Acquiring Nursing Home Operator Forfeits Right to Set Initial Terms and Conditions of Employment: NLRB | Practical Law

Acquiring Nursing Home Operator Forfeits Right to Set Initial Terms and Conditions of Employment: NLRB | Practical Law

In JAG Healthcare, Inc., the National Labor Relations Board (NLRB) held that an acquiring nursing home operator that told employees there would not be a union when it took control of nursing home operations violated the National Labor Relations Act (NLRA) and forfeited its rights under NLRB v. Burns Security Services to set the initial terms and conditions of employment unilaterally. The NLRB also applied its pre-Register Guard standard for evaluating whether a solicitation and distribution policy discriminates against union activity.

Acquiring Nursing Home Operator Forfeits Right to Set Initial Terms and Conditions of Employment: NLRB

by PLC Labor & Employment
Published on 02 Apr 2013 • USA (National/Federal)
In JAG Healthcare, Inc., the National Labor Relations Board (NLRB) held that an acquiring nursing home operator that told employees there would not be a union when it took control of nursing home operations violated the National Labor Relations Act (NLRA) and forfeited its rights under NLRB v. Burns Security Services to set the initial terms and conditions of employment unilaterally. The NLRB also applied its pre-Register Guard standard for evaluating whether a solicitation and distribution policy discriminates against union activity.

Key Litigated Issues

In JAG Healthcare, Inc., the key litigated issues were whether JAG Healthcare, Inc. d/b/a Galion Pointe, LLC, an acquiring operator of nursing home facilities in Ohio:
  • Violated the NLRA and forfeited its rights under NLRB v. Burns Security Services to set the initial terms and conditions of employment unilaterally when it told employees that there would not be a union when it took control of nursing home operations.
  • Violated the NLRA by:
    • prohibiting employees from discussing the union with each other during working time while allowing discussions about other non-work related subjects during the same time; and
    • discharging employees that it suspected had discussed the union or engaged in concerted activities.

Background

JAG Healthcare, Inc. is a corporation that operates multiple skilled nursing home facilities that provide inpatient medical care in Ohio. It acquired a nursing home facility, Village Care, located in Galion, Ohio. A union represented a bargaining unit at Village Care.
While interviewing employees of Village Care to determine whom it might retain as employees at the nursing home (to be renamed Galion Pointe), when it took over operations, JAG Healthcare representatives told interviewees that there would be no union at Galion Pointe. Ultimately, a majority of the employees hired at Galion Pointe were former Village Care bargaining unit employees. The union that represented the Village Care bargaining unit filed unfair labor practice (ULP) charges against the employer in 2010. The Acting General Counsel issued a consolidated complaint on December 29, 2011, which alleged that during 2010, JAG Healthcare violated:
  • Section 8(a)(1) of the NLRA by:
    • telling employees that there would be no union acting as their collective bargaining representative when JAG Healthcare took control of nursing home operations on July 1, 2010;
    • announcing and issuing a rule prohibiting its employees from discussing the union with each other during working time;
    • announcing and maintaining an overbroad no-solicitation/no-distribution policy; and
    • directing an employee to stop discussing the union outside of the employee break room or resign.
  • Section 8(a)(3) of the NLRA by:
    • terminating or refusing to hire 21 former Village Care employees because they were members of the union to avoid retaining a majority of former Village Care employees in the bargaining unit;
    • terminating employees Diana Nolen and Natalie Archer because it believed that they discussed the union and engaged in concerted activities and to discourage employees from engaging in those activities; and
    • terminating employee Traci Atkins both because she was a union member and to discourage employees from supporting the union.
  • Section 8(a)(5) of the NLRA by:
    • unlawfully withdrawing recognition from, or alternatively (from June 30, 2010 onward) failing to recognize and bargain with the union, once a majority of its employees were former Village Care bargaining unit members; and
    • unilaterally changing terms and conditions of employment for unit employees (including mandatory subjects of bargaining such as wages, shift hours and benefits), without giving the union prior notice or an opportunity to bargain about the changes.
On July 27, 2012, an NLRB Administrative Law Judge (ALJ) issued a decision holding that JAG Healthcare violated the NLRA by:
  • Refusing to recognize and bargain with the union as the collective-bargaining representative of the bargaining unit.
  • Telling Village Care bargaining unit employees that there would be no union serving as their collective bargaining representative once JAG Healthcare took control of nursing home operations.
  • Unilaterally changing bargaining unit employees' terms and conditions of employment without first giving the union notice and an opportunity to bargain.
  • Refusing to hire 21 former Village Care employees from July 1, 2010, onward both because they were represented by the union and to avoid an obligation to recognize and bargain with the union as Village Care's successor.
  • Prohibiting employees from discussing unions during working time and by maintaining an unlawful no-solicitation/no-distribution policy.
  • Coercively enforcing the rule prohibiting union discussions against Natalie Archer.
  • Discharging Natalie Archer, Diana Nolen and Traci Atkins for discriminatory reasons.
JAG Healthcare appealed the ALJ's decision by filing exceptions to the panel (Board) heading the NLRB's judicial functions. The Acting General Counsel filed an answering brief.

