A company that assumes the assets and obligations of another is bound to pay severance benefits accrued before the acquisition, a federal judge has ruled in a case that preaches caution for employers that try to curtail benefits retroactively.

U.S. District Judge Jerome Simandle in Camden, N.J., scuttled a successor company’s attempt to cap severance pay at four weeks for Robert Duke, a 33-year employee, finding that the company had “objectively manifested a contractual intent to provide vested employee benefits … equaling twenty-six weeks of pay.”

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