The impact of a merger or acquisition spans across your organization. Without careful planning and execution, your employees may feel negative effects from the transition. A key issue for your payroll team and employee population might be associated with historical employee data.
In some cases, the acquiring company does not receive historical data from the predecessor, nor do they have access to this data. This can present challenges with employment and wage verifications, an employee relations exercise that provides confirmation of an employee’s employment history during critical life events like renting an apartment, buying a house, getting a new job, or even applying for government assistance.
Therefore, it is important to understand what data you will have available and how to handle each unique situation based on the available data (or lack thereof) to ensure your new employees are minimally impacted.
Will your organization have historical wages?
YES
NO
This is the best-case scenario, allowing you to provide a complete record of your new employees’ employment and wage history. With no missing data, employees will be able to have a single, comprehensive verification that shows their time with both the predecessor and successor entities.
What’s Next?
In order for your verification partner to provide comprehensive verifications, historical data should be provided in a one-time file transmission.
Additionally, Thomas & Company provides proactive notification and clarification to verifiers by adding the details of the acquisition and any changes or impact to the employee’s employment and wage history by adding a data driven remark to the employee record indicating the individual was part of an acquisition.
Many times, you will not have prior employment and wage history but when addressed upfront, the impact on the newly acquired employees can be mitigated. Without historical data, employees will only show employment and wage history beginning with the transaction date and/or whenever the official payroll transition between companies occurred.
As time passes, the impact of missing employment and wage data diminishes as most verifier requests will fall in a 3-year window.
In the meantime, there are steps you can take to make sure verifiers have the information they need while ensuring you and your verification partner provide the most accurate, helpful information possible.
What’s Next?
A best practice is to be proactive in providing an explanation about the employee’s employment and wage history to make the verification process as seamless as possible. Thomas & Company includes a data-driven remark that provides the often-requested details for gathering the additional employment and wage information.
Our team can either provide the verifier with contact information for the previous employer (if available) or we can provide details of the transaction with dates and inform verifiers that historical data is not available. These data-driven remarks are included on verifications to proactively provide relevant information, limiting follow up questions from the verifier, and delays for your employees.
Sample Remarks/Stamps
Contact Information Available:
The location that the employee works/worked for was acquired by [Company] on [Date of Acquisition]. For information prior to this date, please contact [Contact information provided by company].
Contact Information Not Available:
The location that the employee works for was acquired by [Company] on [Date of Acquisition]. Information prior to this date is not available.
What date of hire should be used?
When a set of employees is moved between organizations during a merger or acquisition, it is important to evaluate how these employees’ date of hire will be accounted for on the data file feed and thus shown on verifications.
Oftentimes, the newly acquired employees’ date of hire will be recorded as the date of the acquisition or the merger. It is important to maintain their original hire date for employment and wage verification purposes. Best practice is to include both the new hire date and the original hire date as a part of the employees’ files.
At Thomas & Company, we work with your organization to proactively explain the acquisition and employee transition limiting additional inquiries by providing a data-driven remark with additional details on either the original hire date or acquisition details, depending on how the employees are provided on the data file.
Additional Considerations
What Question to Ask |
Why This Question is Important |
| Will the company you acquired continue to exist after the transaction? | This can provide insight into whether or not historical payroll data and/or contact information will be available. |
| Can the acquired company provide you with a historical data feed of 3 years’ worth of employment and wages? | Any historical data is helpful, but 3 years is preferred
Communication with acquired employees may be critical in either case, but especially when you will not have access to their previous employment records. Let them know up front and give them guidance on what steps they need to take (i.e. download pay stubs, etc.). |
| If a detailed file cannot be provided, can anyone provide information on historical employment and wages after the transaction? | Providing contact information for the previous company will help limit questions and additional follow-up from verifiers and Thomas & Company. |
| Will there be a name change associated with the transaction? At what level will the name change occur? | A legal name change may impact the company name that appears on a verification. However, the potential impact will depend on the level at which the name change occurred and what is displayed on the verification.
Often times, the name change is at the location level while the parent name is shown on verifications. In these cases, there will be no impact to the verification. However, if the parent name changes when it is shown on the verification and/or the location name is show on the verification when it changes, updates will need to be made. When this occurs, Thomas & Company works with our clients to update the name on the verification and add a brief remark regarding the name change to provide clarification (and limit questions) for the verifiers. |
M&A and Verifications Best Practices
No matter the information you do – or do not – have available or the transaction type, it is important to keep all partners up to date with any new and upcoming transactions.
Your partners are an extension of your organization and can help you understand the impact of the merger and acquisition on you, and your employees. A trusted partner can help you navigate the changes, avoid compliance issues, and ensure a seamless transition for your current and acquired employees.
Your Trusted Partner
At Thomas & Company, our dedicated team of experts understands the nuanced dynamics of these transformative deals and their impact across your organization. With industry-leading experience and an eye for detail, we are ready to work with your team to maximize the value and potential of your business transaction(s), while ensuring your employees never get left behind.
Our approach is tailored to align with your unique business needs, ensuring that each transaction enables your company’s success.
