American Society for Healthcare Human
Resources Administration
September 28, 2013
Drinker Biddle & Reath LLP
191 North Wacker Drive
Chicago, IL 60606
Katie Bata
Christine M. Kong
Vice President of
Partner
Human Resources,
Advocate Sherman Hospital
Mark D. Nelson
Partner
Overview
> Reasons for increased hospital merger activity
> Strategic transaction process
> Strategies, objectives and principles
> Board and management considerations
> Stakeholders, regulators, interested parties
> Strategic transaction structural options
ASHHRA Pre-Conference Learning Session | September 28, 2013
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Reasons for Increased Hospital Merger Activity
> Access to capital and capital markets
> Changes in care delivery
> Changes in health care payment models
> Health reform
> IT infrastructure and EMR
> Quality initiatives and accountable care
> Revenue growth
> Economies of scale and related efficiencies
> Hospital/physician integration
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Strategies, Objectives and Principles
> Identify and develop key strategies, objectives, and principles
– Different perspectives of parties and stakeholders
– Prioritize
Revisit, evaluate, and reaffirm/revise throughout the process
> Strategies, objectives and principles must drive the transaction
process
>
– Do not permit the process to eclipse the ultimate objectives
– Avoid deal fatigue
– Avoid organizational inertia
>
Strategies, objectives and principles provide basis for binding
covenants/obligations and criteria for identifying and selecting a
partner
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Strategies, Objectives and Principles
>
Typical strategies and objectives
– Improvement of strategic position in the market
 Managed care contracting leverage
 May be defensive transaction
 Enter new market
 Add facilities and equipment
– Commitment of significant capital and improved access to capital
markets
– Long-term commitment to keep hospital as full service acute care
facility

Minimum commitment to maintain identified core services
– Preserve local independence, governance and management
– Protect employees and preserve work force in place
 Positions/titles, duties/responsibilities, salary/benefits, and severance
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Strategies, Objectives and Principles
> Typical strategies and objectives – cont’d
– Protect the physicians on the Medical Staff
– Recruitment of physicians to the community and medical staff
– Employ physicians
– Improve and expand quality initiatives
– Commitment to IT and EMR
– Commitment to the mission – charity care and community benefit
– Receipt of fair market value
– Reduce costs through economies of scale and efficiencies
– Transaction completion certainty
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Board and Management Considerations
>
The Board’s fiduciary duties
– Duty of Loyalty
 Exercise authority in good faith and best interests of the organization
and its charitable purposes
 Put non-profit interests ahead of proprietary ones
 Disclose/resolve all conflicts of interest
 Further the organization’s charitable purposes and mission
 Maintain confidentiality
– Duty of Care
 Comply with all applicable laws.
 Protect and conserve assets
 Manage risk – professional/general liability
 Ultimately responsible for quality
 Avoid “over delegation” to clinicians/experts
 Be reasonably informed on all board matters
 Ask appropriately hard questions – reasonable inquiry
 Business judgment rule
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Board and Management Considerations
>
Board and management considerations
– Mission
– Alternatives to transaction
– Adequate and timely information to Board
– Due diligence
– Documentation
– Participation of Board
– Agreement regarding participation and roles of CEO and Board
leadership

Existing Board committee or special transaction committee?
