Turnaround Advisers Must Beware Calif. Labor Landscape

A fair day’s pay — it sounds like a good thing for a new law to promise, doesn’t it? In fact, California’s A Fair Day’s Pay Act, signed into law by Gov. Jerry Brown in October 2015, was intended to ensure that employees were protected from “wage theft” by enlarging the universe of potential parties that could be held responsible for wage and hour violations. In reality, however, the legislation could have a detrimental effect on companies and, by extension, employees, due in part to its wide-ranging potential impact on the turnaround market and acquisitions — from transactions and management agreements to funding and other issues related to the restructuring of businesses in, or with operating entities in, California.

This article addresses the expansion of liability for wage and hour violations by the Fair Day’s Pay Act and how it will impact the corporate turnaround and restructuring industry, as well as distressed acquisitions, that play a vital role in our economy.