In an important ruling for businesses seeking to acquire a unionized entity, the Court of Appeals for the District of Columbia recently held that the National Labor Relations Board’s (NLRB) longstanding "successor bar" doctrine is unlawful because it compels a successor employer to recognize and bargain with an incumbent union for up to one year, even when the union may lack majority employee support.
The successor bar doctrine, adopted by the NLRB in UGL-UNICCO Service Co. (2011) to stabilize labor relations after an acquisition, required a successor employer that acquires a unionized business and retains a majority of the workforce to recognize and bargain with the incumbent union for a reasonable period, typically six months to one year. During that period, the union's majority status could not be challenged by employees, rival unions, or the employer.
In Hospital Menonita de Guayama v. National Labor Relations Board, which can be found here, [22-1163-2184163.pdf], the Court held that the doctrine unlawfully insulated unions from employee and employer challenges, even when evidence suggested the union lacked majority support. The Court concluded that the rule conflicts with the National Labor Relations Act’s (NLRA) fundamental guarantees of employee free choice and majority rule.
The Court concluded that the doctrine effectively created an irrebuttable presumption that an incumbent union retained majority support, even when evidence showed the opposite. Because the successor bar conflicted with the NLRA’s core protections of free choice and majority rule, the Court independently assessed the NLRB’s statutory authority to impose a successor bar rather than defer to the agency's policy judgments. Because the only explicit statutory bar to representation challenges is the one-year election bar following a valid Board election, the Court reasoned that the NLRB lacked authority to create an additional, non-statutory one-year bar for successor employers.
For employers involved in mergers, acquisitions, or asset purchases, the decision could make challenging an incumbent union's majority status easier immediately after a transaction when there is objective evidence that the union no longer enjoys employee support. Going forward, employers may place greater emphasis on documenting objective evidence of employee support or lack of support when evaluating bargaining obligations after an acquisition. For unions, the ruling removes a key protection that had insulated newly inherited bargaining relationships from challenge during the transition period.
