A real estate operator acquired seven buildings from a property owner. The owner had used a services provider whose employees were represented by the Machinists’ Union. The real estate operator agreed to hire seven of the service provider’s eight bargaining unit employees pursuant to New York City’s Displaced Building Service Workers Protection Act. This local ordinance requires a successor employer to retain building service employees of a terminated building service contractor for a 90-day transition period. The eighth bargaining unit employee was laid off, which the Union did not challenge.

The Union later requested that the Company recognize and bargain with the Union, but the Company refused stating that it would be premature to recognize the Union before the 90-day retention period expired. Upon conclusion of the mandatory retention period, the Company discharged three of the building service workers and hired four new employees. The Company again refused to bargain because the union-represented employees no longer represented a majority of the company’s unit. Neither the Union nor the NLRB appreciated this slick maneuvering.

The Union filed an unfair labor practice charge alleging that the Company violated its duty to bargain. The Board explained that a successorship finding was appropriate where the successor “makes a conscious decision” to hire a majority of its workforce from a unionized predecessor. Thus, the issue here is whether a successor bargaining obligation can be imposed on a new employer that hires its predecessor’s employees pursuant to a worker retention statute. The Board found that even though worker retention was compelled by statute, the successor still chose to retain its predecessor’s employees. Accordingly, the Company violated the National Labor Relations Act when it rejected the Union’s bargaining demand.