D.C. Circuit Invalidates NLRB Successor Bar Rule for Acquired Unionized Employers
Employers acquiring unionized businesses and their in-house counsel must revise post-acquisition labor strategies now that the NLRB’s “successor bar” rule blocking challenges to incumbent union representation for one year after ownership change has been struck down.
A D.C. Circuit three-judge panel ruled 2-1 in favor of Puerto Rico’s Hospital Menonita de Guayama, invalidating the NLRB’s “successor bar” rule that required new owners of unionized businesses to recognize and bargain with incumbent unions for up to one year after acquisition even if the union had lost majority employee support. The ruling relied on the 2024 Supreme Court Loper Bright decision ending Chevron deference to agency statutory interpretations, finding the NLRB exceeded its congressional authority under the National Labor Relations Act. In-house counsel advising on M&A for unionized employers should update post-acquisition labor protocols, and may now file timely challenges to incumbent union representation if evidence shows the union no longer holds majority employee support, without waiting out the prior one-year bar period.