The United States Supreme Court has formerly held that when its is “perfectly clear” that a successor employer intends to retain employees of its predecessor, it is “bound to recognize and bargain with the union” that represented those employees. NLRB v. Burns Int’l Sec. Servs., Inc., 406 U.S. 272, 284 (1972), available at https://www.law.cornell.edu/supremecourt/text/406/272. That same case held that an “ordinary” successor is “free to set initial terms on which it will hire the employees of a predecessor.” The question then becomes - how do employers ensure they are classified as an “ordinary” rather than “perfectly clear” successor?
Previously, a successor employer could avoid the “perfectly clear” designation by giving “prior notice” to employees of its intention to change the terms and conditions of employment. However, the Fifth Circuit’s recent holding in Creative Vision Resources LLC v. National Labor Relations Board makes it more difficult to satisfy this “prior notice” standard. That case upheld the National Labor Relations Board (NLRB) decision that successor company which provided staffing for garbage collectors in Louisiana violated section 8(a) of the National Labor Relations Act (NLRA) by imposing its own terms and conditions of employment for workers without first giving the incumbent union an opportunity to bargain. Creative Vision Resources LLC v. National Labor Relations Board, No. 16-60715 (5th Cir. Sept. 25, 2017), available at http://caselaw.findlaw.com/us-5th-circuit/1875116.html.
Although Creative Vision (the successor employer) made an announcement of its intention to alter the terms and conditions of employment prior to formal hiring, the Fifth Circuit noted that such announcement was untimely and therefore notice was insufficient. Additionally, evidence of discussions with 20 of the 50 employees being retained and subsequent evidence of word-of-mouth communications between the employees regarding changes to terms and conditions of employment was deemed insufficient because it did not put a majority of the employees on notice of the changes. Therefore, Creative Visions was unable to avoid the “perfectly clear” successor designation and its failure to bargain prior to changing terms and conditions of employment was in violation of the NLRA.
This ruling means that buyers of businesses must now take extra care to avoid being classified as a “perfectly clear” successor employer if they wish to retain their right to unilaterally set terms and conditions of employment for unionized workers. To be safe, employers should ensure that an expression of their intent to change terms and conditions of employment is announced prior to any expression of their intent to retain the predecessor’s employees.
This article is presented by the Dallas employment lawyers at Clouse Dunn LLP. To speak to an employment attorney about employment law matters, send an email to [email protected] or call (214) 239-2705.
About Keith Clouse / Dallas Employment Attorney Keith Clouse
Keith Clouse is an employment law specialist with over 25 years of experience representing senior executives, business owners, physicians, and corporations in complex employment litigation, arbitration and negotiations. Senior executives, physicians and other professionals consistently rely on Mr. Clouse for employment law expertise and advice on employment contracts, covenants not to compete, severance agreements, equity awards, trade secret disputes, and breach of fiduciary duty claims. Source CDKLawyers.com
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