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Stakeholders, Regulators, Interested Parties
> The community – patients
>
>
>
>
>
>
>
>
and residents
Parent corporation
Employees
Physicians
Board
Management
Foundation and donors
Bondholders and bond
insurer/credit enhancers
Other lenders and creditors
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> Insurers and self-funded
>
>
>
>
>
>
>
employers
Press
Community organizations
Attorney General
Federal Trade Commission or
U.S. Department of Justice
DHSS and other State
Agencies
CMS/Medicare/Medicaid
Joint Commission and other
accreditation organizations
9
Strategic Transaction Structural Options
> Asset purchase
> Merger
> Consolidation
> Non-Profit change of control (e.g., member
>
>
>
>
>
substitution)
Joint Venture
Joint Operating Agreement
Long-Term Lease
Management Agreement
Non-Profit Affiliation
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Strategic Transaction Structural Options
> Many factors drive the decision on transaction
structure, including:
– Debt structure and how best to handle liabilities
– Availability of acquisition financing
– Licensure, AG and other regulatory requirements
–
–
–
–
–
Enforceability of post-closing covenants
Assignment and assumption of contracts (including leases)
Joint ventures and assignment of interests
Post-closing structural requirements of the acquiring party
Financial reporting and tax issues and consequences
– Employee benefit plan issues and transition considerations
– Requirements of antitrust regulators
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Simple Asset Purchase
Asset Purchase
Agreement
Purchaser
Seller
Purchased Assets
Purchase Price = $$$ + Any
Assumed Debt and Liabilities
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Typical For-Profit/Non-Profit Asset Purchase
Acquiring
System
[For Profit]
Asset Purchase
Agreement
Acquisition
Subsidiary
Net Proceeds
Seller
[501(c)(3)]
[For Profit]
$$$
Foundation
[501(c)(3)]
Purchased Assets
Purchase Price = $$$ + Any
Assumed Debt and Liabilities
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Typical Non-Profit/Non-Profit Asset Purchase
Acquiring
System
[501(c)(3)]
Asset Purchase
Agreement
Acquisition
Subsidiary
Net Proceeds
Seller
[501(c)(3)]
[501(c)(3)]
$$$
Foundation
[501(c)(3)]
Purchased Assets
Purchase Price = $$$ + Any
Assumed Debt and Liabilities
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Typical Simple Merger
Before Closing
After Closing
Acquiring
System
Acquiring
System
Merger
Agreement
Acquisition
Subsidiary
Target
[Survivor]
Target
[Survivor]
Certificate and
Plan of Merger
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Typical Simple Consolidation
Hospital A
Corporation
Hospital B
Corporation
Newco
Hospital
Corporation
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Non-Profit Change of Control
(or Substitution of Member)
Before Closing
Acquiring
System
After Closing
Change of
Control
Agreement
Change of
Control
Agreement
Acquiring
System
System
System
Sole Controlling
Member
Sole Controlling
Member
Hospital
Subsidiary
Sole Controlling
Member
Target
Hospital
Hospital
Subsidiary
Target
Hospital
Amended and
Restated Certificate
of Incorporation
and Bylaws
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Joint Venture Example
For Profit
Hospital
Company
Management
Services, LLC
Non-Profit
Health System
Cash
Contribution
Cash or Asset
Contribution
$$
Subsidiary
$$
50 to 20%
Ownership
50 to 80%
Ownership
JV, LLC
Management
Agreement
50/50 Board
Hospital, LLC
(operating company)
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Joint Operating Agreement
Non-Profit
Health System
Non-Profit
Health System
Joint Operating
Agreement
Contribution
of Hospital
$$
$$
Contribution
of Hospital
50/50 Joint
Operating
Committee
Hospital
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Hospital
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Labor, Employment and
Benefits Issues
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Obstacles to Successful Mergers
> Cultures Too Different
> Poor Integration
> Operational Failings
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Overview of Strategic Transaction Process
Due diligence
(legal, financial and operational)
Identify
concerns and
objectives
Decision to
explore
possible
transaction
Engage legal
and financial
advisors
Objectives
and criteria
for partner
Analysis
of options
Non-Disclosure
Agreement(s)
Identification
of potential
partners
Negotiated
deal or
auction
Select
potential
partner
Definitive
Agreement(s)
Letter of
Intent
Closing
Regulatory
approvals
Inform, educate, advise, and obtain
input from key stakeholders
(e.g., communication plan)
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Avoid Due Diligence Snags
> DD = 2-way street. Anticipate what the other
party will want to know
> Don’t wait for problems to be raised by other
side
> Pre-DD: Conduct internal evaluation of
concerns, questionable practices, etc.
– Will allow time to resolve or explain issue
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Employment Issues
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First Step: Understand Workforce
1.
Union
–
–
–
2.
Single employer?
Multi employers association?
Acquisition Agreement MUST address CBA
Non-Union
–
Generally more flexibility
Retired
4. Inactive - LOA
3.
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Collect Relevant Documents
> Handbook
> Employment
> CBAs
> Severance Policies
>
> Org Charts
> Benefit SPDs and
Plans
> Job Descriptions
> Offer Letters
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>
>
>
Agreements
Restrictive Covenant
Agreements
Medical Staff ByLaws
Hospital By-Laws
Workforce Data
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Understand Employee Compensation
> Compensation Philosophy
> Method of Performance Assessment
> What Metrics Are Used
> Job descriptions
> Salary/Bonus structure
> Pay practices & guidelines
– Performance evaluation training?
