This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
Imagine a sale signed in midsummer: a commercial janitorial company with a few hundred hourly employees across three Florida metros, a buyer modeling off trailing-twelve-month numbers, and a closing set for early October. Between signing and closing, on September 30, 2026, every minimum-wage employee in Florida gets a raise by operation of the state constitution — the last scheduled step of Amendment 2, taking the floor to $15.00 an hour. The target’s labor model, its bids on multi-year cleaning contracts, its earnout thresholds, and its litigation risk profile all move on a single calendar day that has nothing to do with the deal. A buyer who priced the trailing numbers without pricing the step-up did not buy the company in the model. It bought the more expensive one.
The schedule is constitutional, and it does not stop at $15
Florida’s minimum wage stopped being a legislative question in November 2020, when voters wrote the schedule into Article X, section 24 of the Florida Constitution: $10.00 in September 2021, then a dollar every September 30 until $15.00 on September 30, 2026. The Legislature cannot amend it by statute, and employers cannot lobby it away. Section 448.110, Florida Statutes — the Florida Minimum Wage Act — implements the constitutional provision. And the escalator does not retire after this year: beginning September 30, 2027, the rate adjusts annually for inflation. For tipped employees, the familiar $3.02 tip credit carries forward, which puts the tipped direct wage at $11.98 once the $15 floor lands. Anyone underwriting a Florida services business should treat labor-floor growth as a permanent feature of the state, not a one-time event.
The step-up is a pricing problem before it is a compliance problem
The first-order effect in a deal is arithmetic. Trailing-twelve-month EBITDA for a workforce-heavy target embeds the $14.00 floor that took effect in September 2025; the forward cost base includes $15.00 plus the compression ripple — the crew leads earning $15.50 today will expect daylight between themselves and new hires tomorrow, so the true cost of the step is rarely just the sub-$15 headcount times the delta. That has three drafting consequences. First, projections and any earnout measured on margin need to straddle September 30 honestly: an earnout tested on periods that absorb the step-up carries a built-in headwind, and a seller who accepts a margin-based earnout without modeling it is negotiating against the constitution. Second, working capital and payroll accruals move — the peg conversation should acknowledge which side of September 30 the measurement dates sit on. Third, the interim operating covenant does its usual quiet work: ordinary-course operation between sign and close includes implementing the mandatory increase, so a buyer cannot both demand covenant compliance and act surprised by the payroll delta at the closing statement.
Florida wage claims have real teeth, and diligence should treat them that way
The second-order effect is liability. Article X, section 24 creates a private right of action, and section 448.110 builds the procedural frame around it. An employee claiming unpaid minimum wages must first send the employer a written presuit notice, and the employer gets fifteen calendar days to resolve the claim — a cure window that is a gift to any operator with functioning payroll counsel, and a trap for any operator whose registered agent forwards mail slowly. Claims that proceed carry back wages, an equal amount as liquidated damages, and attorney’s fees, with a limitations period that reaches back four years — five for willful violations. Florida has no state overtime statute, so overtime lives under the federal FLSA, but the state minimum wage action is the plaintiff-side workhorse for hourly workforces.
Wage-and-hour diligence on a Florida target is therefore less about the posted rate — everyone knows the number — and more about the categories that generate class exposure. Misclassification leads the list: janitorial, landscaping, staffing, and delivery businesses run on crews, and crews attract independent-contractor structures that do not always survive scrutiny. Salaried-exempt classification for working supervisors is the second perennial. Off-the-clock patterns — pre-shift loading, travel between job sites, automatic meal-break deductions — are the third. For hospitality targets, tip pooling and tip-credit notice compliance join the list. The diligence file should include a payroll-register sample tested against time records, the contractor roster with the actual working arrangements, and any presuit notices received in the lookback years — those fifteen-day letters are the early-warning system, and their absence from a data room is a question, not an answer.
An asset deal does not launder the workforce
Buyers sometimes assume the asset-purchase structure leaves wage history behind with the seller’s shell. It is not that simple. Courts applying federal labor successorship principles — including district courts in Florida — have allowed FLSA claims to proceed against an asset buyer that continued the business with notice of the liability, weighing continuity of operations, workforce, and supervision. The doctrine is equitable and fact-driven, which is exactly what a buyer does not want to litigate. And wholly apart from successorship, a buyer that hires the same crews on day one inherits the practices that generated the exposure: the misclassified crew model does not become compliant because the sign on the truck changed. The employment workstream in a Florida deal already covers WARN Act notice mechanics, the E-Verify successor rules under section 448.095, and the reemployment-tax experience rating that transfers under section 443.131 — the wage floor belongs on the same checklist, with the same seriousness.
The drafting answer is conventional and effective. A wage-and-hour representation with a lookback matched to the limitations period; a specific indemnity — outside the basket, sized to the workforce — where diligence surfaced classification risk; interim covenants that expressly include the September 30 implementation; and, where the exposure is real but unquantified, an escrow that survives long enough for the four-to-five-year claims tail to show its shape. Sellers, for their part, get paid for cleaning this up early: reclassifying a crew model eighteen months before a sale costs operating margin; discovering it in diligence costs enterprise value.
September 30 is a date certain — use it
Deal lawyers spend their careers managing contingencies. This one is the rare risk with a published effective date. If a Florida target runs on hourly labor, the buyer’s model should carry the $15 floor and the 2027 indexing explicitly; the seller’s banker should present numbers that pre-absorb the step rather than defend stale ones; and both sides should decide, on the record, who bears the delta between signing economics and closing economics. The constitution has already decided when. The purchase agreement decides who.
If you are buying or selling a Florida business with a large hourly workforce, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
