Succession and transfer of businesses in the United States

AutorThomas C. Kohler
Páginas102-111

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1. a Does the legal system of the United States establish a specific regulation regarding the rights of workers affected by a transfer of businesses? If so, is this rule the result of a supranational agreement?

United States law makes no special provisions for employees affected by the transfer of a business. Since employees are considered to be hired on an at-will basis, unless otherwise specifically agreed, they can be discharged at any time and for any reason that does not contravene a positive enactment of law.

One statute, the Workers’ Adjustment and Retraining Notification Act (WARN Act), 29 U.S. Code § 2101, provides that employers with more than 100 employees must give notice 60 days in advance of plant closings or mass layoffs. This, of course, does not necessarily include a transfer of a business, unless, as a result, closings or layoffs will occur. General information about the statute and its requirements can be found at the U.S. Department of Labor website: http://www.dol.gov/compliance/laws/compwarn.htm

2. What are the situations that determine the situation of «transfer of businesses»? How does the legal system in your country regulate the phenomenon of a transfer of business established in a collective bargaining agreement? And how does it regulate the situation of transfer of business derived from a transfer of a group of workers?

There is no special legal provision that describes the -transfer of business- in American labor and employment law. The transfer of a business whose employees are covered by a collective bargaining agreement in the United States raises the problem known as -successorship,- i.e., what duties or responsibilities does a successor employer have to employees who were covered by the terms of a collective bargaining agreement between their bargaining representative (union) and the -predecessor- employer? As the U.S. Supreme Court has stated:

-The question whether [an employer] is a -successor- is simply not meaningful in the abstract- [T]he real question in each of these -successorship- cases is, on the particular facts, what are the legal obligations of the new employer to the

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employees of the former owner or their representative? The answer to this inquiry requires analysis of the interests of the new employer and the employees and the policies of the labor laws in light of the facts of each case and the particular legal obligation which is at issue, whether it be the duty to recognize and bargain with the union, the duty to remedy unfair labor practices, the duty to arbitrate, etc. There is, and can be, no single definition of successor which is applicable in every legal contest.- (Howard Johnson Co. v. Detroit Local Joint Executive Board, 417 U.S. 249, 262, note 9 (1974)).

The Supreme Court in Howard Johnson also has made clear that -where the successor corporation is the ‘alter ego’ of the predecessor, where it is ‘merely a disguised continuance of the old employer’- courts will have -little difficulty holding that the successor is in reality the same employer and is subject to all the legal and contractual obligations of the predecessor.- (417 U.S. 249 at 259, note 5)

I will outline the law under the National Labor Relations Act, as interpreted by some key U.S. Supreme Court holdings. I will then address some special problems that arise in arbitration of -work preservation- and -successor and assign- clauses in collective bargaining agreements.

2.1. Successorship and the NLRA

The question in successorship cases is whether any duty exists on the part of the successor employer (a) to recognize the union that represented the predecessor’s employees and (b) whether and to what extent, if any, the successor employer is bound by the terms of the collective bargaining agreement between the predecessor employer and the union that represented its employees. With the above-mentioned principles in mind, an outline of the law:

1. Firstly, a -successor- employer is under no legal obligation under the National Labor Relations Act to hire any of the predecessor’s employees. As long as the successor does not discriminate, on the basis of anti-union animus, in the hiring process, the successor is free (a) to set the terms and conditions which it will offer employment and (b) to select those whom it wishes as employees. The successor...

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