SENATE BILL REPORT

HB 1669

BYRepresentatives Wang, Patrick, Ebersole, O'Brien, Locke, Sayan and Winsley

Requiring successor employers to observe existing collective bargaining agreements.

House Committe on Commerce & Labor

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 25, 1988

Senate Staff:Bill Lynch (786-7427)

AS OF FEBRUARY 23, 1988

BACKGROUND:

When a business changes ownership, the new owner is generally not bound to contracts made by the previous owner, including collective bargaining agreements, unless the new owner specifically agrees to accept those obligations.

Although the new owner may not be bound to the collective bargaining agreement, under interpretations of the National Labor Relations Act he or she may have obligations towards the employees if found to be a "successor" employer.  To determine "successorship," the courts evaluate whether there is continuity in the work force and whether the new owner's operational structure and practices are similar to the business of the previous owner.  If a new owner is found to be a successor employer, the owner must recognize and bargain with the employees' bargaining representative.

These successor employer requirements do not apply to employers outside of the jurisdiction of the National Labor Relations Board.  The threshold for the board's jurisdiction is $500,000 in gross sales for retail businesses.  Some states have enacted state successor employer provisions, including California, Massachusetts, Ohio and Illinois.

SUMMARY:

If a collective bargaining agreement contains a successor clause, the clause is binding on any employer who succeeds to the contracting employer's business until the agreement expires, but for no longer than three years from the effective date of the agreement.  The contracting employer is obligated to disclose the successor clause to the successor employer.

A "successor employer" is a purchaser or other transferee of the business if the purchaser will conduct substantially the same business operation or offer the same service and use the same physical facility as the contracting employer.

Exemptions are provided for receivers or trustees in bankruptcy of the contracting employer's business, employers who acquire businesses from the receiver or trustee in bankruptcy, public employers, and employers subject to the National Labor Relations Act or the Railway Labor Act.

The successor employer provisions may be enforced in a court of competent jurisdiction by any person aggrieved by a violation of the provisions.

Appropriation:    none

Revenue:    none

Fiscal Note:      available