In June 2009, we reported on the Ohio Supreme Court’s decision to create a narrow exception to the broad BWC successor rules. The Ohio Supreme Court’s decision in State ex rel. Valley Roofing, LLC v. Ohio Bureau of Workers’ Compensation created a small exception to the BWC’s broad authority to impose successorship liability when it held that a business that acquired another business’s assets via a bank foreclosure was not a successor to the previous business.

Ohio’s courts have long held that the workers’ compensation statute authorizes the BWC to find successorship whenever “any employer transfers a business in whole or in part or otherwise reorganizes the business.” This broad definition permits the BWC to transfer the experience of a predecessor business to the purchasing business if the purchaser is succeeding the predecessor in some part of the operations of the business. Based on whether the purchase was of all or part of the operations, the BWC will transfer all or part of the predecessor’s experience, rights and obligations to the purchaser.

 

Continue Reading Ohio BWC Creates New Rule Circumventing the Ohio Supreme Court’s Decision

The Ohio workers’ compensation successor-in-interest rules frequently catch even the most seasoned corporate M&A attorney off guard. Most M&A attorneys reasonably expect that a straight asset purchase will not result in the assumption of any workers’ compensation liability in Ohio. As it relates to companies that pay premiums directly into the Ohio state workers’ compensation fund, that expectation more often than not will turn out to be wrong. In short, Ohio’s courts have long held that the workers’ compensation statute authorizes the BWC to find successorship whenever "any employer transfers a business in whole or in part or otherwise reorganizes the business."

Frequently deferring to BWC determinations that successorship justifies a transfer of the seller’s experience to the purchaser, the courts simply have defined a successor in interest as a "transferee of a business in whole or in part." This broad definition generally has resulted in the asset purchaser being held to have succeeded to the experience rating of the selling company even when the asset purchase agreement expressly states that the purchaser assumes none of the liabilities of the selling company. (Indeed, it has even resulted in a finding of successorship when a company retained another company’s employees as it took over a lease of that company.)

Continue Reading Ohio Supreme Court Reaffirms Narrow Exception to Broad BWC Successor Rules