August 18, 2019

August 16, 2019

Subscribe to Latest Legal News and Analysis

NLRB Shifts Position on Successor Employers

A recent decision by the National Labor Relations Board (NLRB), Ridgewood Health Care Center, Inc. (Ridgewood), has changed how the Board will define a “perfectly clear successor” when evaluating whether an employer is bound by an existing collective bargaining agreement (CBA) after acquiring another business.

In a 3-1 decision, the Board held that the purchaser of a business was not a “perfectly clear successor” because it was not apparent that it would have hired all or substantially all of its predecessor’s unionized employees absent discriminatory animus.

Under Supreme Court precedent, the purchaser of a business generally has the right to set the initial terms of employment and may decline to adopt an existing CBA after the takeover. However, a “successor employer”—a purchaser who substantially continues its predecessor’s unionized business and hires a majority of the predecessor’s workforce—has an obligation to recognize and bargain with the existing union.

If a purchaser misleads the union into believing it will retain all or substantially all union employees under the terms of an existing CBA then refuses to retain them because of discriminatory animus, the employer is considered a “perfectly clear successor” and must adopt the existing CBA. A 1996 Board decision, Galloway School Lines, had extended this rule so a purchaser would be a “perfectly clear successor” where there was evidence that the union’s majority status would continue in the purchasing business. The Board’s Ridgewood opinion explicitly overruled Galloway.

In Ridgewood, the purchaser originally told the union employees that it planned on retaining “99.9%” of them and would keep their existing CBA. During the transition process, however, the purchaser made it clear it would not retain many of the union employees. Ultimately, it retained 49 employees, hired 52 new employees, and refused to recognize the union. Following the takeover, the purchaser’s president voiced her opinion that unions were unnecessary and the business might close if the union became the employees’ bargaining representative. She also threatened to fire an employee for recruiting non-union employees to support the union.

The Board—affirming the decision of administrative law judge—found that the employer’s refusal to hire four additional union employees demonstrated anti-union animus. Had the employer retained these employees, the union would have maintained a majority status among the employees, and the purchaser “would have been a successor employer obligated to bargain with the Union.” However, the Board also found the purchaser did not create uncertainty whether it would have hired all or substantially all of the predecessor’s unionized employees. As a result, while the purchaser was required to bargain with the union, it was not bound by the existing CBA as a “perfectly clear successor.”

Employers are encouraged to contact legal counsel with any questions regarding the Board’s decision and to ensure compliance with all provisions of the National Labor Relations Act.

© 2019 Dinsmore & Shohl LLP. All rights reserved.

TRENDING LEGAL ANALYSIS


About this Author

Associate

Zachary focuses his practice on labor and employment issues. He received his J.D. from the University of Cincinnati College of Law, and his experience includes researching cases on appeal from federal district courts and authoring memorandums for cases in areas such as civil rights, employee discrimination, Title IV, various workplace policies and post-conviction relief.

(513) 832-5348
Faith Whittaker, Dinsmore Law Firm, Cincinnati, Labor and Employment Law Attorney
Partner

A partner in the Employment, Labor and Benefits Department, Faith has experience guiding clients through issues that arise in the workplace. She handles employment-related litigation for her clients, who range from local businesses to Fortune 500 companies.

Understanding each client has different tolerances and objectives in dealing with employment matters, Faith is passionate about learning her client’s industry and gaining insight into their operations. While always prepared to vigorously proceed through litigation, she teams with her clients to conduct a thorough evaluation of the case, examining the risks and options before crafting a unique strategy that meets their needs. She works with in-house counsel and legal departments, as well human resources officials and company executives, in analyzing each matter and charting the best course toward a resolution. Faith handles litigation relating to all facets of employment law, including, but not limited to, discrimination claims, retaliation claims, wrongful discharge claims, class and collective actions, claims relating to background checks, wage and hour claims, noncompetition issues, and common law tort claims. She also handles wage/hour and exemption issues for clients and has extensive experience in negotiating settlements.

513-977-8491