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THE TRANSFER OF CERTAIN ASPECTS OF SELLER’S BUSINESS TO BUYER DID NOT MEET THE CRITERIA IN LABOR LAW 581; THEREFORE THE TRANSFER DID NOT TRIGGER THE TAKEOVER OF THE SELLER’S UNEMPLOYMENT INSURANCE EXPERIENCE ACCOUNT (THIRD DEPT).

The Third Department, reversing Supreme Court, determined that the HOP’s purchase of certain aspects of a competing business, Playground, did not trigger HOP’s takeover of Playground’s unemployment insurance experience account:

The statute provides that where a business has been transferred from one employer to another, either in whole or in part, the transferee shall take over and continue the unemployment insurance experience account of the transferor (see Labor Law § 581 [4] [a] …). A transfer, however, will not be deemed to have occurred “if the transferee has not assumed any of the transferring employer’s obligations, has not acquired any of the transferring employer’s good[]will, has not continued or resumed the business of the transferring employer either in the same establishment or elsewhere, and has not employed substantially the same employees as those of the transferring employer” … . To negate a transfer, all four of these requirements must be met … . …

… [U]ndisputed evidence was presented that, in connection with its purchase of assets from Playground, HOP did not assume any of Playground’s obligations, did not continue or resume operation of Playground’s screening room … and did not retain any of Playground’s employees. The sole basis upon which the Board concluded that a transfer had occurred was HOP’s alleged acquisition of Playground’s goodwill. The record, however, does not support the Board’s finding in this regard.

The asset purchase agreement did not identify goodwill as an asset encompassed by the agreement, nor was it specifically mentioned on the list of property set forth on schedule 2.1 of the agreement. Matter of HOP N.Y. Entertainment, LLC (Commissioner of Labor), 2021 NY Slip Op 03093, Third Dept 5-13-21

 

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