2-1 NLRB finds employer a ‘perfectly clear’ successor, failed to give union chance to bargain over initial terms
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Friday, February 9, 2018

2-1 NLRB finds employer a ‘perfectly clear’ successor, failed to give union chance to bargain over initial terms

By Ronald Miller, J.D.

Finding that a school bus transportation company was a “perfectly clear” successor employer, a divided three-member panel of the NLRB ruled that it unlawfully refused to bargain by failing to provide a union with notice and an opportunity to bargain before imposing initial terms and conditions of employment. The Board concluded that the employer became a “perfectly clear” successor, with an obligation to bargain over initial terms on March 2, when it first expressed an intent to retain the predecessor’s employees without clearly announcing an intent to establish different initial terms of employment. Chairman Kaplan filed a separate opinion dissenting in part (First Student Inc., a Division of First Group America, February 6, 2018).

Until 2012, the Saginaw School District directly employed drivers and assistants to perform school bus transportation services. The employees were represented by a union, and the most recent collective bargaining agreement was effective through August 31, 2012. For the 2012-2013 school year, the school district requested proposals for subcontracting bus transportation services. First Student submitted a bid, and thereafter, entered into negotiations with the school district for a contract.

Hiring current unit employees. Meanwhile, the school district arranged a meeting between the employer and unit employees which took place on March 2, 2012. The employees were told that the school district had agreed to a contract, and the employer would offer employment to current employees who submitted an application and met the employer’s hiring criteria, including a background check, physical examination, drug screen, and training. These requirements were consistent with the school district’s hiring criteria and the general eligibility requirements for bus drivers in the industry.

In response to a question, an employer representative stated that the employer typically hired 80 to 90 percent of an existing workforce when it assumed operations. The representative further stated that if the workforce was unionized, and it hired 51 percent of the employees, it would recognize the union and negotiate a new contract. When asked about guaranteed hours for employee, the representative responded that the employer would use the school district’s routing system, and would not be able to provide information regarding hours until the routes were established.

Ultimately, the school district and employer reached an agreement on the transportation services agreement. At a public meeting, the employer reiterated that it would hire current employees who applied and met the hiring criteria, employees would receive the same rate of pay, and it would recognize the union if it hired 51 percent of the current unit members.

Changes in initial conditions of employment. Following a May 17 meeting with almost all unit employees, the employer distributed a memo inviting them to apply for employment. However, the memo set forth several terms and conditions of employment that were different from the employment terms set forth in the school district’s CBA under which the employees had worked. Further, the memo set forth a lower number of guaranteed hours than had been in place under the CBA and provided a different method for paying employees for participating in training.

“Perfectly clear” successor. In this instance, the employer admitted that it was a legal successor to the school district, and as such, obligated to recognize and bargain with the incumbent bargaining representative of a unit of bus drivers, a majority of whom formerly worked for the school district. Accordingly, the Board affirmed the findings of an administrative law judgment that the employer violated Section 8(a)(5) by unilaterally implementing a new attendance policy and by delaying bargaining for two months. However, contrary to the ALJ, the Board found that the employer was a “perfectly clear” successor, and therefore unilaterally changed unit employees’ initial terms and conditions of employment without first bargaining with the union.

In NLRB v. Burns International Security Services, Inc., the Supreme Court held that a successor employer is not bound by the substantive terms of a CBA negotiated by its predecessor and is ordinarily free to set initial terms of employment unilaterally. However, it also recognized that there would be instances in which it is perfectly clear that a new employer plans to retain all of the employees in a unit, and in those circumstances, the successor is required to “initially consult with the employees’ bargaining representatives before it fixes terms.

Transition process. Here, from the very beginning of the transition process, well before the formal hiring process began, the employer clearly and consistently communicated its intent to retain the school district’s unit employees. The employer first expressed its intent to retain unit employees on March 2, 2012. Thereafter, following a meeting on March 16, it reaffirmed its intention to retain unit employees and further stated that it would maintain existing wages. Therefore, the next question was whether the employer “clearly announced its intent to establish a new set of conditions” prior to or simultaneously with its expression of intent to retain the unit employees.

Contrary to the ALJ, the Board concluded that the employer had not “clearly announced its intent to establish a new set of conditions.” Here, the Board found that the law judge misinterpreted the import of the employer’s statements on March 2 that matters such as paid time off, vacation pay, and sick pay “would be subject to negotiations.” Further, the Board concluded that the ALJ erred in finding that the employer’s statements about employees’ hours and routes were sufficiently clear to put them on notice that there would be changes in the initial terms and conditions of employment.

Additionally, the Board found that the ALJ misapplied well-established precedent in finding that the employer’s announcement of new initial terms and conditions of employment on May 17 was a timely exercise of the Burns successor’s right to unilaterally establish initial terms and conditions of employment. Accordingly, the Board concluded that the General Counsel met his burden of proving that the employer became a “perfectly clear” successor, with an obligation to bargain over initial terms on March 2, when it first expressed an intent to retain the predecessor’s employees without clearly announcing an intent to establish different initial terms of employment.

Partial dissent. Chairman Kaplan would affirm the ALJ’s finding that First Student was not a “perfectly clear” successor to the school district. He argued that the employer gave notice of different initial employment terms on May 17, more than a month before it extended employment offers to the employees. Therefore, under the standards set forth in Spruce Up Corp., Kaplan would find that the employer had the right under Burns to implement initial employment terms without first consulting or bargaining with the predecessor’s union.

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