Successor Bar Doctrine Applied to Require Collective Bargaining

News Updates

Giving all employees a crisp $100 bill for meeting a production goal without bargaining with a union arguably could be an unfair labor practice.

Moreover, an employer that acquired a unionized company and thought it could quit bargaining with the union that had lost majority support instead was required to keep bargaining with the union for six months under the successor bar doctrine, the U.S. District Court for the Northern District of Indiana ruled on Nov. 7, 2014. That’s six months measured from the date of the first bargaining meeting between the union and the successor employer.

Corporate Acquisition

In August 2013, DCX-Chol Enterprises bought the assets of Stuart Manufacturing in Fort Wayne, Ind., a company that manufactures electronic parts, wires, cables and harnesses, mostly for the defense industry. For more than 30 years, Stuart Manufacturing’s production and maintenance employees were unionized and represented by the Indiana Joint Board, Retail, Wholesale, Department Store Union, United Food & Commercial Workers Union, Local 835. David Altman, president of the Indiana Joint Board, has represented the union members since 2000.

Carol Goods-North, Stuart Manufacturing’s director of HR, informed Altman that the only change she knew DCX would request of the union was to switch the pay date from every other Wednesday to the fifth and 20th of each month, to align the facility’s pay periods with the rest of DCX. Altman said he would need to submit the change to the bargaining unit for a vote.

After DCX and the union held their first monthly grievance meeting together, Altman asked Gerald Pettit, Stuart Manufacturing’s general manager, if he could go to the employee break room to have a cup of coffee with employees so he could talk with them and answer any of their questions, as Goods-North (who phoned into the meeting, but wasn’t there in person) had let him do for seven years. Pettit said, “no,” explaining that employees were busy and it would be disruptive for Altman to be in the break room.

At roughly the same time, 29 members of the approximately 54 members of the bargaining unit signed a petition to decertify the union.

Goods-North stayed in contact with Altman at first, relative to DCX’s requested changes to the collective bargaining agreement (CBA)—the shift in the pay periods. Altman proposed having the employees vote on the proposal on Sept. 3, 2013. But that day Goods-North e-mailed that DCX had been notified about the decertification petition and proposed waiting for the National Labor Relations Board (NLRB) to act on the petition before moving forward. Altman did not object.

In October 2013, the Stuart Manufacturing Inc. (SMI) division of DCX shipped over $1 million of products in a single month, meeting its production goal. The facility hadn’t met that mark in several years. Neal Castleman, DCX’s president, directed Pettit to give every employee at the facility “a crisp $100 bill” to show his appreciation, which SMI managers did. DCX never bargained with the union over giving the $100 bills to employees.

The CBA was due to expire on Feb. 8, 2014, so Altman and Goods-North began exchanging e-mails to initiate the bargaining process for a new agreement. They agreed for the first bargaining session to take place on Jan. 6, 2014. By then, the board had dismissed the employees’ petition for decertification, but the employees refiled it on Nov. 4, 2013. In December 2013, an employee anonymously left a copy of the decertification petition with over half of the bargaining unit employees’ signatures on Pettit’s chair.

On Jan. 3, 2014, counsel for DCX sent Altman a letter stating that DCX was no longer willing to bargain with the union in light of the decertification petition.

DCX subsequently changed the employees’ pay dates without bargaining over the change. 

ULP Charges

Altman filed unfair labor practices (ULP) charges against DCX. The NLRB’s regional director cited ULPs it contended required interim injunctive relief, and an administrative law judge agreed with several of them. On appeal, the court granted injunctive relief as to four of the ULP charges:

Refusing to recognize and bargain with the union.

Denying a union official access to DCX’s employee break room.

Awarding a $100 bonus to all employees without bargaining with the union.

Unilaterally changing the employees’ pay date.

The court called the refusal to recognize and bargain with the union, despite the union’s loss of majority support among employees, the “central dispute in this matter.”

Under the successor bar doctrine, “once an employer becomes a successor, the union is entitled to a reasonable period of bargaining, during which no question concerning representation that challenges its majority status may be raised through a petition for an election filed by employees, by the employer or by a rival union; nor, during this period, may the employer unilaterally withdraw recognition from the union based on a claimed loss of majority support, whether arising before or during the period.”

And, the court noted, the board “has adopted a bright-line rule that, in cases such as this where the successor adopts the existing terms and conditions of employment, this bar runs for a period of six months.”

The court observed that DCX expressed “discomfort with negotiating with a union that no longer had the support of a majority of its bargaining unit employees, but while that discomfort is understandable, it is legally irrelevant.” The court ordered the company to bargain with the union immediately, lasting until at least six months after the date of the first collective bargaining meeting between the parties.

Addressing the denial of access to the break room, the court noted that “while the CBA does not expressly require DCX to permit union officials access to the break room following grievance meetings, the director asserts that  its predecessor permitted such access so consistently that it became a term and condition of employment.” The court was persuaded by this argument, pointing out that the CBA did not expressly forbid access and observing that “the union’s access to bargaining unit employees is particularly important at this time to allow the union to restore the support of its members.” It granted an injunction requiring DCX to permit a union official access to the employee break room for reasonable periods following the parties’ monthly grievance meetings.

The payment of a $100 bonus was a closer call, according to the court, which merely enjoined the company from future “improper awards” of such bonuses. The company had characterized the bonuses as gifts that are not a mandatory subject of bargaining, as distinct from wages. But the court noted that the bonus was tied to performance. In addition, after employees were given the bonus on Nov. 4, 2013, a union membership meeting scheduled for that day had only three employees attend—a substantial decrease from the eight to 15 employees who typically attended such meetings.

As for the unilateral change in the employees’ pay date, DCX observed that the interest for any delay in employees receiving their checks would measure in the pennies. “Granted, it is not clear here whether the pay dates were particularly important to the employees, such that they would be interested in bargaining back for them,” the court stated. “But changing the pay dates was important for DCX, so even if the employees were indifferent as to when they were paid, they may have been able to extract other "value from DCX in return for their concession on this issue. DCX’s unilateral change deprived them of that opportunity.”

DCX also argued that it would be harmed if it was required to change the pay dates back because it would have to pay its payroll contractor to process a separate pay date for the Fort Wayne facility only. The court rejected that argument, saying that “if DCX wants the entire company’s payroll to be on the same schedule, it could do so by moving the rest of the company’s pay dates to every other Wednesday instead of by moving the Fort Wayne facility’s pay dates.”

The court concluded that DCX would have to rescind the change in pay dates and move the union members’ pay date back to every other Wednesday, if the employees request such rescission within 30 days of the court order.

This decision is Lineback v. SMI/Division of DCX-Chol Enterprises, 1:14-cv-00228 (N.D. Ind. 2014).

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

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