Hiring the workforce or purchasing the assets of an employer with union-represented employees is a transaction with a lot of labor-related risks. A recent decision from the NLRB provides an example of how it can go wrong for an employer that fails to plan. In so doing, it offers a good contrast to a case discussed on this blog last year.

A waste disposal company used “hoppers” on its garbage trucks. The hoppers were provided by a labor supply company with whom the waste disposal company became dissatisfied. A relative of the waste company’s owner formed a new labor supply company and set out to hire hoppers to provide to the waste company.

The source of hires for the new company was the prior labor supplier’s workers. These workers were represented by a union. The new company didn’t look elsewhere for employees. The new company’s owner communicated directly with a number of the hoppers, letting them know that he would hire them if they submitted an application, and also advising them what he would pay and a few other terms and conditions of their employment.

The owner of the new company, however, also gave out applications to one of the hoppers and asked him to assist in passing them out. The owner didn’t tell this hopper about the new terms and conditions of employment. Thus, this hopper didn’t pass along any such information to the other workers to whom he handed out applications. Thus, of the 70 or so hoppers ultimately hired, only 20 heard directly from the new company that employment conditions would change.

The NLRB held that the new company did not have the right to set the initial terms and conditions. Rather, it had to bargain with the union that had previously represented the hoppers. The NLRB applied the “perfectly clear” rule, a rule that has existed for several decades. When a new employer, hiring employees of a unionized predecessor, fails to clearly announce its intent to establish a new set of employment conditions prior to or simultaneously with inviting employees to apply for employment, the new employer will be required to consult with the union representing the employees prior to setting employment terms.

In this case, the NLRB held that the new company promised to hire anyone who submitted an application. It also did not communicate to all employees the employment conditions it expected upon hire. Rather, it only did so on the day that the employees first gathered to work for the new company, but the NLRB found that this was too late in the process.

Member Miscimarra (R) disagreed with the majority’s approach. Among other things, he reasoned that the communication on the first day the employees reported for work was sufficient to satisfy the “perfectly clear” rule. He also noted that the union didn’t make a demand for bargaining until a few days after the employees had started working for the new company.

This decision highlights an important lesson from the NLRB’s cases in this area: an employer contemplating an acquisition of a unionized business that fails to plan for the hiring process makes a costly mistake. That plan should include not just what will be said to applicants, but also when it will be said. Both things are vital if the new employer wants to retain the unilateral right to set the initial terms of employment.