This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
Here is a deal pattern that recurs anywhere buyers shop for industrial, logistics, or hospitality businesses — Florida very much included. A buyer finds a solid target: a distribution operation, a food manufacturer, a hotel services company. Diligence surfaces a collective bargaining agreement covering the warehouse crew or the housekeeping staff. The buyer’s first instinct, almost every time, is structural: “We’ll do an asset deal. The union contract stays behind with the seller’s entity, and we start clean.” Half of that sentence is right. The half that’s wrong has been wrong since 1972, and it gets buyers into unfair labor practice proceedings they never saw coming.
The asset deal does not launder the union
Start with the structural baseline. In a stock or membership-interest purchase, the employer never changes — the same entity keeps employing the same people — so the collective bargaining agreement simply continues to bind. No successorship analysis needed; the buyer bought the employer, CBA and all.
An asset deal is different, and this is where the folk wisdom breaks down. The buyer entity is a new employer, and under NLRB v. Burns International Security Services, 406 U.S. 272 (1972), a new employer is not bound by the substantive terms of the predecessor’s CBA. So far the folk wisdom holds. But Burns also holds that the new employer can inherit something else: a duty to recognize and bargain with the incumbent union. That duty attaches when the new employer is a “successor” — when it continues the predecessor’s business in substantially unchanged form and a majority of its workforce, in an appropriate bargaining unit, consists of the predecessor’s employees. The asset structure is irrelevant to that analysis. Labor law looks at the business and the people, not the purchase agreement’s Article I.
The Supreme Court filled in the operational details in Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27 (1987). The substantial-continuity inquiry asks whether the business of both employers is essentially the same: same plant, same or similar jobs under similar working conditions, same supervisors, same machinery and production processes, same product for the same customers. Notably, Fall River found successorship even though seven months passed between the predecessor’s collapse and the new company’s startup, and even though the new company hired through newspaper ads rather than the predecessor’s records. A hiatus does not reset the board. The Court also blessed the Board’s “substantial and representative complement” rule for timing the majority count — you measure the workforce when the new employer has hired a substantial and representative complement of its planned workforce, not on day one and not at some indefinite full-capacity future — and the “continuing demand” rule, under which a union’s early bargaining demand stays live until that moment arrives.
Put together: a buyer who acquires the plant, runs the same lines for the same customers, and staffs up mostly with the seller’s former workforce will very likely owe the union recognition and bargaining, no matter how clean the asset structure looks.
Burns gives buyers the terms; the hiring math decides who counts
Now the part buyers actually control. Successorship’s majority test runs on the buyer’s own hiring decisions, and Burns leaves a genuine freedom in place: even a successor bound to bargain is ordinarily entitled to set the initial terms of employment unilaterally — its own wages, its own benefits, its own work rules — and then bargain with the union going forward from that baseline. That is a meaningful economic difference from inheriting the predecessor’s CBA wholesale, especially where legacy work rules or wage scales are the very reason the seller struggled.
Two boundaries keep the hiring math honest. First, a buyer may not engineer its way out of successorship by refusing to hire the predecessor’s employees because of their union affiliation — that is itself an unfair labor practice, and the Board treats a discriminatorily constructed workforce as if the predecessor’s employees had been hired. The freedom is in how many people you need, what jobs you’re staffing, and lawful selection criteria — not in screening for union sympathies. Second, the bargaining-unit lens matters: the majority question is asked within the appropriate unit, so a buyer integrating the target’s drivers into a much larger existing nonunion fleet presents a different analysis than a buyer running the acquired operation as a standalone.
The perfectly clear trap springs on the buyer’s own kindness
The most expensive mistake in this corner of the law is, oddly, generosity. Burns reserved a caveat, developed in the Board’s Spruce Up line of cases: when it is “perfectly clear” that the new employer plans to retain all of the employees in the unit, the employer forfeits the right to set initial terms unilaterally — it must consult the union first.
Watch how this plays out in an ordinary closing sequence. Signing happens; the buyer wants a smooth transition and worried employees; someone drafts a town-hall announcement — “nothing changes, everyone keeps their job.” Offer letters go out promising continuity. Only later, after modeling the numbers, does the buyer announce the new health plan and the revised overtime structure. In the Board’s eyes, the moment the buyer made retention perfectly clear without simultaneously announcing that employment would be on new terms, it locked itself into the predecessor’s status quo until it bargains. The unilateral changes that follow become unfair labor practices, with backpay accruing.
The fix is sequencing, and it costs nothing but discipline. If the plan is to retain the workforce on different terms, say both things at once: we intend to offer employment to substantially all current employees, and employment will be on the terms stated in our offer packages, which differ from current terms. Announce conditions with the retention, not after it. Transition-planning communications deserve the same legal review as the disclosure schedules — arguably more, because a podium sentence at a town hall can set labor obligations that no integration budget contemplated. The same discipline applies to the retention documents themselves; we’ve written about re-papering key employees at closing, and unionized workforces add a bargaining-obligation layer on top of that checklist.
Liability can follow the assets when the buyer knew
One more doctrine rounds out the map. Under Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973), a buyer who acquires a business with knowledge of the seller’s pending unfair labor practice liability can be ordered, as a successor, to remedy it — reinstatement and backpay included. Diligence therefore has to sweep NLRB dockets and unresolved charges the same way it sweeps tax liens, and the purchase agreement should speak directly: representations on pending and threatened labor proceedings, special indemnities for pre-closing labor liabilities, and escrow sizing that accounts for accruing backpay. For completeness, Howard Johnson Co. v. Detroit Local Joint Executive Board, 417 U.S. 249 (1974), holds that a successor who hires a genuinely new workforce generally cannot be compelled to arbitrate under the predecessor’s CBA — the doctrine consistently keys off workforce continuity, which is why the hiring plan is the whole ballgame.
And none of this displaces the rest of the employment-transition stack. A unionized target still raises WARN Act notice questions about who owes notice when the company is sold, still requires a decision about terminating the target’s 401(k) before closing, and — where the CBA touches a multiemployer pension — raises withdrawal-liability questions that deserve their own analysis before the LOI is signed, not after.
Diligence and drafting for a unionized target, in one pass
Pull it together and the playbook is manageable. First, get the labor file early: every CBA and side letter, memoranda of understanding, pending grievances and arbitrations, open NLRB charges, and any multiemployer plan participation. Second, decide the workforce plan before anyone communicates anything — headcount, unit structure, and whether the economics require new initial terms. Third, script the communications so retention and new terms travel together, keeping the perfectly-clear trap shut. Fourth, paper the risk: labor reps, targeted indemnities, and a covenant governing seller’s pre-closing communications with the union, since the seller may owe its own effects-bargaining obligations on the way out. Fifth, in Florida specifically, remember that right-to-work status limits union-security clauses — employees can’t be required to join or pay dues — but it does nothing to successorship; the bargaining obligation is federal and follows the workforce into any state.
The through-line: in a unionized acquisition, the labor outcome is not something that happens to the buyer. It is something the buyer builds — through the hiring plan, the announcement sequence, and the paper. Build it on purpose.
If you are planning to buy a business with a union workforce, or selling one and wondering what you owe on the way out, feel free to reach out to our firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
