are going through a merger, and 2 sales forces are combined; one of which has a much higher salary package, is the new company required by law to equalize the salaries?

 

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Ft. Worth, Texas

Already Tried:
Nothing, the actual company is based in California.

Customer (name blocked for privacy)
Answer
December 1 2:39 PM (11 minutes and 42 seconds later)
         
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rhart7,

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This depends on the details of the merger or acquisition.

If these two companies will still function as separate entities reporting to a common board the employees from each company would not need equalized pay. This would be true because each company would be operating as a separate unit of the parent company. Since these units would be different salaries between the two units could also be different.

On the other hand, if the two companies merge and operate as one single firm then equal pay statutes would be in effect and salaries would need to be normalized.

For instance.

Assume X corp buys Y corp but still operates two separate entities called X and Y only having a board in common.

If Jim is a salesman with X with 5 years experience and a 4 year degree he could be paid different than Mike, a salesman with Y having 5 years experience and a 4 year degree.

On the other hand.

If X corp buys Y corp and they now operate together as a larger company all called X corp it is possible that Jim and Mike would need to be paid the same.

Remember, there are a couple keys to requiring equal pay. The two employees must:

1. Have the same position within the company.
2. Have similar experience.
3. Have similar education.
4. Have similar performance reviews.
5. Be working in the close proximity to one another.
6. Be working for the same company or same branch within a company.

If they lack any of those 6 in common they could potentially use that as the reason for different pay.


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