Does the acquiring company have to honor my existing severance agreement?

Generally, yes. When a company is acquired, the acquiring company typically assumes the contractual obligations of the target company, including employment agreements with severance provisions. Check whether your employment agreement survived the acquisition and what the merger agreement says about employee benefits.

What is double-trigger acceleration for stock options?

Double-trigger acceleration means your unvested equity accelerates when two events occur: the company is acquired (first trigger) and you're terminated within a specified period after the acquisition (second trigger). This protects employees who are kept through the close but then laid off. Check your equity agreements for this provision.

Can my employer discriminate in choosing who to lay off during a merger?

No. Even though a merger creates a legitimate business reason for layoffs, the selection of who stays and who goes must not be based on protected characteristics. If older workers, minorities, pregnant employees, or employees on leave are disproportionately affected, there may be a discrimination claim regardless of the business justification.

I Was Laid Off During a Merger. What Are My Severance Rights?

Mergers and acquisitions create a unique severance landscape. Two companies are combining, roles are being duplicated, and people are getting cut. If you're one of them, your situation may involve considerations that don't apply in a typical termination. Here's what you need to know.

Which Company Owes You What?

One of the first questions in a merger layoff is: who is your employer? The answer affects everything from who pays your severance to which policies apply.

Pre-close termination. If you were terminated before the merger or acquisition closed, your original employer handles the severance. Their policies, your employment agreement, and any existing severance plan govern the terms.

Post-close termination. If the acquiring company retained you through the close and then terminated you, the acquiring company is responsible. Their severance policies may be different from your original employer's.

Change-of-control provisions. If your employment agreement includes a change-of-control or "golden parachute" provision, it may trigger enhanced severance automatically when the acquisition closes or when you're terminated within a specified period after the deal. Check your original offer letter, employment agreement, and any equity plan documents.

Existing Severance Plans and Agreements

Does your company have a formal severance plan? Some companies maintain written severance policies that promise specific benefits to employees terminated under certain conditions. These plans may be governed by ERISA (the Employee Retirement Income Security Act), which means the acquiring company may be required to honor them even after the merger.

If your employment agreement includes a guaranteed severance provision, the acquiring company generally must honor it as well, because they assumed your employer's contractual obligations in the acquisition.

WARN Act Considerations

Merger-related layoffs in Los Angeles frequently trigger WARN Act requirements. If 50 or more employees at a single site are laid off within a 30-day period, both the federal WARN Act and California's broader version require 60 days' advance notice. Merger transitions often compress timelines, and companies sometimes fail to provide adequate notice.

If you received less than 60 days' notice, you may be entitled to up to 60 days of back pay and benefits on top of any severance. This is a penalty, not severance, and it's owed regardless of whether you sign the severance agreement.

Equity Treatment in Acquisitions

If you held stock options, RSUs, or other equity in the acquired company, the merger agreement typically specifies how that equity is treated. Common scenarios include:

Conversion. Your equity in the old company is converted to equivalent equity in the acquiring company, subject to the same vesting schedule.

Cash-out. Your vested equity is cashed out at the deal price. Unvested equity may be cashed out on a vesting schedule or forfeited.

Acceleration. Some merger agreements provide for full or partial acceleration of unvested equity upon close or upon termination within a specified period after close ("double-trigger" acceleration).

Understanding how your equity is treated in the deal is critical because the equity component can be worth more than the cash severance.

Discrimination in Merger Layoffs

Just because a merger creates a legitimate business reason for layoffs doesn't mean individual termination decisions are immune from scrutiny. If the selection process for who stays and who goes was discriminatory — something we see regularly in LA (targeting older workers, employees on leave, employees of a particular race or gender), those are viable legal claims.

Look at who was kept and who was let go. If there's a pattern based on protected characteristics, the merger doesn't shield the employer from discrimination liability.

What to Do

Gather your documents. Employment agreement, offer letter, equity grant documents, any severance plan or policy handbook. These determine your baseline entitlements.

Check for change-of-control provisions. Any provision in your employment or equity agreements that triggers upon a merger, acquisition, or change of ownership.

Evaluate the WARN Act timeline. How much notice did you receive? Count the days carefully.

Review the severance agreement carefully. Make sure it accounts for all your entitlements, including equity, WARN Act pay, and any existing severance plan benefits.

Merger-related terminations are complex, and the severance agreement needs to address all the moving parts. Contact our employment team for a free review. We represent employees throughout Los Angeles and we'll make sure nothing is being overlooked.