The seventh circuit has ruled that the federal common-law doctrine of successor liability is applicable to cases filed under the Fair Labor Standards Act, even in states that limit liability to instances in which the buyer expressly or implicitly assumed the seller's liabilities.

In Teed, et al., v. Thomas & Betts Power Solutions LLC, 12-2440 and 12-3029, consolidated (7th Cir., 2013), a unanimous seventh circuit panel affirmed a Wisconsin District Court's finding of successor liability for FLSA claims, even though the defendant corporation purchased the plaintiffs' employer pursuant to an agreement that expressly stated the transfer of assets would be "free and clear of all Liabilities."

Gary R. Gehlbach, a partner with the Dixon firm of Ehrmann, Gehlbach, Badger, Lee & Considine LLC, said the seventh circuit's decision, drafted by Judge Richard Posner, created a tough result for the defendant corporation, which did not seek to reduce the purchase price when it bought the assets of the bankrupt predecessor corporation that employed the plaintiffs at the time of the alleged FLSA violations. Read more in the August Illinois Bar Journal.