Successor Owner has a Duty to Bargain as Soon as it is “Perfectly Clear” that it will Retain the Prior Workforce

The question of a new owner’s duty to bargain with the Union can get complicated.  The general rule is that when a new owner purchases a company where workers were previously represented by a Union, the new employer is required to bargain with the Union if the new employer continues substantially the same business, and retains a majority of the prior workforce.

There is an exception to this rule.  When the new employer offers to hire the same employees, but only on the condition that they accept new terms of employment, the NLRB permits the new employer to unilaterally set these initial terms of employment because it is not yet known whether the new workforce will come mostly from the prior Union-represented group.

This exception does not apply if the new employer has previously made it “perfectly clear” that it plans to keep the prior workforce, without clearly telling workers that they have to accept new terms and conditions of employment to keep their jobs.

In a case called Nexeo Solutions LLC, the successor employer tried to have it both ways.  It lured workers to stay with the company during the ownership transition, assuring workers over several months that they would have “equivalent” salaries and “comparable” benefits with the new owner.  Then, at the last minute, the new employer sent workers written offers of employment that included significant changes, including replacing their hard-earned pension with a 401(k).  After the Union filed a ULP, the new employer argued that it should not be held responsible for misleading the workers because the prior owner, and not the successor, was the one who repeatedly told workers they would retain “comparable” benefits.

In considering this and other factors, the National Labor Relations Board found the successor employer’s argument without merit because the new owner knew of the misleading statements, had the ability to control them, and never corrected or refuted them.  The Board said that the successor employer received the benefit of a stable, experienced workforce—a workforce that previously chose Union representation—throughout the transition because of the misrepresentations.  The Board held the new employer cannot not now be allowed to undermine that choice by failing to meet its obligation to bargain with the Union chosen by that workforce.

For more questions regarding successorship or other issues, contact your labor law counsel.

By Xochitl Lopez | October 11, 2016

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