## Facts

- Michael and Laurie Abikasis owned and controlled Michael’s Painting, Inc. (Michael’s), a painting contractor.
- On March 27, 1998, Michael’s employees began picketing and other concerted activity seeking union representation and protesting an alleged failure to pay prevailing wages.
- The union obtained signed authorization cards from a majority of unit employees (the ALJ found 18 of 34 employees signed valid cards).
- On March 31, 1998, Michael’s terminated employees who had engaged in the union activity.
- Also on March 31, 1998, Painting L.A., Inc. (Painting L.A.) was incorporated, with Laurie as its sole shareholder.
- Painting L.A.’s rules stated that work was reviewed and approved by Michael, reflecting his continued operational control.
- Painting L.A. purchased all assets of Michael’s and began operating as a painting contractor performing the same type of work.
- The employees terminated by Michael’s were not rehired by Painting L.A.
- An unfair labor practice complaint issued alleging, among other things, that Painting L.A. was Michael’s alter ego and that the employers unlawfully discharged employees and refused to recognize and bargain with the union.
- The Abikasises contended that Painting L.A. was formed for business reasons because Michael’s liability insurance was expiring and replacement coverage was unaffordable.
- After a hearing, an administrative law judge found violations of the National Labor Relations Act (NLRA) and recommended remedial relief.

## Issues

1. Whether Painting L.A., Inc. was the alter ego of Michael’s Painting, Inc., such that it shared responsibility for NLRA violations and any bargaining obligation.
2. Whether Michael’s violated NLRA § 8(a)(1) and (3) by terminating employees because of protected union and concerted activities.
3. Whether Michael’s (and, if an alter ego, Painting L.A.) violated NLRA § 8(a)(1) and (5) by refusing to recognize and bargain with the union after it demonstrated majority support through authorization cards.
4. Whether the Board should issue a bargaining order under NLRB v. Gissel Packing Co. based on the card majority and the nature of the unfair labor practices.

## Decision

- The Board affirmed the ALJ’s findings and conclusions, with a modification to the date on which the union achieved majority status (the Board treated the majority as established by March 31, 1998).
- The Board found that Michael’s terminated employees because of their union activity, violating § 8(a)(1) and (3).
- The Board concluded that Painting L.A. was Michael’s alter ego based on continuity of ownership/control and business operations, including the asset transfer and Michael’s continuing role in approving work.
- The Board found that the employers unlawfully refused to recognize and bargain with the union after it established majority support, violating § 8(a)(1) and (5).
- The Board ordered cease-and-desist relief, reinstatement and backpay for affected employees, and other make-whole remedies.
- The Board issued a Gissel-type bargaining order requiring recognition of and bargaining with the union.
- A federal court of appeals later enforced the Board’s order.

## Legal Principles

- Alter ego status may be found when two entities are substantially the same in ownership, control, management, business purpose, operations, supervision, and use of assets; the Board may also consider whether the new entity was used to avoid NLRA duties.
- Close timing between protected activity, mass terminations, and creation of a new entity continuing the same business can support a finding that the change was a disguised continuation of the prior employer.
- Terminating employees to discourage union membership or because of protected union/concerted activity violates NLRA § 8(a)(1) and (3).
- An employer violates NLRA § 8(a)(5) by refusing to recognize and bargain with a union that has shown majority support through valid authorization cards, absent a lawful basis for refusal.
- Under NLRB v. Gissel Packing Co., the Board may order bargaining without an election when the union had a valid card majority and employer misconduct is serious enough to make a fair election unlikely or to make traditional remedies insufficient to remove the effects of the misconduct.

## Conclusion

The NLRB concluded that Michael’s responded to employee organizing by terminating union-active employees and continuing the same painting business through Painting L.A., a substantially identical entity, so it imposed alter ego liability and ordered reinstatement, backpay, and a bargaining order requiring the employers to recognize and bargain with the union.


Michael's Painting, Inc. & Painting L.A., Inc., 337 N.L.R.B. 860 (2002)