NLRB: Successor Employer Determination Must Be Made When Buyer Takes Control of Business

The National Labor Relations Board's ("NLRB" or "Board") successorship doctrine obligates a purchaser/new employer in an asset transaction to recognize and bargain with the union representing a seller's employees if the new employer: (i) continues its predecessor's business in substantially unchanged form, and (ii) hires predecessor employees as a majority of its post-closing workforce. GVS Properties, LLC, 362 NLRB No. 194 (Aug. 27, 2015); NLRB v. Burns Int'l Security Servs., 406 U.S. 272 (1972). However, a new employer will not be required to abide by its predecessor's collective bargaining agreement if it makes clear to the union and the employees, either prior to, or at the time of, offering employment to seller's employees, that it does not intend to be bound by the existing collective bargaining agreement. Under these circumstances, new employers may establish initial terms and conditions of employment that differ from the existing collective bargaining agreement and then bargain with the union for a new agreement. See Burns, 406 U.S. at 273.

In GVS Properties, LLC, a New York City ordinance required a new building owner and employer to retain its predecessor's building service employees for 90 days after closing. The Board found that GVS was a successor employer because it made a "conscious decision" to purchase and manage the buildings with knowledge of the legal requirement that it must retain the employees for 90 days after closing. As a successor, the Board found that GVS had a duty to recognize and bargain with the union. A Board majority rejected the argument that successor status should be determined after the statutorily-required, 90-day retention period expired. GVS lawfully terminated some of its predecessor's employees after the 90-day retention period and at that time its workforce was not comprised of a majority of the predecessor's employees. If the successorship determination were made at the end of the 90 days, GVS would not have been required to recognize or bargain with the union. Instead, the Board found that whether GVS maintained a sufficient continuity of workforce to become a successor should be determined at the time it "assume[d] control over the predecessor's business and hire[d] the predecessor's employees." 362 NLRB No. 194, at 1. Therefore, the Board held that GVS violated Sections 8(a)(5) and (1) of the NLRA by refusing to bargain with the union representing its predecessor's employees during the...