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Due Diligence: HR Practices
> Employee Handbooks
> Personnel Policies
– LOA
– Drug & Alcohol Testing
– Anti-Discrimination
– Elec. Communication
– Record Retention
– Discipline
> Recruitment Process/Statistical Analysis of the
Workforce
> Employee Engagement/Satisfaction Surveys
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Due Diligence: Compliance
> Compliance Policies
> Compliance Officer
> Training & Education
> Auditing & Monitoring Process
> History of Compliance Complaints/Outcomes
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Due Diligence: Insurance & Litigation
> Threatened/Pending Lawsuits/Charges/
>
>
>
>
Claims/Arbitrations
Litigation Outcomes/Settlements within 5
years
EPLI/D&O Coverage
Worker’s Compensation History
Unemployment Compensation History
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Union v. Non-Union
Potentially Restricted by a
Collective Bargaining
Agreement (CBA)
• Management Discretionary
Action
• Job Descriptions
• Performance Management
• Merit Pay
• Incentives
• Disciplinary Processes
• Work Rules
Outside Scope of CBAs
•
•
•
•
Clear Goals
Performance Tracking
Training and Education
Communication
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•
•
•
Informal Rewards
Staff Recognition
Collaboration
Shared Decision Making
31
Review the CBA
>
Calculate direct costs of CBA (i.e., wages, vacations, holidays)
>
Address important issues:
–
Are there any obligations for a subsequent employer – recognize the union(s) or adopt
the CBA?
–
How broad is the union’s jurisdiction and does the bargaining unit exclude
supervisors?
–
Is membership in the union a condition of continued employment?
–
How effectively does the CBA’s management rights clause reserve specific
prerogatives to management?
–
Are there prohibitions on management’s right to subcontract, transfer or relocate
bargaining unit work?
–
Does the CBA specify a guaranteed work week or minimum staffing in any manner?
–
How much notice is required prior to a reduction in force and how are RIF decisions
made and when are they communicated to the union(s) and covered employees?
–
Limitations on employer’s right to assign/float staff?
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Review the CBA
>
Are strikes and other work stoppages prohibited and are employees
permitted to cross picket lines, or engage in sympathy strikes?
>
Is there a grievance/arbitration procedure and how are they defined?
>
How many grievances has union filed in past 3 years? What have
been the outcomes?
>
Under what circumstances and in what amount is severance pay
required?
>
What is the duration of the CBA and will it renew automatically?
>
Upon the sale or transfer of the business, is the seller required to
obtain the purchaser’s agreement to be bound by the CBA?
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Benefits Issues
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Employee Benefits – Due Diligence
> 401(k) Plans – tax-exempt or for-profit entities
– Timely contribution of employee deferrals/employer
contributions
– Nondiscrimination testing (ADP/ACP testing)
– Coverage testing
– ERISA 404(c) status
– Plan document current for legally required changes
– Reporting and disclosure
– Plan operation and administration
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Employee Benefits – Due Diligence, con’t.
> 403(b) Plans – tax-exempt entities only
– Consistency of annuity providers/custodians practices
with governing plan document
– Timely contribution of employee deferrals/employer
contributions
– Nondiscrimination testing (match only)
– ERISA 404(c) status
– Plan document current for legally required changes
– Reporting and disclosure - expanded Form 5500
disclosure requirements and plan audit
– Plan operation and administration
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Employee Benefits – Due Diligence, con’t.
> Defined Benefit Pension Plans – tax-exempt or
for-profit entities
– Funding status/funding liability
– Plan document current for legally required changes
– Reportable events (PBGC)
– Reporting and disclosure (PBGC and DOL reporting)
– Plan operation and administration
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Employee Benefits – Due Diligence, con’t.
> Multi-employer pension plans – tax-exempt
or for-profit entities
– Withdrawal liability
– Funded status
– Plan document current for legally required
changes
– Reporting and disclosure/operation
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Employee Benefits – Due Diligence, con’t.
> Health, Welfare and Fringe Benefit Plans
– Programs that are ERISA plans but have not been
treated as such
– COBRA compliance and potential liabilities
– Funded status of health plans (insured or self-insured)
– Plan or program documentation current for legally
required changes
– Compliance with the “cafeteria plan” rules and
potential liabilities
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Employee Benefits – Due Diligence, con’t.
– Retiree medical or welfare arrangements
– HIPAA compliance and potential liabilities
– Accrued but unpaid vacation/sick pay and potential
liabilities
– Potentially affected employees currently on leaves of
absence (type, duration)
– MEWAs
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Employee Benefits – Due Diligence, con’t.
