Employment Law Daily 3-1 NLRB: New employer need not bargain before setting different initial terms, conditions of employment for unit employees
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Monday, April 8, 2019

3-1 NLRB: New employer need not bargain before setting different initial terms, conditions of employment for unit employees

By Ronald Miller, J.D.

The increasingly activist NLRB overturned the 1996 decision in Galloway School Lines and precedent applying its holding, finding that it went far beyond the limits of the narrow “perfectly clear successor” exception contemplated by the Supreme Court’s ruling in NLRB v. Burns Security Services, and impermissibly extended the Love’s Barbeque remedial doctrine.

Following its takeover of a nursing home facility, an employer had a successor employer’s obligation to recognize and bargain with a union that represented a bargaining unit of the predecessor’s employees. However, the Board, in a 3-1 decision, determined that the employer did not have an obligation to bargain prior to setting different initial terms and conditions of employment for unit employees when they began operations. In so ruling, the Board overruled Galloway School Lines, which it found was an unwarranted extension of the Love’s Barbeque remedial doctrine. Member McFerran filed a separate dissenting opinion (Ridgewood Health Care Center, Inc., April 2, 2019).

On October 1, 2013, the employer took over management of a skilled nursing home facility. Prior to October 1, the facility had been operated by Preferred Health, and a union represented a unit consisting of licensed practical nurses (LPNs), and nurses’ aides (CNAs), along with housekeeping, laundry, maintenance, and dietary employees. The collective bargaining agreement was effective from September 2010 to September 2016.

Mixed messages on future employment. In the months preceding the takeover, the employer, Ridgewood Health, sent conflicting messages to the Preferred unit employees about their prospects for continued employment and union representation. During a meeting, Ridgewood’s owner informed employees that she expected to hire “99.9%” of them and to adhere to the current CBA. Later, however, Ridgewood’s then-counsel contradicted that statement in a July 15 letter to the union, stating that the employer would not accept the CBA and had not determined how many Preferred employees it would hire, but did offer to bargain with the union for a new CBA when the employer assumed operations. Then, in a July 29 letter, Preferred formally notified employees that its lease of the facility would terminate on September 30, and they would be laid off.

Although the owner continued to assure employees during August meetings that 99.9 percent of them would be hired, she changed her position concerning the union, telling employees that she did not think the union necessary. The owner also informed employees of the creation of a new “helping hands” job classification that would perform some of the duties currently performed by CNAs.

Job offers. Sixty-five of the 83 Preferred bargaining unit employees applied for jobs. Of those, 51 received offers of “at-will” employment. Subsequently, 56 applicants not previously employed by Preferred were also sent job offers for job classifications performing bargaining unit work.

In a September 23 letter, the employer’s new counsel conditioned any future bargaining on whether the employer was determined to be a successor employer to Preferred at the conclusion of the hiring process.

Refusal to bargain. When the employer commenced operations, 101 employees accepted offers of employment. Of those, 49 were former Preferred unit employees and 52 had never worked for Preferred. Nineteen of the 52 were hired into the newly created “helping hands” job classification. Without bargaining, the employer informed employees of their new employment terms. In an October 7 letter, the employer’s counsel refused the union’s demand for bargaining and its request for information relating to the transition. Thereafter, the employer voiced increasingly antiunion positions, including a letter to employees stating that Ridgewood “is now operating without a union,” and warning employees about the serious consequences of signing a union authorization card.

Refusal to hire. An administrative law judge found that in the course of hiring employees, the employer violated NLRA Section 8(a)(3) and (1) by refusing to hire four former Preferred employees. He further found that the employer would have hired a majority of unit employees absent this discrimination, and that it continued to operate the facility without substantial change from the manner in which it had been operated by Preferred. Thus, the ALJ found that the employer was a successor to Preferred, and acted unlawfully by refusing to recognize and bargain with the union and to provide relevant bargaining-related information requested by it.

Antiunion animus. The Board agreed with the law judge that the record contained ample circumstantial evidence establishing the employer’s refusal to hire the four employees was motivated by antiunion animus where it coercively interrogated Preferred applicants about their union membership during job interviews. The employer further demonstrated animus when, during an employee meeting a few weeks after the transition, the owner threatened that she might close the facility if employees unionized. Moreover, the employer clearly demonstrated animus when the nursing director threatened to fire a CNA for recruiting her coworkers to support the union.

Successorship. The Board also agreed with the ALJ that the employer failed to prove its affirmative defense that it would have refused to hire the four employees even absent a desire to avoid successorship. The credited evidence showed that each had satisfactory and well-documented work histories and uneventful interviews that should not have prevented their rehire. Moreover, because the former Preferred employees would have constituted a majority of the employer’s initial complement of employees and the employer unlawfully refused to hire these four applicants, the Board concluded that the employer was a legal successor. Thus, the employer was obligated to recognize and bargain with the union.

Initial terms and conditions of employment. However, the Board concluded that the employer was not obligated to bargain with the union prior to setting different initial terms and conditions of employment. In its 1979 decision in Love’s Barbeque Restaurant No. 62, the Board ruled that an employer’s hiring discrimination against “all” or “substantially all” of a predecessor’s unit employees makes the employer tantamount to a “perfectly clear” successor, requiring the finding of a failure to bargain prior to setting initial terms and conditions of employment in the successor unit.

In its 1996 ruling in Galloway School Lines, the NLRB construed the “perfectly clear” exception of NLRB v. Burns Security Services, Inc. to “mean that a duty to bargain over initial terms can arise in cases where, although the employer’s plan is to retain a fewer number of predecessor employees, it is still evident that the union’s majority status will continue.

Love’s Barbeque addressed a situation where the employer’s broad and unlawful discriminatory hiring practices created an ambiguity making it impossible to determine whether that employer would have hired all or substantially all of the predecessor’s unit employees had it not discriminated in hiring. However, in this case, like Galloway, there was no uncertainty regarding how many former employees of the predecessor would have been hired absent the successor’s discrimination. The employer would have hired 53 Preferred employees and 48 new employees but for the unlawful discrimination. Accordingly, the employer, as an ordinary Burns successor, remained free to set initial employment terms for the unit employees.

Dissent. In a lengthy dissent, Member McFerran pointed out that for months before the new employer took over the facility, the owner told predecessor employees that it planned to hire “99.9 percent” of them and that employment terms would essentially remain unchanged. Thus, McFerran argued that under well-established law, the employer was a “perfectly clear successor” required to recognize and bargain with the union, and the Board should order the new employer to restore the terms and conditions of employment set forth in the predecessor’s CBA. Moreover, McFerran argued that the same remedy applies, under a different line of Board successorship doctrine, when an employer discriminatorily refuses to hire a targeted number of predecessor employees to avoid successorship.

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