Successor issues complicate acquisitions
Do you work in HR for a company that is looking at an acquisition of an existing business that operates under a union contract? You may find this recent ruling by the NLRB to be of interest. Successor issues can be very complex and costly, as this case shows.
From the NLRB:
California nursing home ordered to recognize union and hire 50 employees who worked for the previous owner
The National Labor Relations Board this week adopted the recommendations of an Administrative Law Judge and ordered owners of the Yuba Skilled Nursing Center in Yuba City to hire 50 employees they unlawfully failed to hire after assuming operations of the center in September 2011.
Employees at the home had been represented by the Service Employees International Union, United Healthcare Workers West, before it was bought by Nasaky, Inc. Under the National Labor Relations Act, new owners of a union facility are obligated to recognize and bargain with the existing union as a successor employer. However, the union alleged in charges with the NLRB that the new owners failed to hire the longtime employees in order to avoid that obligation. After an investigation, Regional Director Joseph F. Frankl agreed and issued a complaint.
Following a two-day hearing, Administrative Law Judge Gerald Etchingham issued a decision finding all the allegations to be true and rejecting Nasaky’s explanations for why it declined to hire most of those who had worked for the previous employer. The employer did not file exceptions and the Board adopted the Judge’s decision as a final order this week. As a result of the Board’s order, Nasaky must immediately recognize and bargain with the union and commence the process of hiring the former employees and making them whole. The amount of backpay and interest is expected to approximate $1.25 million.