The U.S. Court of Appeals for the Second Circuit and the U.S. District Court for the Southern District of New York. (Photo: Ken Lund)

The U.S. Court of Appeals for the Second Circuit reaffirmed its position on firms' collective bargaining agreement obligations to employees, while accepting arguments from sister circuits on similar issues, in upholding a National Labor Relations Board finding against health care company HealthBridge Management.

The panel of Circuit Judges Dennis Jacobs and Christopher Droney, with U.S. District Judge Stefan Underhill for the District of Connecticut sitting by designation, declined to review the 2017 NLRB decision against HealthBridge, finding the board's reasoning legally sound. The board sided with workers with the New England Health Care Employees Union who filed unfair labor practice charges in 2012.

In 2009, a subcontractor for HealthBridge took over management and payroll responsibilities over a few dozen housekeeping workers at three of the company's health centers. Based on the contract with HealthBridge, the union was assured its workers would retain benefits, seniority and job status. However, once the subcontractor's contract ran out, the workers it had supervised were told they were out of jobs and would have to reapply. Almost all were rehired, but at lower wages, with fewer benefits and without accrued seniority.

When the workers protested the new arrangement, a HealthBridge administrator threatened to call the police for those who refused to sign on or leave. According to the court, 45 of the 48 offered to be rehired were, almost all of whom did so within 48 hours.

The circuit panel, in upholding the board's remedial order against HealthBridge, affirmed its finding that an employer may not use a short-term operational change to get around its contract agreements with a union. Circuit law, the panel noted, supported this conclusion against a “disguised continuance” of operations meant to undercut a CBA. Circuit law specifically prevents employers from disregarding contracted seniority status, even if employees are shifted onto the payroll of another entity.

The panel pointed to other circuits' ruling in the same area, which supported the workers' claims. Specifically, the panel pointed to the Tenth Circuit's decision in 2000's NLRB v. F&A Food Sales, which shared a number of the features of the HealthBridge case. This and other decisions that support, like the Second Circuit does, barring employers from using short-term operation changes to subvert CBAs supplement the circuit's own findings, the panel noted.

“The obligations that HealthBridge attempted to shed remained binding, and no reasonable reading of those obligations permitted HealthBridge to eliminate the seniority-based entitlements of its housekeeping workers as it did,” the panel wrote.

A spokesman for the National Labor Relations Board declined to comment on the panel's decision.

Fisher & Phillips co-regional managing partner Brian Gershengorn led HealthBridge's legal team on appeal. He did not respond to a request for comment.