As tribal business development corporations grow, soshould the concern regarding unionization. Today's

most successful Indian tribes and Alaskan Native Corpora-tions, as part of their business development strategy, purchaseor merge with business entities in all types of industries. Assuch, tribes and their business enterprises are likely to comeinto contact with labor unions, as tribally owned enterprisesacquire or merge with unionized companies.

Often when a successor purchases a company with a certified union representing some or all of the employees,there exists an understandable confusion as to the successor'sobligation to recognize the union. In some instances, the successor will refuse to recognize the union on the groundsthat it has no relationship with the union, and as such does not have to entertain collective bargaining regarding theterms and conditions of the newly acquired workforce.

Unfortunately, in many cases this posture is incorrect, andif maintained will usually result in the filing of an unfair laborpractice, that often results in an outcome unfavorable to thesuccessor employer.

It is well established that a mere change of employers aloneis not sufficient to nullify the certification of the employees'representative. Where the nature of the business continueswithout substantial change after the transfer of ownership,the successor employer is required under federal law to recognize the union. The National Labor Relations Board(NLRB) has consistently held that there is no reason tobelieve that the employees have changed their attitudetowards representation simply because the identity of theiremployer has changed. Where the successor performs thesame services, utilizing the predecessor's former supervisors,on the same premises, with the same employees, exercisingthe same skills and using the same tools and equipment, forthe same market of customers, form the perspective of theemployees; nothing has changed warranting a belief thatunion representation is no longer desired.

In determining whether the new company is a successorcompany, thereby obligating the new company to recognizethe union, the NLRB will apply its “substantial continuity”rule. Simply, this rule addresses whether the new companyhas acquired substantially all of the predecessor's assets, andhas continued, without interruption, the predecessor's business operations. It will usually be determined that the newcompany is a successor when the following circumstancesexist: (1) the new company acquires most of the predecessor'sreal property, machinery, equipment, inventory, and materials, (2) produces the same product line, (3) essentialnature of employees' jobs remains the same, (4) job classifi-cations remain the same, and (5) employees' work on the same machines and under the direction of may of the samesupervisors as when working for the predecessor.

On the other hand, factors that are evidence of “discon-tinuity” between the employers, thereby providing the newemployer with the ability to reject the union's representationare (1) the hiring through by newspaper advertisementsrather than the predecessor's employment records, (2) along hiatus between the predecessor's demise and the startupof the new employer, (3) changes in sales and marketing, (4)the new company does not assume the predecessor's liabilities or tradename, and (5) there is a reduction in the sizeof the workforce as compared to the predecessor's company.

The theory behind successorship is based upon the

LEGAL FRONT

Successorship Under the National Labor Relations Act:The Basics Every Employer Should Know

by Kevin J.Allis

20 Indian Gaming May 2008

May 2008 Indian Gaming 21

overriding premise of the National Labor Relations Act(NLRA) which is to promote peaceful and healthy laborrelations. Because transitions from one employer to anothercan be particularly threatening to industrial peace, the rebut-table presumption that the certified union enjoys majority status continues despite the change of employers.

However, if a majority of the new employer's workforceis new and was never associated with the predecessor, or ifthe product line, job responsibilities of the employees, andthe identity of supervisors should change, serious doubt is castupon continued majority status. Again, when decidingwhether a successor is obligated to recognize the union, theview is that from the employees' perspective. If the workingenvironment is substantially different from that of the pre-decessor's, there is no reason to believe that the employeesstill wish to be represented by the union. Both the NLRB andthe courts have held that such changes warrant the refusalto recognize the predecessor's union.

Finally, successor employers are not bound by the substantive

provisions of the collective bargaining agreement betweenthe union and the predecessor employer. The new employeris free to set the initial terms and conditions of employmentfor the employees. However, once these terms and conditionsare set, the new employer has an obligation to bargain in goodfaith with the existing labor union.

A successor employer's obligations under the NLRA canbe complicated and wrought with dangers for the unsuspect-ing employer. As such, competent legal counsel with extensive knowledge in traditional labor law is essential toavoiding the unnecessary and costly expense of defendingagainst an unfair labor practice. ¨

Kevin J. Allis, an attorney with the Washington D.C. firm ofPilieroMazza PLLC, is a tribal member of the Forest CountyPotawatomi Community. His areas of practice include manage-ment-side labor and employment law and Native AmericanIndian law. He can be reached by calling (202)-857-1000 or email kallis@pilieromazza.com