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Unanimous NLRB gives guidance on successor's obligation to hire
August 05, 2006 by Ross Runkel at LawMemo

LawMemo's popular NLRB Law Memo today reports on an NLRB decision that clarifies a successor employer's duty to hire, setting initial terms and conditions, and remedies.

The unanimous, full-Board decision clarified (1) the analytical framework for deciding whether a successor employer unlawfully refused to hire the predecessor's employees in order to avoid a bargaining obligation, (2) the initial terms and conditions for employees formerly employed by the predecessor, and (3) the appropriate remedy for refusal to hire and for unilateral implementation of terms and conditions. Planned Building Services, Inc (NLRB 07/31/2006).

The successor employer is a building maintenance company that was awarded contracts to clean buildings at which the employees had been represented by an SEIU local. The employer did not hire most of the predecessors' employees.

(1) The NLRB held that proof of unlawful refusal to hire in a successorship context is controlled by Wright Line, 251 NLRB 1083 (1980) and not by FES, 331 NLRB 9 (2000). Under Wright Line, the General Counsel has the burden to prove the employer's unlawful animus, and then the burden shifts to the employer to prove that it would have taken the same action without the unlawful animus. The FES case applies in "normal" refusal-to-hire cases, and requires the General Counsel to prove unlawful motivation plus (a) that the employer was hiring or planned to do hiring, and (b) that applicants had the relevant experience. The additional two elements in FES do not apply in successorship cases because (a) the predecessor's employees presumptively meet the successor's requirements and (b) the successor obviously must fill vacant positions.

(2) When a successor employer plans to retain all of the predecessor's employees, then the successor cannot unilaterally set beginning terms and conditions of employment. In addition, a successor who (as in this case) discriminatorily refuses to hire the predecessor's employees cannot unilaterally set beginning terms and conditions of employment.

(3) One part of the normal remedy is a make-whole remedy including back pay and benefits, measured with reference to the predecessor's terms and conditions of employment. There is always an issue of how long the back pay should run at the predecessor's rate, because the successor might negotiate a new wage rate or bargain to an impasse. The Board held that it will continue to issue its traditional make-whole remedy. However, the successor may, in a compliance hearing, prove (a) that it would not have agreed to the monetary provisions of its predecessor's collective bargaining agreement and (b) either the date on which it would have bargained new terms or the date on which it would have bargained to impasse.

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