Acquiring the assets or hiring the workforce of an employer whose employees are unionized poses an additional layer of complexity for the purchaser. Without prior planning, the purchaser can end up losing its right to set the initial terms and conditions of employment. In a case earlier this year, the NLRB provided a good reminder of what some of those planning steps might look like.

The case arose in the context of government contracting. The “purchaser” – also known as the “successor” in NLRB case law – was a company that had taken over a government contract to provide armed security guards at a particular facility. The guards providing the services were unionized, and under the predecessor’s collective bargaining agreement, the guards were paid for time spent collecting and returning firearms and ammunition before and after their shift. In the guard industry, this is often called “guard mount” time.

The successor reduced the amount of paid guard mount time employees received during weekday shifts and discontinued it entirely for weekend shifts. The successor did not bargain with the union before taking these actions. The union claimed that these unilateral changes were unlawful, even as the successor’s initial terms and conditions of employment, because the successor did not provide prior notice to employees.

The NLRB majority disagreed with the union. The majority found that the successor provided sufficient notice to the employees it hired, including employees of the predecessor, that it would reduce paid guard mount time upon assuming the government contract. Specifically, the successor (1) used an application form that stated employees would need to conform to the successor’s policies, practices, and procedures and that the successor had the right to establish and change terms and conditions of employment; and (2) made contingent offers of employment that described new employment terms, and included a statement that employees’ “shift schedules” would be determined upon the company’s operational needs.

In addition to providing notice, the successor employer effectively implemented the reduced guard mount time on the very first day of operations at the site. Thus, the security guards it hired always worked under this new term of employment.

Member McFerran (D) dissented. She noted that the neither the application form nor the offer of employment specifically mentioned guard mount time. Rather, the application form was general in its references to employment policies. Moreover, the offer letter was very specific on a number of items, like wages, pension, and health insurance, as well as vacation, sick, and personal leave accrual. Because that offer letter didn’t mention guard mount time, the letter “reasonably conveyed that changes to [guard mount time] were not in the offing.”

There are four important takeaways for labor professionals involved in successor employer situations, whether in the government contracting setting or in a more typical acquisition of the assets of a unionized business, to consider:

  • It is important to plan, well in advance, what the purchaser/successor will say to the employees of the seller/predecessor. What is said and when it is said has important labor implications.
  • Greater specificity about which terms will change is better. Here, more details in the offer letter (or application, for that matter) may have avoided the argument Member McFerran made in her dissenting opinion.
  • Don’t forget the importance of action as well as language. A key factor in the majority opinion was that the successor actually implemented the reduced guard mount time on the first day of operations at the site.
  • Remember that there are many numerous traps for the unwary in acquisition situations.   This case only focused on one of them.  Accordingly, consulting experienced labor counsel in these transactions is critical.