> Nonqualified Plans/Executive Compensation –
tax-exempt or for-profit entities
– Group arrangements (SERPs/top hat/excess benefit
plans)
– Individual arrangements
– Assets to match liabilities (rabbi trusts)
– Equity based arrangements (for-profit entities only)
– Bonus arrangements
– Plan documentation current for legally required changes
– Compliance with Code Sections 409A, 457(b), 457(f), 451
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Employee Benefits – Due Diligence, con’t.
> Employee/Severance/Change of Control
Agreements
– What promises have been made?
– Are they consistent with or in conflict with terms of qualified,
–
–
–
–
nonqualified and/or health/welfare plans and programs?
Acceleration of vesting or right to exercise stock options
upon change in control
Acceleration of payment provisions upon change in control
under employment agreements or severance arrangements
Compliance with 409A and 457(f) (if tax-exempt)
Documentation of severance obligations
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Employee Benefits – Due Diligence, con’t.
> Other issues
– Documentation of major disputed claims under
any plan, program or arrangement
– Documentation of investigations or inquiries by
any government agency regarding any plan,
program or arrangement
– Documentation of accelerated funding or vesting
of benefits
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Labor Issues
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Overview
> Rights and obligations regarding
>
>
>
>
predecessor employer’s unions
Successorship Doctrine
Effect of the transaction structure
Negotiating the CBA to facilitate the transition
Post-transaction issues
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Rights and Obligations of New Entity
Vis-à-Vis Predecessor’s Unions
> Set new terms and conditions of employment.
Assume no obligations under the seller’s CBA,
and avoid any obligation to recognize or bargain
with the union.
> Set new terms and conditions of employment.
Recognize and bargain with the union, but do
not assume the seller’s collective bargaining
agreement (“CBA”).
> Recognize the union, and assume seller’s CBA.
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Understand the Rules Before Structuring
the Transaction: SUCCESSORSHIP
Subsequent Employer is free to set initial terms
and conditions of employment without
bargaining unless:
It is a “Successor”
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A Subsequent Employer is a
“Successor” When There is:
* Continuity of Operations;
* Continuity of Workforce;
* Ongoing Union Demand for Bargaining; and
* Actions that make it “perfectly clear” the
subsequent employer intends to hire the
predecessor’s employees who comprise a
majority of an appropriate bargaining unit with
the subsequent employer.
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Continuity of Operations
> Business operations must remain relatively intact
despite change in ownership
> Relevant factors:
– Length of time between cessation of former operations and
start of new operations
– Geographic proximity between old and new operations
– Continuity in supervisory hierarchy
– Similarity in services, customers or markets
– Similarity in scope and methods of operations
– Similarity in work performed and job classifications
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Continuity of Workforce
> Whether there is workforce continuity is
determined when the subsequent employer
employs a “substantial and representative
complement” of employees, and a majority
of the employees were employed by the
predecessor and represented by a union in
an appropriate bargaining unit.
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Is There a “Substantial and
Representative Complement?”
* Has the subsequent employer substantially filled all
job classifications in which union-represented
employees worked under the prior employer?
* Have normal or substantially normal operations
begun?
* How large was the workforce when normal operations
began?
* How much time will elapse before the workforce will
expand significantly?
* How likely is a projected workforce expansion?
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Demand for Bargaining
> Until the union makes a bargaining demand,
the new employer has no duty to consult with
the union over terms and conditions of
employment.
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What Are the Successor’s Obligations?
>
Recognize an incumbent union for a “reasonable period of
bargaining” without challenging its majority status.
>
Abide by existing terms and conditions of employment.
>
Remedy its predecessor’s unfair labor practices of which it was
aware at the time of the business transaction.
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Steps Purchaser Can Take to Avoid
Assuming or Adopting CBA
>
Before commencing operations, expressly disavow intention to be
bound by the contract in writing to the union.
>
Clearly state that purchaser will not be applying, adopting or
assuming seller’s CBA
>
Avoid consulting with the union regarding possible concessions by
union before the transaction closes.
>
Ensure that transaction documents do not inadvertently assume or
adopt CBA.
- Merger agreement providing “successor shall be responsible and liable for all
liabilities and obligations of predecessor” was viewed as an express
assumption of the arbitration provisions of the CBA and successor was
required to conduct arbitration pursuant to predecessor CBA. United Food &
Commercial Workers Union v. Morgan’s Holiday Mkts., Inc., 202 F.3d 280
(9th Cir. 1999).
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To Avoid Finding of “Perfectly Clear”
Successorship
> Purchaser should refrain from announcing that it intends to hire
full complement of employees and should preface discussions
with union with statement that no determination has been made
whether and to what extent predecessor employees will be
hired.
