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