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Labor Board: Successor Required to Bargain With Union Over Unilateral Layoffs

More than five years and a pandemic later, the National Labor Relations Board (NLRB) has clarified a successor employer’s union bargaining obligations regarding layoffs under the National Labor Relations Act. Tramont Manufacturing, LLC, 369 NLRB No. 136 (July 27, 2020).

The NLRB held that a successor employer may lawfully take any action “reasonably encompassed” by the initial terms and conditions established prior to bargaining with an incumbent union, but a successor employer’s right to conduct layoffs does not absolve it from having to bargain over the effects of the layoffs. Tramont Manufacturing began with an unfair labor practice charge that was filed on July 8, 2015.

In light of the COVID-19 pandemic, which has spurred furloughs, layoffs, mergers, and acquisitions within the construction industry, the NLRB’s Tramont provides an important reminder regarding a successor employer’s obligations to bargain over the effects of decisions, including layoff decisions, even absent any obligation to bargain over the decision itself.

Successors Precedent: Burns

The NLRB’s successorship doctrine stems from the U.S. Supreme Court’s decision in NLRB v. Burns Int’l Sec. Serv., 406 U.S. 272 (1972). Following Burns, an employer must bargain with a predecessor union if there is a “substantial continuity of identity in the business enterprise,” and a majority of the new employer’s workforce consists of the predecessor’s employees.

While Burns successors are required to recognize and bargain with an incumbent labor organization, successors are not typically obligated to honor the specific collective bargaining agreement negotiated and entered into by the predecessor. A successor may establish initial terms and conditions of employment, unless it has expressly or implicitly agreed to honor the collective bargaining agreement.

Tramont Decision

The NLRB issued a supplemental decision in Tramont, clarifying the legal standard that applies in evaluating the lawfulness of a successor employer’s unilateral action after setting the initial terms of employment, but before any collective bargaining agreements have been negotiated.

The employer in Tramont was indisputably a successor, having taken over the predecessor’s operations and hired a majority of the predecessor’s employees. The successor employer then implemented the initial terms and conditions of employment by distributing a handbook, which contained a provision setting forth the procedures the successor would follow in the event layoffs were required.

Before a collective bargaining agreement with the union was negotiated, the successor unilaterally implemented a round of layoffs without notice to the union. The union requested bargaining over the layoffs decision, and its effects, but the employer refused, citing its handbook provision regarding layoffs.

Following multiple appeals and remands, the NLRB ultimately rejected the use of either a “contract coverage” standard or a “clear and unmistakable waiver” standard in determining whether the employer’s conduct was lawful, since the unilateral imposition of initial terms and conditions of employment cannot constitute a “contract” with, or “waiver” by, a union.

Instead, the NLRB held that an employer may take any action “reasonably encompassed by unilaterally implemented initial terms and conditions of employment” without providing advance notice to and bargaining with an incumbent union.

However, and critical to the employer in Tramont, the NLRB ruled that the right to take action “reasonably encompassed” by lawfully imposed initial terms and conditions of employment does not excuse an employer’s obligation to bargain over the effects of such actions.

Because the employer refused to bargain over the effects of its decision to implement layoffs, the NLRB found the employer’s conduct in Tramont violated the Act.

Implications

In light of Tramont, successor employers that wish to establish the initial terms and conditions of their employees’ employment should be clear to spell out with specificity the types of decisions they may make. When such decisions are made, an employer should be mindful of their obligations to bargain over the effects of such decisions, upon request.

Jackson Lewis P.C. © 2020National Law Review, Volume X, Number 259

TRENDING LEGAL ANALYSIS


About this Author

Richard F. Vitarelli Principal Jackson Lewis
Principal

Richard F. Vitarelli is a Principal in the Hartford, Connecticut, office of Jackson Lewis P.C. Part of the firm’s national labor practice, he has over two decades of experience representing employers nationally in strategic labor relations, collective bargaining, and union organizing, including in the context of mergers and acquisitions, corporate restructuring and contract administration. He serves as general labor and employment counsel for employers and multi-employer associations in various industries, including construction, manufacturing, health care and senior living,...

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Associate

Adam C. Doerr is an Associate in the St. Louis, Missouri, office of Jackson Lewis P.C. He represents management in labor and employment matters before state and federal courts, administrative agencies and arbitrators.

Mr. Doerr’s practice involves representing clients in all phases of litigation, including jury and bench trials, dispositive motions, discovery, pre-trial strategy, and client counseling and best practices. Mr. Doerr’s experience includes investigating allegations of employee and managerial misconduct and representing clients in cases involving wrongful termination, discrimination, harassment, and retaliation under various civil rights laws, including Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Missouri Human Rights Act and Illinois Human Rights Act, among others, as well as wage-and-hour collective actions under the Fair Labor Standards Act. He has also represented clients in appeals, including cases before the Missouri Court of Appeals, Illinois Appellate Court, and Illinois Supreme Court.

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