Buying or Selling a Business? Why SB 261 Changes the Risk Landscape in 2026

In the business world, we often talk about “risk management.” In 2026, the risk associated with unpaid wage claims is skyrocketing.

SB 261 is designed to give teeth to wage enforcement. For business owners, particularly those looking to buy, sell, or restructure a company, this law introduces critical liabilities that cannot be ignored.

The “Triple Penalty” Threat

Previously, delaying payment on a wage judgment was a common (albeit risky) tactic. That ends now.

If a final judgment for unpaid wages remains unsatisfied for 180 days after the appeal period, the court can now impose a civil penalty of up to three times the outstanding amount.

Example: If you owe $10,000 in back wages and ignore the judgment, that debt could balloon to $40,000 (the original $10k + 30k penalty), plus interest.

You Can’t Run from the Debt (Successor Liability)

This is perhaps the most critical update for entrepreneurs. The law extends “joint and several liability” to successor employers.

What this means: You cannot avoid a wage judgment by simply closing down one LLC and opening another, or by selling the business to a new owner. The liability travels with the business.
For Buyers: If you are acquiring a business, your due diligence must be flawless. If the previous owner has unpaid wage judgments, you could be on the hook for them.

Mandatory Legal Fees

To further discourage non-compliance, the law now mandates that if a worker or the Labor Commissioner wins an enforcement action, they must be awarded reasonable attorney’s fees and costs. This removes the discretion of the judge and guarantees that fighting a losing battle will be expensive.

Protecting Your Business Legacy

At Griswold LaSalle, we help build communities and careers. Part of that is ensuring business transactions are transparent and secure. If you are considering a merger or acquisition, or if you are facing a wage dispute, early intervention is key.

Don’t let hidden liabilities derail your business sale.

Contact our team for a comprehensive legal audit before you sign the deal.