In 2011, the National Labor Relations Board held in a contested case proceeding that federal labor law requires purchasers of unionized businesses to recognize and bargain with the existing union for one year following the acquisition. This "successor bar" rule created a rebuttable presumption that the union continued to have support of a majority of bargaining unit employees after the purchase. Last week, the U.S. Court of Appeals for the District of Columbia Circuit concluded that the successor bar rule is inconsistent with the statutory provisions of the National Labor Relations Act. 

In Hospital Menonita de Guayama v. NLRB, the employer appealed a NLRB decision requiring it to recognize and bargain with the existing union despite the fact that there had not been a collective bargaining agreement in place for years. The employer contended that the union no longer enjoyed the support of a majority of employees and refused to bargain with it. The union filed an unfair labor practice charge, and the NLRB sided with the union citing the successor bar rule.

On appeal in a 2-1 decision, the D.C. Circuit relied on the Supreme Court’s Loper Bright opinion to determine that courts are no longer required to give deference to the NLRB’s interpretation of federal labor laws. When the court independently reviewed the NLRA, it concluded that the law guarantees employees the right to choose their own bargaining representatives, and that unions must maintain support of a majority of the bargaining unit to continue as their representative. Based on these principles, the employer is free to contend that such support no longer exists without any legal presumptions.

Acquiring a unionized workplace presents a number of challenges for the purchaser. In many situations, the purchaser agrees to initially recognize the existing union in order to avoid labor strife while it consolidates operations following the acquisition. However, this decision provides an option for employers that believe the union no longer has the support of its employees, and are willing to risk a legal battle in order to avoid recognizing or bargaining with that union.

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