Outcome

In a unanimous decision dated March 28, 2013, a three-member panel of the Board affirmed the ALJ's rulings, findings and conclusions and adopted his recommended Order.
Specifically, the Board:
  • Affirmed the ALJ's conclusion that JAG Healthcare lost its right unilaterally to set the initial terms and conditions of employment as a successor under Burns because it unlawfully stated that there would not be a union at the Galion Pointe facility. Here, as in Advanced Stretchforming International, the employer made the unlawful statement and then became Village Care's successor when a majority of its hires were former Village Care bargaining unit employees. The employer's discriminatory hiring practices also independently made unlawful its unilateral setting of initial terms.
  • Affirmed that the employer unlawfully:
    • prohibited employees from discussing or soliciting support for the union during working time while allowing non-work related conversations at the same time;
    • prohibited union discussions outside of the break room, regardless of whether it was working or non-working time; and
    • disciplined employees whom it believed discussed the union. (The Board found it unnecessary to determine whether there were formal rules or informal policies because the employer's actions had a reasonable tendency to interfere with, restrain or coerce employees in the exercise of their Section 7 rights and therefore violated Section 8(a)(1) of the NLRA (Jensen Enterprises).
  • Affirmed that the JAG Healthcare unlawfully discharged Natalie Archer, Traci Atkins and Diana Nolen while applying the Board's Wright Lineanalysis.

Practical Implications

A company that acquires a business where there is currently a bargaining unit may not be required to recognize and bargain with the union representing the purchased company's employees under Burns and other cases interpreting successors' obligations under the NLRA (see Practice Note, Collective Bargaining under the National Labor Relations Act: Bargaining Obligations from Business Acquisitions). However, as this case illustrates, an acquiring company should consider avoiding:
  • Overtly using employees' union affiliation as a factor when making hiring decisions.
  • Making broad statements that there will be no union at the acquired facility under the new ownership.
An acquiring company that is a Burns successor and takes either action might forfeit rights to set the initial terms and conditions of employment unilaterally. Instead, an acquiring company should:
  • Consider avoiding any comments about unions.
  • Only if prompted by direct questions, indicate that as part of the purchase, the acquiring company is not assuming the seller's collective bargaining agreement or collective bargaining obligations, but will comply with obligations under applicable laws as it sets up its operations and hires its workforce.
This case is also noteworthy because the Board applied a discrimination analysis that differs from its analysis in Guard Publ'g Co. (Register-Guard) without distinguishing that case. The Board cited Jensen Enterprises, a 2003 decision where the employer violated the NLRA because it disciplined employees engaged in union discussions or solicitations but not employees engaged in other non-business discussions or solicitations. In Register-Guard, a 2007 decision, the Board held that its discrimination analysis required the Board to compare how an employer treats pro-union discussions with how it treats anti-union discussions. In light of the Board's decision to rely on a case preceding Register-Guard without distinguishing that case and the Board's previous statement that it disagreed with the holding in Register-Guard, employers should expect the Board, whether or not properly constituted, will formally overrule Register-Guard at the soonest opportunity (see Legal Update, Unfazed by Ruling on Recess Appointments, NLRB Condemns Employer's Restrictions on Unapproved Communications with Media, Law Enforcement).

Court Documents

UPDATE: On December 13, 2016, the US Court of Appeals for the Eleventh Circuit withdrew its opinion dated September 15, 2016, and issued a new opinion ( (Dec. 13, 2016)). The new opinion is nearly identical to the original opinion, but includes an additional paragraph noting that:
  • The EEOC has not persuasively explained why the EEOC changed course in the EEOC Compliance Manual, which conflicts with the EEOC's position in Thomas. (In the first opinion, the court had stated that the EEOC did not address Thomas in its reply brief and offered no explanation for its changed course.)
  • The EEOC's argument regarding Thomas fails to justify its shift in the EEOC Compliance Manual because:
    • the EEOC's attempt to characterize Thomas as a case about "hair length" as opposed to "natural hair texture" or the "other racial characteristics" raised in this case is not a sound basis for distinguishing Thomas, as the complainant in Thomas specifically complained about the employer's hair length policy in the context of "African American males who wear ethnic hair styles such as braids"; and
    • in Thomas, the EEOC relied on Willingham and Rogers as support for the proposition that an employer's prohibition against hairstyles typically associated with a particular race or ethnic group is outside the scope of Title VII since the prohibition does not discriminate based on immutable characteristics.
(, at *10.)