The Eleventh Circuit Provides Guidance to Successor Employers on Workforce Transitions Under the NLRA
In determining that the National Labor Relations Board’s decision finding that the Employer violated the National Labor Relations Act was not supported by substantial evidence, the U.S. Court of Appeals for the Eleventh Circuit provided some guidance to employers on workforce transitions from another employer.
The case of Ridgewood Health Care Center, Inc. v. NLRB addressed three primary issues: whether a successor employer (1) coercively interrogated prospective employees, (2) engaged in a discriminatory hiring scheme to avoid an obligation to recognize and bargain with the union representing its predecessor employees, and (3) thereafter refused to bargain with the union on the basis that the employees previously represented by the union did not constitute a majority of the successor’s workforce.
Background: Prior to 2013, Preferred Health Holdings leased and operated Ridgewood Health Care Center. In 2013, Preferred announced that it would terminate its lease. Following Preferred’s termination of operations, Ridgewood Services (Ridgewood) would assume operations of the facility. Preferred Health employees were informed that their positions would be terminated at the same time as Preferred’s operations ended, and they would have to reapply for positions with Ridgewood.
Sixty-five of 83 Preferred employees applied for employment with Ridgewood. Of those 65 employees, 53 were offered employment with Ridgewood Services. On the first day of Ridgewood Services’ operations at the facility, 49 employees were previously employed by Preferred – and represented by the union – and 52 were not previously employed by Preferred. Accordingly, Ridgewood notified the union that it would not recognize and bargain with the union because a majority of its workforce was not comprised of Preferred employees who had been represented by the union.
The union alleged that Ridgewood Services committed numerous unfair labor practices. Ultimately, the Board held that Ridgewood Services coercively interrogated prospective employees regarding their union activities, engaged in a discriminatory scheme to avoid hiring a workforce comprised of a majority of the union-represented employees, and unlawfully refused to bargain with the Union.
Coercive Interrogation: The Eleventh Circuit found that Ridgewood did not coercively interrogate Preferred employees during interviews. It held that the Board failed to analyze the circumstances to determine whether Ridgewood’s questioning crossed the line and became coercive. The Eleventh Circuit noted that the seven employees who were asked about union membership all answered truthfully and were hired by Ridgewood. Additionally, there did not appear to be a systemic effort to inquire about union status. Finally, not one of the employees asked about union membership testified that their interviews suggested any coercion. Accordingly, Ridgewood’s questioning did not violate the NLRA.
Discriminatory Hiring: The Board found that Ridgewood undertook a discriminatory hiring scheme to avoid a bargaining obligation with the Union. The Board inferred union animus from the alleged coercive interrogations, Ridgewood’s lead investor’s statement that it was a “possibility” that Ridgewood may close the facility if employees unionized, and a threat of termination made to an employee seeking to organize a union months after Ridgewood commenced operations.
The Eleventh Circuit, however, rejected each prong of the Board’s reasoning. First, as discussed above, the court held that Ridgewood did not engage in coercive interrogation. Second, the Eleventh Circuit held that the investor’s statement was not coercive on its face but, even if it was coercive, was made several months after the hiring decisions and there was therefore no nexus between the statement and Ridgewood’s hiring decisions. Third, the termination threat occurred well after Ridgewood’s commencement of operations and, again, there was no evidence that hiring decisions made months earlier were impacted by union animus. Thus, the Eleventh Circuit held that the Board’s conclusion that Ridgewood engaged in a discriminatory hiring scheme was not supported by substantial evidence.
Refusal to Bargain: Finally, the Eleventh Circuit agreed with Ridgewood that it did not unlawfully refuse to bargain with the union. On Ridgewood’s first day of operations, a majority of its workforce was not comprised by a majority of Preferred employees who had been represented by the union. And because Ridgewood did not engage in a discriminatory hiring scheme, the Board incorrectly found that Ridgewood was obligated to bargain with the Union.
Takeaway: While Ridgewood was ultimately successful before the appeals court, it takes substantial resources to process a case to that juncture. Employers who are taking over operations at a unionized facility are well-served to avoid broaching the subject of unionization or union membership during employee interviews. Finally, successor employers should not make hiring decisions based on an effort to avoid a bargaining obligation; if the successor’s Day 1 workforce is not comprised of a majority of employees who were represented by the union, the employer should be prepared to present non-discriminatory reasons for its hiring decisions.