Corporate Transformations and Collective Bargaining Rights - Corporate Transformations and Collective Bargaining Rights: The Successor Employer Doctrine in U.S. Labor Law -

This study analyzes the jurisprudence of U.S. labor law concerning the effects of corporate transformations—such as mergers, business transfers, and service contractor transitions—on existing collective bargaining agreements and the duty to bargain. Under U.S. labor law, employment contracts are considered personal and non-transferable; thus, employment relationships are not automatically succeeded in the event of a corporate change. Accordingly, a successor employer wishing to retain the predecessor’s employees must enter into new employment contracts with them. Furthermore, the successor is generally not bound by the predecessor’s collective bargaining agreement and may establish initial terms and conditions of employment at its discretion. However, since the 1960s, the U.S. Supreme Court has developed the doctrine of the “successor employer,” under which a successor employer acquires the obligation to bargain collectively if certain conditions are met. In particular, where the successor continues the predecessor’s business in a substantially similar manner and hires a significant number of the predecessor’s employees who then constitute a majority, the successor employer acquires the duty to bargain.<br/> This body of case law provides comparative insights into the legal treatment of collective labor relations during corporate transformations, especially in situations where substantial continuity of business exists between the predecessor and successor, raising issues such as the legal status of a union that previously held exclusive bargaining rights.