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Clear and Early Communications Will Set You Free

Congratulations! Your Company has been awarded a new contract for services and will replace a company that had previously provided the same services to the customer. Your operations folks are not certain how many of the predecessor’s employees they will decide to hire. You have been told that one reason your Company obtained the work was that your Company’s proposal had lower total cost for wages and benefits than the predecessor company. Oh, and by the way, your predecessor’s employees were represented by a union.

Two recent National Labor Relations Board decisions reflect how important communication is in this situation. In one case, relating to a successor company providing garbage services, the Board held that the successor employer had an obligation to maintain the terms and conditions of employment of the predecessor employer until it renegotiates new terms with the union. This requirement was based on the Board’s finding that the first truly clear communications to employees regarding the new employer’s intent to implement its own wage and benefits scheme didn’t occur until the day employees were to show up for work. Another recent Board decision indicated that a predecessor’s statements can also affect the successor’s freedom to implement its own wage and benefits and bind the successor to the preexisting terms and conditions. Although this second decisions is a strange one, and may not survive appeal, it still reflects how important clear and early communication is.

Based on these decisions, here are a few things to tell your operations folks. First, their decisions as to who they will hire should be unrelated to the fact that the predecessor employees were represented by a union. The current Board will be very unfriendly to any employer who is found to have manipulated a hiring decision in order to avoid a union. Second, the operations folks should communicate as soon as possible what new pay scales and benefits they intend to offer to those employees of the predecessor whom they are considering for employment. In fact, the very first communication from your Company to these employees should state clearly that it is the intention of your Company to implement its own wage structure and benefits system, even if a majority of the workers hired are from among the predecessor employer’s union represented employees. Your Company should also ensure that your customer and the predecessor company know you intend to retain your freedom to implement wages and benefits. Taking these steps toward clear communication should set you free to establish your own wages and benefits.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.