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NLRB Clarifies Purchaser’s Bargaining Obligation

September 19, 2016 by

The National Labor Relations Board has issued a decision that emphasizes the importance of a purchaser’s communications with a selling employer’s employees before taking over the operations of the seller. The decision, Nexeo Solutions, LLC, and Teamsters Local 70, 364 NLRB No. 44 (7/18/16), clarifies the question of when a purchaser of a unionized business must negotiate with the union before setting new terms and conditions of employment.

The Board’s long-established successorship doctrine imposes an obligation to bargain with employees’ chosen bargaining representative if the seller’s former employees make up a majority of the purchaser’s workforce. However, a successor is ordinarily not bound by the terms of a collective bargaining agreement negotiated with the predecessor employer, and can generally set the initial terms and conditions of employment without first bargaining with the union. But under the “perfectly clear” exception to this rule, if a successor employer makes clear that it will retain a majority of the seller’s employees without changing their employment terms, the successor must bargain with the union before making any changes to those terms of employment.

The Board’s majority opinion in Nexeo Solutions emphasizes the different ways in which a successor employer can fall into “perfectly clear” status, and thus have to bargain prior to making changes in pre-existing employment terms.  The “perfectly clear” exception “is not limited to situations where the successor fails to announce initial terms before extending a formal invitation to the predecessor’s employees to accept employment.  Rather, the bargaining obligation attaches when a successor expresses an intent to retain the predecessor’s employees without making it clear that employment will be conditioned on acceptance of new terms. … To avoid ‘perfectly clear’ successor status, a new employer must clearly announce its intent to establish a new set of conditions prior to, or simultaneously with, its expression of intent to retain the predecessor’s employees.”

The Board ruled that Nexeo violated the NLRA when it unilaterally implemented initial terms of employment at its newly-purchased facility that were different from the employees’ existing terms of employment. Nexeo was a “perfectly clear” successor because it told employees they would all be retained under new management with equivalent salaries and benefits. Employees received various communications to this effect prior to Nexeo’s extension of offer letters in which Nexeo announced its intention to change benefits and making other unilateral changes after assuming operational control.

Unions and their members should be aware of this important rule whenever a unionized operation is sold.  It could make the difference between saving and losing hard-fought bargaining gains.


The Board Decision may be found here:


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