NLRB Makes it More Difficult to Establish a Perfectly Clear Successor

In Ridgewood Health Care Center, Inc.,[1] a 3-1 majority of the Board held that the new owner of a nursing facility was not a “perfectly clear successor” and, therefore, was not bound by the existing collective bargaining agreement, despite the union’s continuing majority status and evidence of clear anti-union animus. The decision overrules NLRB precedent and limits the remedy in cases where a successor employer discriminates against and fails to hire the union-supporting employees of the predecessor.

As background, when one company takes over its predecessor’s unionized business and hires the predecessor’s employees as a majority of its workforce, it is a “successor employer” and has an obligation to bargain with the union. Successor employers are free to set initial terms of employment unilaterally, unless the successor employer plans to keep all (or nearly all) of the predecessor’s employees.  In such cases, the employer is called a “perfectly clear successor” and has to honor the terms of the existing collective bargaining agreement – that is, it cannot set new terms unilaterally.

In its 1979 Love’s Barbeque Restaurant No. 62[2] decision, the NLRB held that when a successor employer unlawfully refuses to hire the predecessor’s employees to avoid a bargaining obligation and then modifies the unit employees’ terms and conditions of employment, the successor employer must reinstate the prior terms and conditions.  In such cases, the full remedy is that the successor must (1) hire the employees it discriminated against; (2) compensate the workers for time without pay; and (3) honor the existing collective bargaining agreement as a perfectly clear successor.

A 1996 case, Galloway School Lines,[3] extended this rule further, holding that the Love’s Barbeque remedy applies even where the successor employer discriminates against a targeted number of the predecessor employees, but never planned to hire all of the predecessor’s employees.

The Trump Board in Ridgewood Health Care Center, Inc. overruled Galloway, making it easier for successors to discriminate against union-supporting employees.  Specifically, theBoard held that the full Love’s Barbeque remedy for anti-union discrimination is not available where it is clear the successor employer did not plan to hire all or nearly all of the predecessor’s employees. Thus, even where a successor employer actively discriminates against union-supporting employees and refuses to hire them, the NLRB will not find the successor employer to be a “perfectly clear successor” unless the union can show the employer originally planned to hire all or nearly all of the employees.

[1]           Ridgewood Health Care Center, Inc., 367 NLRB No. 110, 2019 LRRM (BNA) 116178 (Apr. 2, 2019).

[2]           Love’s Barbeque Restaurant No. 62, 245 NLRB 78, 82, 102 LRRM (BNA)1546 (1979).

[3]           Galloway School Lines, 321 NLRB 1422, 153 LRRM (BNA) 1105 (1996).