> Clearly inform employees that specific changes in employment
terms will be implemented and are a condition of initial
employees.
>
This information must reach predecessor employees at or
before time predecessor employees apply for employment.
>
Make clear that employment applications will be considered
only if they understand and accept new terms and conditions.
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Effect of the Transaction Structure on
Purchaser’s Labor Obligations
> Stock purchase
– Insufficient to alter existing bargaining obligations
because ongoing operations are usually uninterrupted
– business as usual.
– Purchaser of majority of stock is obligated to
recognize the union and adopt the existing CBA.
– To ensure continuation of CBA, purchaser should
advise the union of its intent to adopt the CBA and
obtain its written consent.
– Purchaser is required to redress unremedied unfair
labor practices committed by seller.
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Effect of the Transaction Structure on
Purchaser’s Labor Obligations
> Assets Purchase
– Purchaser is not obligated to adopt seller’s CBA.
– Purchaser has the right to hire complete new
workforce and to set new terms of employment…
– So long as it is not discriminating against
predecessor’s employees because of their union
status or affiliation.
– BUT…..BE CAREFUL!
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Effect of the Transaction Structure on
Purchaser’s Labor Obligations
>
If the sale of assets was merely a sham transaction, undertaken
to avoid an obligation to adopt the CBA or bargain with the
union, the purchaser will be deemed an “alter ego,” bound by
the seller’s agreement.
> Alter ego status is found where two enterprises have
substantially identical management, business purpose,
operation, equipment, customers and supervision.
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Effect of the Transaction Structure on
Purchaser’s Labor Obligations
> Asset purchaser may be deemed a Successor
which engenders a duty to recognize and bargain
with the union representing seller’s employees if:
– Purchaser acquires assets (not stock) or has otherwise
taken over business of a predecessor;
– Majority of successor’s workforce is made up of
predecessor’s employees;
– Successor’s business, as employees view it, is substantially
the same; and
– The employees’ terms and conditions of employment
remain the same or substantially the same.
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Employee Benefits – Recent Deal Issues
> Involve the benefits team sufficiently early in
the process so the acquirer does not
inadvertently assume sponsorship of plans
when deal closes
– In part a function of deal structure
– In part a function of what the parties negotiate
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Employee Benefits – Recent Deal Issues, con’t.
> Treatment of the seller’s defined contribution
plan (401(k), 403(b), profit sharing or money
purchase)
– Cannot merge 403(b) plans into 401(k) plans or
vice versa
– IRC rules may limit the buyer’s ability to terminate
the seller’s 401(k) plan post-closing
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Employee Benefits – Recent Deal Issues, con’t.
> Treatment of outstanding loans under the
seller’s defined contribution plan
– Plans usually provide that employment termination
accelerates outstanding loans
– Negotiate for account balance, including loans, to be
rolled over to the buyer’s plan
– Bridge loans
– If seller’s plan remains with seller or its controlled
group, amend seller’s loan program to allow for
repayment by former employees
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Employee Benefits – Recent Deal Issues, con’t.
> Correction of operational or reporting failures
– Employee Plans Compliance Resolution System
(IRS correction program)
– Department of Labor Voluntary Fiduciary
Correction Program (late transmission of
employee contributions)
– Department of Labor Delinquent Filer Voluntary
Compliance Program (delinquent Form 5500s)
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Employee Benefits – Recent Deal Issues, con’t.
> Defined benefit pension plan issues
– Underfunded defined benefit pension plans
– Notice to the PBGC of the proposed transaction
may be required due to change of plan sponsors
controlled group
– PBGC may require additional amounts be
contributed to the plan
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Employee Benefits – Recent Deal Issues, con’t.
> Purchase agreement indemnification
provisions
– Consider specific indemnification provision
depending on problems and exposure
– Quantify the extent of the exposure and develop
post-closing corrections methodology before
closing
– Dollar limit and notice requirements of
indemnification provisions
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Employee Benefits – Recent Deal Issues, con’t.
> Examples of special challenges
– Relative costs of retirement benefits
– DB versus DC retirement programs
– Provision of service credit for welfare and/or retirement
–
–
–
–
–
–
benefits
Governance of plans (i.e., delegations of authority)
Premature promises
Understanding the form of the transaction
Affirmative and negative covenants
Closing deliverables
Escrow of part of the purchase price to pay certain claims
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Lessons Learned:
The Employment Perspective
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In the Heat of the Deal, DON’T:
> Forget to Involve Employment/HR
> Forget to Address Employment Aspects of
Hospital and Medical Staff By-Laws
> Forget to Have a Coordinated Plan for PostTransaction Integration
> Forget to Identify/Develop the Culture and
Values of the New Entity and Compare them
to the Cultures and Values of the Involved
Entities
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Address Integration Before Closing
> Will purchaser employ all employees?
