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