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Win-Win: Unions and the "Successorship Doctrine"

  • April 13, 2002

Under the National Labor Relations Board’s “successorship doctrine,” when a purchaser takes over a unionized employer, the purchaser is deemed to be a “successor” if a majority of its employees formerly worked for the unionized employer. And, if the purchaser is deemed to be a successor, it must recognize and bargain with the union that represented the seller’s employees. Companies considering the purchase of a unionized business traditionally have struggled to obtain the right to operate without the added burden of a union contract and without employees more loyal to the union than to their new employer.

The dilemma for the purchaser is this: although it is free to hire or bring in its own workforce, it is illegal not to hire the employees of the seller merely to avoid becoming unionized or having employees who favor the union. Put another way, the new employer is legally bound to consider applicants based upon non-discriminatory reasons, i.e., reasons having nothing to do with the union. One such non-discriminatory reason could be found in the purchase and sale agreement. The seller may want to restrict the purchaser’s right to offer employment to the seller’s employees, whom the seller may want to transfer to its other locations. In that case, a hiring restriction written into the purchase and sale agreement by the seller may constitute evidence of a non-discriminatory reason for the purchaser’s refusal to hire the seller’s employees. This restriction may prevent the purchaser from becoming the seller’s successor and allow the purchaser to lawfully start operations on a union-free basis with its “own” workforce.

©2002 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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