The New York City Displaced Building Service Worker Protection Act, NYC Administrative Code Section 22-505 (DBSWA), requires that any buyer, transferee or successor employer of most New York City commercial and residential properties offer the incumbent employees jobs after the change in ownership or employer for as many jobs as the new employer will have at the property, and to keep those employees in employ for at least 90 days unless it has cause for discharge during that “probationary” period.

This law, although applicable in both union and nonunion properties, was strongly supported during the enactment process culminating in 2002, by Local 32BJ, Service Employees International Union (“the Union”), which represents a large number of employees at such properties in New York City. The law generally was considered to have the effect of keeping the Union in place when a building changed ownership or control or contractor providing building services, because under federal labor law’s so-called “successorship” doctrine, if a majority of the workforce of a successor employer is composed of employees of the predecessor, there is a legal presumption that those employees still wish to be represented by that union.

However, in a recent decision, Paulsen v. GVS Properties, LLC, 12 CV 04845 (BMC)(S.D.N.Y. November 13, 2012), a U.S. District Court judge in the Southern District of New York denied a request for injunctive relief sought by the National Labor Relations Board seeking to compel a buyer to recognize the incumbent union (not Local 32BJ), holding that, because hiring pursuant to the DBSWA is not “voluntary” but mandatory, and that the federal labor law “successorship” doctrine is based on “voluntary” hiring of a majority by the successor, the fact that a buyer hired the seller’s contractor’s employees did not require the buyer to recognize and bargain with the union until the buyer made a decision after the 90 day “probationary” period. Because the buyer’s workforce of eight employees included only four of the seller’s contractor’s employees, there was no majority and the judge denied the National Labor Relations Board’s request for a preliminary injunction.

This decision could, if upheld on appeal, change the manner in which buyers and/or new contractors not in contractual relations with the incumbent union make labor and employment decisions after closing or change in contractors. While employers cannot refuse to hire persons because of their union status, or to avoid union obligations, the presumptive continuance of representation of the predecessor’s union will no longer be automatic as had been presumed.