Daniel J. Sobol, Brandon S. Shemtob, and David G. Rodriguez

What employers should know about union recognition, employee majority support, and bargaining obligations after a business acquisition.

The D.C. Circuit has invalidated the National Labor Relations Board’s (“NLRB”) “successor bar,” a rule that required a new owner of a unionized business to recognize and bargain with the incumbent union for up to one year after the ownership change before employees could challenge the union’s status. When an employer acquires a predecessor’s business, it is required to recognize the incumbent union if a majority of the successor’s workforce is made up of employees from its predecessor. The court held that the successor bar rule conflicts with the National Labor Relations Act because it blocks employees, employers, and rival unions from testing whether the incumbent union still represents a majority of employees.

Background

The employer, Hospital Menonita de Guayama (“Hospital”), acquired another hospital in 2017 where employees had long been represented by a union in five separate bargaining units. Hospital set initial terms, hired a majority of the unionized employees, and recognized the union. Over the course of five months following this initial recognition, Hospital received evidence that a majority of employees in each unit rejected the union as their representative. An employer may not solicit this sort of evidence, which must be presented by the unionized employees themselves. After Hospital refused to bargain and informed the union it would no longer recognize it as the employee’s designated representative, the NLRB found unfair labor practices and ordered Hospital to recognize and bargain with the union. The Supreme Court later vacated the D.C. Circuit’s initial decision upholding the successor bar and remanded for reconsideration after Loper Bright Enterprises v. Raimondo, which overruled Chevron deference.

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