NLRB Says Remarks Made Successorship ‘Perfectly Clear'

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By Lawrence E. Dubé

May 18 — It became “perfectly clear” that a training center operator was the successor of a unionized company when an executive praised the predecessor's employees and expressed optimism they would continue working at a California Job Corps facility, the National Labor Relations Board held May 17.

The ruling suggests managers taking over from a unionized company should carefully consider the consequences of making predictions about hiring and employment.

A successor employer is generally not bound by a predecessor's union contract, but Adams & Associates Inc. triggered a duty to bargain with an American Federation of Teachers affiliate by leading employees to believe they would be hired, without making it clear they would have to accept new employment terms, NLRB Chairman Mark Gaston Pearce and Members Kent Y. Hirozawa and Lauren McFerran said.

The board found Adams and a joint employer unlawfully changed employment conditions without bargaining and violated the National Labor Relations Act.

New Employer at Job Corps Center

Adams and McConnell, Jones, Lanier & Murphy LLP made a successful bid to operate a Sacramento Job Corps center previously managed by Horizons Youth Services LLC.

AFT Local 4986, which represented Horizons residential and nonresidential advisers, requested recognition and bargaining, but Adams disregarded the demand and proceeded to hire employees and change the terms and conditions of employment.

Local 4986 filed unfair labor practice charges, and an administrative law judge found the companies illegally refused to hire five former Horizons employees in an effort to avoid bargaining with the union. The ALJ found the companies had a duty to bargain with Local 4986 because of the hiring violations (116 DLR A-11, 6/17/15), but the board also found successorship under another legal theory.

Board Reviewed Successorship Rules

Pearce, Hirozawa and McFerran said that under NLRB v. Burns International Security Services, 406 U.S. 272, 80 LRRM 2225 (1972), “a successor is not bound by the substantive terms of a collective-bargaining agreement negotiated by the predecessor and is ordinarily free to set initial terms and conditions of employment unilaterally.”

However, the Burns court said that in some cases, it may be “perfectly clear that the new employer plans to retain all the employees in the unit.”

In such cases, the court said, it will be “appropriate” for the employer to consult with the union before setting employment terms.

Successor's Comments Showed Intent

An Adams executive told the former Horizons advisers they had done “a really good job” and that he was “99 percent sure” they would all have jobs with the new employer; in fact, a majority of the new operator's advisers were former Horizons employees.

The board members said that because Adams encouraged employees about their job prospects and failed to inform them that employment would be offered on new terms, Adams and McConnell, Jones became a “perfectly clear” successor that lost the right to set the initial job terms.

The new employer didn't promise jobs to all of the advisers, but the NLRB said that “the relevant inquiry is whether the successor intends to retain a sufficient number to continue the union's majority status.” The employer's “99 percent” remark showed such intent, the NLRB said, and failing to maintain the employment terms of the Sacramento advisers pending negotiations with the union was unlawful.

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com