Insights for the Labor Relations Professional


New Labor Rules Announced for Employers Involved in Mergers and Acquisitions

By Nelson Cary

A business that purchases or merges with a company whose employees are represented by a union must navigate a labor law minefield.  The NLRB recently planted another mine in that field. In UGL-UNICCO Service Co., 357 N.L.R.B. No. 76 (2011) (3-1), the NLRB restored a modified version of the "successor bar" doctrine.  If the "successor bar" applies, the union that represented the seller’s employees is entitled to a reasonable period of time in which its majority status cannot be challenged.  In addition, employers may not unilaterally withdraw recognition from the union based on a claimed loss of majority support.  This is the third of three major decisions that were included in the flurry of activity at the end of Chairman Liebman’s term last month.

The NLRB’s ruling marks another swing of the pendulum in an area that has seen substantial doctrinal shifts by the NLRB over the years.  This time, the NLRB not only reversed a 2002 ruling, however, but went further to define a "reasonable period" in certain situations.  The applicable time period for the bar will now depend upon the buyer’s actions with respect to terms and conditions of employment.  If the buyer expressly adopts the existing terms and conditions of employment as the starting point for bargaining, without making unilateral changes, the "reasonable period" will be six months.  If the buyer exercises its right to set initial terms and conditions of employment (a decision that must navigate its own legal minefield), the "reasonable period" will be a minimum of six months and a maximum of one year.  In both of these situations, the period is measured from the date of the first bargaining meeting between the union and the employer.

Finally, the NLRB majority also modified the time-period for the "contract bar" in the successorship context. The contract bar is the period of time that a union is protected from an effort to test its majority status after it has negotiated a labor agreement with an employer.  The NLRB held that the contract-bar period applicable to election petitions filed by employees or by rival unions will be a maximum of 2 years, rather than the current 3-year maximum, but only in certain situations.

In a lone dissenting opinion, Member Hayes (R) argued that the majority’s decision was inconsistent with, and even an attack on, U.S. Supreme Court precedent.  He noted that the majority’s decision elevates protection of incumbent unions over employee free choice.  The majority changed the law, in Member Hayes’ view, "to service the ideological goal of insulating union representation from challenge whenever possible." 

For the labor professional involved in a merger or purchase situation, the NLRB’s decision further complicates an already complicated area of the law.  Careful planning by the buyer early in the process will be necessary to ensure that the buyer’s legal obligations are satisfied.

Tags: Burns successor, acquisition


Insights for the Labor Relations Professional