The facts of this case are rather typical for successor liability cases. A company bought the assets of a defunct newspaper company and hired back 24 of the defunct company’s employees. The new company also hired a group of part-time inserters who inserted magazine and advertisements into the newspapers’ folds. The inserters are not on the company’s health plan, received substantially lower pay than the 24 regular employees, and were not allowed to talk to full-time workers. The new company also changed the board of directors, gave reporters new titles, bought a new copy machine, and changed the paper’s motto.
The new company refused to bargain a successor collective bargaining agreement with the defunct company’s union on the theory that the new company was not a successor to the defunct company. The union filed an unfair labor practice charge, and the case went to hearing, was appealed to the National Labor Relations Board, and then appealed to the D.C. Circuit Court where Judge Merrick Garland (yes, that Judge Garland) ruled the new company was a successor to the old company and ordered the parties begin negotiating a successor collective bargaining agreement.
This case highlights the lengths companies go through to try to avoid being a successor employer. I have had many retail clients that think a fresh coat of paint, new signs, and new uniforms would insulate them from being successor employers. Some argue with me that closing for 2-3 weeks during the re-fresh is also a way to avoid successor liability. They are wrong. Avoiding the successorship label requires more than those cosmetic changes and it requires planning and execution that should be done well before the acquisition closes.
I strongly encourage companies that are considering avoiding a union obligation through the acquisition of another company seek competent legal advice.
Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers throughout the U.S.A. dealing with labor, employment, and OSHA matters. You can reach Matt at (614) 843-3041 or emailing him at Matt@MattAustinLaborLaw.com.