Tag Archives: lawsuits

Successor Liability does not cover federal claims

Teed v. Thomas & Betts Power Solutions, LLC (7th Cir. 2013) held that  a buyer of a company’s assets can’t rely on state law to keep  a seller’s violations of the Fair Labor Standards Act (FLSA) from transferring to the buyer of the Seller company’s assets.  This standard has been previously applied to the LMRA, NLRA, Title VII, ADEA, and FMLA.

The Seventh Circuit explained that federal labor law claims are governed by federal common law, not state law.  Further, the court explained that employees do not have the power to stop an owner from selling the company.  Therefore, the buyer (successor) is stuck with the seller’s (prior owner) liability regardless of what the contract states.

To determine whether successor liability will apply, the Seventh Circuit considered the following multi-part balancing test:

  1. Whether the successor had notice of the pending law suit;
  2. Whether the predecessor would have been able to provide the relief sought in the lawsuit before the sale;
  3. Whether the predecessor could have provided relief after the sale;
  4. Whether the successor can provide the relief sought in the suit (if not successor liability is a phantom); and
  5. Whether there is continuity between the operations and work force of the predecessor and the successor – which favors successor liability because nothing really has changed.

via Buyer Beware of Successor Liability For FLSA Claims | Sands Anderson PC – JDSupra.

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Filed under civil rights, courts, District Court, employment, labor, legal decision, union, wage, waiver

Stericycle vs Novotel at NLRB

In Stericycle, Inc., the Board reversed its Novotel rule for dealing with union-backed employment law suits before an election.

At issue is whether union assistance with such suits constitutes an improper grant of benefit that might warrant re-running the election if the union wins. Under Novotel, a union may give employees free legal services to investigate, prepare, and file a lawsuit during the critical period before an election. However, the D.C. Circuit has refused to enforce that rule, prompting the majority in Stericycle to reverse it and conclude that such assistance is objectionable conduct.

The key ruling in the decision, which Members Becker, Hayes, and Pearce joined, is that:

we hold that a union engages in objectionable conduct warranting a second election by financing a lawsuit filed during the narrow time period—known as the “critical period”—between the date of the filing of the representation petition and the date of the election, which States claims under Federal or State wage and hour laws or other similar employment law claims on behalf of employees in the unit.

The Board acknowledged the importance to employees’ collective rights that education about their workplace rights, attorney referrals, and funding for lawsuits provides. But those interests were outweighed by the need to avoid the grant of benefits before an election (Novotel distinguished funding extraneous benefits with funding lawsuits directly related to the workplace problems that lead to the union campaign). The Board also argued that the harm to employees’ collective rights was minimal because of the critical period was only for a limited amount of time. Further, funding a lawsuit before the critical period remains unobjectionable conduct.

The Board, with Liebman, Becker, and Pearce signing on, also tried to define the boundaries of permissible and impermissible assistance.  According to the Board, is is OK for a union during the cirtical period to “inform employees about their rights [under labor and employment laws], assist them in identifying violations, urge them to seek relief, and even refer them to competent counsel [which may file suit during the critical period as long as there is no union funding] without casting into question subsequent election results.”

via Workplace Prof Blog.

 

 

 

 

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Filed under labor, NLRB