A contractor buys a construction firm from a retiring owner. There is a three-year successor clause in the existing collective bargaining agreement. Is the new owner bound by the agreement?

A contractor buys a construction firm from a retiring owner. There is a three-year successor clause in the existing collective bargaining agreement. Is the new owner bound by the agreement?

• A. No, a successor clause applies only to the seller
• B. Yes, but only if the successor is a party to the union
• C. Only for the first year
• D. Yes. A successor clause is binding for up to three years

Answer: (D)

The key idea is that a successor clause in a collective bargaining agreement binds the new employer who acquires the business to the terms of that agreement. When the contractor buys the construction firm, the three-year successor clause means the new owner must honor the existing contract for up to three years, preserving the workers’ wages, benefits, and working conditions during that period. This binding applies regardless of whether the new owner is a party to the union or not, and it isn’t limited to just the seller or to only the first year. The agreement specifies the duration as three years, so the new owner is obligated for that entire period.

The key idea is that a successor clause in a collective bargaining agreement binds the new employer who acquires the business to the terms of that agreement. When the contractor buys the construction firm, the three-year successor clause means the new owner must honor the existing contract for up to three years, preserving the workers’ wages, benefits, and working conditions during that period. This binding applies regardless of whether the new owner is a party to the union or not, and it isn’t limited to just the seller or to only the first year. The agreement specifies the duration as three years, so the new owner is obligated for that entire period.