> If not, who will decide which employees will
not be hired and what process will be used?
> Do you want personnel files?
> Who has RIFs/WARN responsibility?
> What is the plan for transitioning all involved
entities to the new cultures/values, and who
is responsible for this initiatives?
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Manage the Message
Percentage of Employees Strongly Agreeing
with the Statement: “I Am Kept Informed of the
Organization’s Future Plans and Direction.”
44%
20%
Managers
Frontline Staff
Source: Advisory Board Survey Solutions Data Cohort, 2012; HR Investment Center interviews and analysis
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Lessons Learned:
> Implement well-planned integration quickly
> Align organizational roles/responsibilities
> Communicate new expectations
> Clear, honest and frequent communication
> Plan for resistance/reluctance/uncertainty
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Managing Resistance
> Be transparent
> Identify “cheerleaders”
> Maximize opportunities to maintain “status quo”
> Minimize “surprises” about change
> Emphasize benefits to all parties in transaction
> Communicate “non-negotiables”
> Humanize new leadership
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Engage Key Stakeholders
> Medical Staff Leaders
> Managers
> Union Leaders
> Employees (dissenters, supporters and
non-engaged)
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Use “Town Halls”
> Explain industry trends driving change
> Prepare them for change
> Ask for their help
> Don’t over-promise or mislead
> Don’t go off-script!
> Anticipate negative Union reaction
> “Listen” to the reaction
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Lessons Learned:
The Labor Perspective
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Negotiating the CBA to Facilitate the Transaction
> Successorship provisions in unexpired CBA (The
Deal Killer)
– May purport to bind successor to terms and conditions of parties’
–
–
–
–
existing CBA
May “require” employer/seller to provide Union with notice prior to
transaction and to condition terms of transaction on purchaser’s
adoption of terms of CBA
Not enforceable as against assets purchaser (under current NLRB
law)
May provide Union with avenue to seek an injunction if seller fails
to ensure that purchaser adopts CBA - - threatens the transaction
closing
Sale may be stayed until after Union and seller have arbitrated the
issue
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Effects Bargaining
> Seller is not required to bargain over core management
decisions …an employer has the absolute right to
terminate his entire business for any reason it pleases.
> Seller is required to bargain over the effects of the sale or
merger upon demand before completing the transaction.
> Seller must provide:
– Meaningful notice to the union of the transaction; and
– Engage in good-faith bargaining over mitigating measures
concerning “effects” issues (severance, outplacement, job
counseling, transfer rights, payment for accrued PTO,
seniority and pension rights).
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Post-Transaction Issues
> Workforce changes and bargaining units:
– When employees hired by the successor previously belong to
different bargaining units, the NLRB evaluates each unit separately
to determine majority status.
– If the purchaser’s bargaining unit has been so effectively merged
into the seller’s bargaining unit or is so functionally integrated that
it has lost its separate identity, the NLRB may consider it
“accreted” or added to an existing unit without an NLRB election.
– When purchaser takes over only a small part of the seller’s
business or operations, the NLRB orders bargaining only if the unit
within that part remains intact and appropriate which is more likely
since Board’s “micro” bargaining unit decision in Specialty
Healthcare, 357 NLRB No. 83 (2011).
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Post-Transaction Issues
> Merger or sale of business can trigger “withdrawal
liability” for the employer’s share of the unfunded
liability of the Multi-employer Pension Plan.
> Asset purchases generally leave withdrawal liability
with the seller, affecting sale proceeds.
> Stock sales generally send it to the buyer generating
a large liability after closing which could encumber
future operations.
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NLRB Pro-Union/Pro-Employee Stance
Presents Legal Challenges to Employers
> NLRB restores the “Successor Bar Doctrine” requiring
employers to recognize incumbent unions for a
reasonable period after a business transition without
challenging the majority status of the employee
representatives – no less than 6 months after the parties’
first bargaining session and no more than one year after
the start of bargaining.” UGL-UNICCO Serv. Co. 357
N.L.R.B. No. 76 (8/26/11).
> NLRB reaffirms potential successor liability for a
predecessor’s unremedied unfair labor practices. Big Sky
Hospitalities, LLC, 358 N.L.R.B. No. 83 (July 16, 2012).
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