Recent Arbitration Decision on the “Construction Industry Exemption” Serves as a Good Reminder for All Employers Contributing to Multiemployer Funds

By: Mark M. Trapp

Under the Multiemployer Pension Plan Amendments Act (“MPPAA”), an employer who ceases to contribute to a multiemployer pension fund generally incurs “withdrawal liability.” However, employers in the building and construction industry are exempt from withdrawal liability under certain conditions.

Working,Men,Creating,Business,GrowthTo qualify for the “construction industry exemption,” an employer must demonstrate that “substantially all the employees with respect to whom the employer has an obligation to contribute under the plan perform work in the building and construction industry[.]” 29 U.S.C. §1383(b)(1)(A). “Substantially all” has been interpreted to mean at least 85 percent.

Next, the plan must either: (1) primarily cover employees in the building and construction industry; or (2) have been amended to provide that the exemption applies to building and construction industry employers. 29 U.S.C. §1383(b)(1)(B).

If those two criteria are met, an employer that ceases having an obligation to contribute to a plan will trigger a complete withdrawal only if it also either Continue reading

District Court Allows Pension Fund to Exercise “Nuclear Option”

Two months ago, we brought you the story of the ongoing fight between Penske Truck Leasing (“Penske”) and the Central States Pension Fund (“Central States”). Close,Up,Of,Time,And,Money,With,Green,Bokeh,BackgroundThis article will provide an update in the case of Penske Truck Leasing Co. v. Central States, Southeast and Southwest Areas Pension Plan, 21-cv-05518 (N.D. Ill).

By way of background, just before Christmas, a Chicago district court entered a temporary restraining order preventing Central States from ejecting a unit of Penske employees or from taking any action to trigger a partial withdrawal. The contemplated expulsion would have triggered a partial withdrawal, which Penske alleged would trigger well over ten million dollars in withdrawal liability for the company.

As noted in our earlier article, Central States asserted that Penske was engaged in “a scheme to minimize its withdrawal liability by lining up all ten of its bargaining units for negotiations in 2022 in order to trigger a complete withdrawal from the Fund in 2022 rather than triggering a partial withdrawal in 2021 followed by a complete withdrawal in 2022.” Thus, when Penske and its local union in Dallas also agreed to extend that agreement until 2022, Central States’ trustees rejected the extension, asserting the extension “could significantly reduce Penske’s withdrawal liability exposure.”

Last week, following expedited discovery and briefing by the parties, the district court Continue reading