Buyer Beware – Continuing Its Controversial Changes, NLRB Increases The Price Tag Of A Successor's Unlawful Failure To Hire Its Predecessor's Employees

On September 30, 2014, the National Labor Relations Board overruled established precedent once again. The Board's decision enhanced the liability to which a successor employer is exposed when it fails to hire employees of its predecessor to avoid recognizing their union representative. In Pressroom Cleaners Inc., Decision and Order, Case No. 34-CA-071823 (Sept. 30, 2014), the Board held a successor found guilty of such a scheme, in addition to being required to recognize and bargain with the union, had to: (1) restore the "status quo" by putting in place the employment terms of its predecessor, i.e., those spelled out in their old labor agreement, until it bargained to an agreement or impasse with the union; and (2) pay the employees it unlawfully failed to hire back pay and benefits under the monetary terms under which they worked for the predecessor.

Saying it was simply returning to the Board's "traditional approach" to remedying unfair labor practices of this kind, the majority, made up of the three Democrat appointees, overruled the Board's 2006 decision in Planned Building Services, 347 NLRB 670 (2006), a case giving a successor found to have unlawfully avoided successorship status a way to reduce its liability. The way Planned Building Services held a successor could reduce its liability was by proving in a compliance proceeding that, had it not unlawfully avoided becoming a successor, it would have bargained to an agreement or impasse with the union on less generous monetary terms.

While it may not seem surprising the Obama Board overruled a case decided by the Bush Board, Planned Building Services is not a Bush Board decision practitioners expected this Board to have in its crosshairs. Planned Building Services was a rarity in this age of partisanship and polarization at the Board – it was a unanimous decision in which then Democrat Members Liebman and Walsh, without so much as a whisper of disagreement, joined with the Republican majority.

The Board's Decision

In Pressroom Cleaners, all five members of the Board found, as had the administrative law judge (ALJ), that the new employer had "discriminatorily refused to hire six [of its predecessor's] employees because of their union affiliation," and that the predecessor's employees "would have constituted the majority of [the] unit employees absent [the employer's] discriminatory refusals to hire." Decision and Order, Case No. 34-CA-071823 (Sept. 30, 2014) at *1. Based upon those findings, all five members, in agreement again with the ALJ, found that the employer was a statutory successor with an obligation to recognize and bargain with the union, and that, in refusing to honor that obligation, the employer had unlawfully implemented new employment terms different from those of its predecessor.

It was on the issue of the...