TRANSITION PERIOD: How to handle former owners employment status?

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September 24, 2025

by a searcher from Dartmouth College - Tuck School of Business at Dartmouth in Bellevue, WA, USA

I have a 60-day transition period with the owners, once we close. What happens with their employment status? We have a production shop so do I need to get workers' compensation for them? Do I need to make them an employee for them to get workers' comp? Would appreciate any insights from those who have navigated similar transitions.
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Reply by a searcher
from Stanford University in Healdsburg, CA 95448, USA
They would either be an employee or a consultant, depending on what you decided with the seller. If they're an employee, they need to be treated like any other employee, and things like WC would apply. If they're a consultant, depending on their level of work, they could be classified as an employee, and WC would apply anyway. If the former owner is functionally acting as a staff member but being paid as a consultant, you may want to get an opinion from an employment lawyer or labor and employment specialist about the applicability of WC to that role.
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Reply by a searcher
from The University of Michigan in Snohomish, WA, USA
I would contact the state WC agency to confirm WC needs; if you are in Washington it's the Dept of Labor & Industries. They are actually pretty responsive and helpful unlike a lot of the other state departments.
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