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California Employment Law Commentary on Issues Facing California Employers

When an Employer Takes Over a Unionized Workforce, Can It Change Conditions and Benefits?

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Here guest bloggers Chip Zuver in LA and Dan Berkley in San Francisco explain some of the issues that employers need to pay close attention to when they take over a unionized workforce. Both Dan and Chip previously worked at the NLRB (which they insist we call “the Board”) and we’re grateful for their insights:

In Horizon Coach Lines, the NLRB’s Division of Advice discussed when a successor employer could lawfully implement changes to employee health and welfare benefits after hiring a substantial group of the predecessor’s employees, but before the union made a demand to bargain. In a factually specific opinion, the Division of Advice (“Advice”) concluded that the employer was not obligated to bargain with the union over the changes.

Under Board law, a successor employer  is generally free to hire whomever it wishes if it doesn’t do so to avoid a bargaining obligation with the union representing its predecessor’s employees. If the predecessor’s bargaining unit employees constitute less than half of the successor’s employees in the same positions, the employer can refuse to bargain with the union. Where the predecessor’s bargaining unit employees constitute more than half of the successor’s employees in the same bargaining unit positions, the successor is obligated to bargain with the union assuming the business continues. However, the  employer doesn’t have to assume the predecessor’s collective bargaining agreement. If the successor makes it clear before hiring the employees, it may set its own initial terms and conditions of employment.  However, any changes the successor makes after hiring those employees in the bargaining unit and after the union demands bargaining, must be bargained to agreement or impasse prior to implementation.  In the instant case, Advice concluded that the successor notified the union prior to takeover that it would be acquiring the predecessor’s business and provided employees with its employee handbook informing them that the terms and conditions of employment set forth in the employee handbook would apply if the employees were hired.

Based on how Advice addressed the matter, it seems that the enrollment forms given to employees after the union demanded bargaining did not explicitly describe some of the terms of the insurance plans. Here’s the good news for employers: This means that the successor employer can begin operations without explicitly laying out all the new terms and conditions of employment, at least with regard to benefits plans, if it makes clear that the employees will operate under new terms, describes those new terms, and any additional terms subsequently conveyed to employees  are consistent with those described by the successor prior to hire. The bad news for employers is that neither the General Counsel nor the Board needs to follow Advice’s recommendation.

Only time will tell whether the Board will choose to follow Advice’s recommendation in any cases the General Counsel chooses to prosecute irrespective of Advice’s recommendation. Of continuing value to employers is the notion that each business take over with a previously organized work force must be carefully planned, well in advance, and with attention to all of the details reflected in this decision and others on the subject.  The relationship among the various NLRB entities, Advice, Office of the General Counsel, the Regions is not always in harmony or logically driven.

You can read the full Advice Memo here: Horizon Coach Lines Advice Memo (pdf).

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