NLRB Forces Buyers To Become 'Successors' Against Their Will

While all eyes were on the landmark Browning-Ferris decision issued Thursday, the Board issued yet another split decision that also may have far reaching consequences. In GVS Properties, LLC, 362 NLRB No. 194 (Aug. 27, 2015) (here), a case of first impression, the Board in a 2-1 decision held that a purchaser employer becomes a Burns successor with an obligation to recognize and bargain with the Union when, as required by a local worker retention law, it has to hire the predecessor employer's employees for a "trial period."

The purchaser employer, GVS, had acquired several real estate properties in New York City and decided to insource maintenance work that had been contracted out to a unionized contractor. The city's Displaced Building Service Workers Protection Act (DBSWPA) required that GVS, as the successor, retain the maintenance employees for a 90-day transition employment period (or at least as many of those it needed to perform the work). GVS set initial terms and hired 8 of the 9 predecessor employees in accordance with the law. The union demanded recognition, but GVS refused on the grounds that it would not employ a substantial and representative complement of employees until after the expiration of the 90-day transition period when it would be free to decide whether to keep the predecessor's employees. In this case, after the 90-day period GVS fired three of the old employees and brought on 4 new employees, meaning a majority of the post-transition period work force were not former union employees. GVS had no obligation to recognize the union under its theory.

The Board majority found that GVS became a successor under NLRB v. Burns International Security Services, Inc., 406 U.S. 272 (1972), at the point it assumed control of the predecessor's business and hired, pursuant to the DBSWPA, a majority of its workforce from among the former employer's employees for the transition period. The primary dispute between the parties was whether it was possible for an employer to become a successor under Burns during a period of time when it had no legal choice as to whether to retain the predecessor's employees. GVS and dissenting Member Johnson argued that, based on the Supreme Court's decision in Fall River Dyeing v. NLRB, 482 U.S. 27, 40-41 (1987), a buyer becomes a successor under Burns only if it does so voluntarily, i.e., if it makes a "conscious decision" to hire a majority of the predecessor's employees, for in such a case it...