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

[Webinar] Withdrawal Liability and Pensions

CaptureOn Wednesday, April 14th at 1:00 P.M. EST, join Mark M. Trapp for a webinar regarding Withdrawal Liability and Pensions.

This webinar will address the significant challenges faced by companies participating in multiemployer plans. Specifically, it will help unionized employers understand and analyze what is often the most critical challenge facing their business – multiemployer pension withdrawal liability. It will also address pension-related provisions of the recently-enacted American Rescue Plan Act.

Participants will learn about the following: Continue reading

Going Through Withdrawal – Strategies for Minimizing Your Multiemployer Pension Withdrawal Liability, Protecting Your Assets and Saving Your Business

Join Conn Maciel Carey Labor & Employment Practice Group partner, Mark Trapp, on November 14, 2018 when he presents an interactive workshop to help unionized employers understand and analyze what is often the most critical challenge facing their business – multiemployer pension withdrawal liability.  Attendees will learn innovative and aggressive techniques and strategies to address this issue and proactively secure the future of their company. Increasing Money Graph

This workshop will also discuss the current legislative environment for multiemployer pension plans and issues, particularly the work of the Joint Select Committee on Solvency of Multiemployer Pension Plans, charged with preparing a report and recommended legislative language by November 30 to “significantly improve the solvency” of multiemployer pension plans and the Pension Benefit Guaranty Corporation.

Workshop attendees will:

  • Gain a broad understanding of the challenges facing employers who participate in a multiemployer pension plan

  • Discover strategies for assessing and minimizing their withdrawal liability risks through collective bargaining and business planning

  • Examine the status and possibility of legislative relief from the Joint Select Committee on Solvency of Multiemployer Pension Plans

Click here to register.