Transferring Employees from One Company to Another May Bust the Union, but Effects Bargaining Still Required

A company owned multiple car dealerships. One dealership employed six mechanics, all of whom belonged to a union. In 2009, the company shut down the “union dealership” and offered the six employees jobs at its “nonunion dealership.” Five of the mechanics took the job at the nonunion dealership. The five employees were no longer a majority of the mechanics at the nonunion dealership. After the transfer of mechanics, the company refused to recognize the union since the union no longer represented a majority of employees in the bargaining unit. The D.C. Circuit ultimately held that the transferred mechanics were distinct from the larger pool of nonunion workers they were asked to join, thus opening the door for the mechanics to organize under the Board’s newly expansive micro-bargaining unit standard. Yet, regardless of their status after the transfer, according to the Court, the company should have negotiated with the union on the effects of the union dealership’s closure on it mechanics. Effects bargaining generally covers how the shutdown affects the organized workers. Unions seek lump sum payments, continued health care, job offers, and relocation assistance to the new facility, etc. But, just like bargaining for a new contract, neither side can force the other to propose or accept effects bargaining terms.

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at