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Successor Employers

What happens when the employer sells the business? The union wants to maintain wages, terms and conditions of employment. However, management has the unilateral right to sell.

Successorship language is a mandatory subject of bargaining
Such language is binding on old owner; any sale contingent on new owner accepting the existing collective bargaining agreement. If a purchaser buys in good faith without knowledge of the clause, it is not enforceable against the purchaser. However, the signatory predecessor may incur liability.

Tactics include

	Seeking a court injunction
	Serving notice of clause on prospective buyer

A bona fide (legitimate) purchaser not obligated to bargain unless:

	The employer remains in same industry
	The employer retains a substantial part of workforce, which comprises a majority of the successor’s workforce.

A purchaser will be considered a successor if there is substantial continuity of business. This might include:

	Offering a similar product or service
	Retaining the same facilities or equipment
	Serving the same customers or market area

What is the successor obligation to bargain?

A successor maintains right to unilaterally establish initial terms and conditions of employment. The intent to continue business without interruption using entire workforce may obligate employer to continue existing conditions.