When a company considers acquiring the assets of a unionized employer, it must assess its position toward the incumbent bargaining representative. In many cases, the acquiring company prefers to adopt the existing collective bargaining agreement, or to recognize the existing union as the representative of the employees for purposes of negotiating a new agreement.

However, in some cases, the purchasing company concludes that as a result of the transaction, the current union will cease to represent the majority of the acquired employees. In its 2002 MV Transportation decision, the National Labor Relations Board declared that the incumbent union was entitled to a rebuttable presumption that it continues to represent a majority of the bargaining unit after the transaction. The new employer can overcome this presumption during the course of a decertification petition, or a different union can attempt to supplant the existing bargaining representative.

Last month, in UGL-UNICCO, the NLRB reversed this precedent, granting incumbent unions in a "successor bar" against challenges to their status for a set period of time following the transaction. In a 3-1 decision, the NLRB concluded that MV Transportation misread the NLRA, and that the statute favors bargaining relationship stability, especially in the context of greater merger and acquisition activity.

The NLRB imposed the successor bar for a period of six months to one year following the acquisition, depending upon the employer's acceptance of existing employment terms and conditions. The dissenting NLRB member characterized the reversal of MV Transportation as little more than an effort to protect existing unions regardless of changed circumstances following the transaction.

Under this decision, the acquiring employer has no obligation to adopt the previous CBA, but it cannot attempt to remove the incumbent union to avoid negotiations over working terms and conditions for an established period of time.