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A union client called and asked questions relating to his negotiation of a "stand alone" contract. The union is in the construction industry and its plan is a multiemployer arrangement. However, the contract in question is negotiated with one large company that employs several members of the union. At some point in the past, the company agreed to contribute to the union's multiemployer db plan on behalf of its member/employees. The db plan calculates a person's retirement benefit by multiplying the years of credited and partial service by a dollar amount ($90). Based on the usual contribution amount of roughly $4.00 per hour, a person needs to work approximately 300 hours to earn 1/4 credit. Now the problem... When the union negotiated this stand-alone agreement several years ago, the parties agreed to put only 20 cents per hour into the plan. This means a person who works 2200 hours per year will never have sufficient contributions to earn even a 1/4 credit. Is this a situation where the trustees of the plan could return the contributions under a "mistake of fact/law" theory? Has the union breached its duty of fair representation by negotiating such a deal? Wouldn't this arrangement violate the IRC/ERISA vesting and benefit accrual rules? I'm quite frankly not even sure where to begin on this mess.

I think the answer to this question varies from Circuit to Circuit. My recollection is that some Circuits (such as the 6th) refuse to look any farther than the beneficiary designation on file. Others will allow the QDRO to trump the card, but only if it clearly mentions the name of the plan and the type of benefit being waived. Good luck.

We had an employer with a major delinquency problem. One cause of action the Union and Plan brought was under the state prevailing wage law. (Very similiar to Davis-Bacon in all material respects.) The theory was that by failing to pay his fringes, he had also violated the prevailing wage act. The order from the court awards the monies and penalties, but specifies the payments are to be made to the employees...not their benefit plans. This creates the obvious problem that our db/dc plans must grant them service credit for all hours worked...even though we will not be receiving the contributions. Questions: 1. Can we somehow negate the service credit that would otherwise be earned? How? 2. Do we have to collect the monies from our members? 3. Any other ideas?

We had a similar situation that involved only $10k. We told the two potential beneficiaries to either work it out or we would file in interpleader action in federal court. (This allows the plan to pay the money to the court and back out of the picture...downside is cost to the potential beneficiaries...legal fees eat up the benefit.) Once they agreed on a fair distribution, we had them sign a waiver and release in favor of the plan that came straight from the bowels of hell....

FYI...an update on the original post. I had a compliance meeting this morning with the EBSA. The investigator has backed off of her original position somewhat, but is still taking a relatively hard line approach to the issues. 1. Per diem/meal issue- They are asking those who received the $35 per diem to repay 1/3 of the per diem for any day in which they received a dinner from the fund. (This is much less than asking the trustees to repay their entire pro rata share of the meals.) They suggested that the board could pay expenses such as parking and mileage on top of the per diem, (similar to government travel) but that they would want to see receipts justifying these costs. This does not help us with the current situation as none of the apprentices were told to keep receipts. 2. They are not moving on the spousal meal issue. I think the client will likely pay these costs and be sure future meals provided to spouses are backed up by minutes, receipts, etc. That way we have all the evidence that would be needed if forced to litigation.

My understanding is that a finding from the EBSA does not have the force of law. Like any other administrative body they must prove their case through an administrative hearing or the solicitor's office. Assuming this is correct, is the fund taking a big gamble in settling the legimate issues but refusing to budge on the per diem/meal issue? WHat are the options for the EBSA if they want to push the issue? BTW, I reviewed the IRS guidelines cited by Harwood. For government travelers (including the DOL), they can recieve a per diem for meals AND mileage, tolls, telephone, taxis, etc. Our people did not receive such benefits.

Thanks for the input. I have seen the IRS pubs, but I don't think they fit our situation perfectly. One problem is with mileage. The Plan would pay a person mileage from the home city to the host city, but would not reimburse him for any miles or parking while in the host city. It all came out of the per diem.

We have an apprenticeship plan that underwent a DOL investigation. Some of the findings were legitimate, but others are questionable. I would appreciate input on the following: 1. Apprentices regularly compete in regional and national competitions. Attendees (instructors, commitee persons, etc.) to apprenticeship competitions are paid a low stipend ($35 per day). The stipend is not meant to cover every conceivable expense, but to subsidize parking, meals, etc. In addition to the stipend, attendees are treated to a recognition dinner hosted by the Fund. The EBSA investigator has deemed the dinner expense to be unreasonable. Her theory is that the Fund cannot pay a stipend AND supply a meal to the attendees. Our argument is that the stipend is so nominal it is not unreasonable to pay for a recognition dinner. Even when the stipend and the dinner are combined, the average cost per person ranges anywhere from $60-$100. (Keep in mind that the competitions are often held in locales such as Boston, Chicago, Philadelphia, etc., where 35 bucks doesn't go too far.) 2. Guests are invited to the dinner. Typically this includes the spouses of the competitors and instructors. The EBSA has demanded the costs of the guests meals be repaid as it is "unreasonable" to provide a meal to a spouse, etc. Our belief is that it is entirely appropriate (and very common) for apprenticeship funds to host recognition dinners or banquets. It is also common for spouses and family to be invited to these dinners. Input is appreciated.

I don't have the cite for the regs in front of me, but they are common sense. Expenses must be reasonable and necessary. The advance must be based on an estimate of the true costs to be incurred by the Trustee. When reviewed by the DOL, it seems that "reasonable" is in the eye of the beholder. We had a Trustee who was forced to return 1/2 of a $45 dollar dinner, because it included a show. The DOL felt this was entertainment and not a proper expense. It didn't help to point out that $45 was an average price to pay for dinner alone in the locale of the conference. You can get an expense voucher form from the International Foundation...www.ifebp.org. Look under the multiemployer section.

We have struggled with 404© issues on some of our plans. A small number of participants seem to make ridiculous choices regarding their investments. The biggest problem seems to be with diversification. Too many participants put all their eggs in one volitile or ultraconservative basket. Is there any guidance to suggest fiduciaries who have not fully complied with 404© are immune from participants who sue over their own stupid choices? In other words, if a plan is not compilant, it seems there is a good argument to be made that the fiduciaries are responsible for issues such as diversification. Could participant A state a case that the fiduciaries are responsible for his poor decisions?

I reviewed this rule in "Employee Benefits Law" and believe that employers do walk away. The authors discuss the rule and state "Thus, unlike other employers, construction industry employers that go out of business completely do not incur withdrawal liability..." My reading of 4203(b) is that employers who go out of business and do not return w/n 5 years to perform the same type of work in same area do not accrue any withdrawal liability under 4203(a).

I don't have the regulations in front of me, but it is my understanding that they do not incur WL and would not be required to pay any portion of the plan's unfunded liability. You may want to run a search on this topic in BenefitsLink or Westlaw. I know there have been articles written in the last 12 months... due to the universally lousy returns suffered by DB plans. Good luck

I think there is a different rule for the construction industry. A CI employer who decides to retire or close down does not face withdrawal liability unless he resumes the same type of work in the same area covered by the CBA (within 5 years). Special rules also apply in the entertainment and trucking industries. The PBGC can also approve rules adopted by individual plans in industries that share the characteristics of construction, entertainment and trucking.

Although not directly related to the original question, there are several cases from different Circuits debating whether a general waiver in a divorce decree or separation agreement is sufficient to cancel a beneficiary designation filed by a participant. Most of the cases indicate that for a plan to consider honoring such a waiver, the decree/agreement must clearly and unambiguously identify the name of the plan and the benefit that is being released.

My understanding is that the Board of Trustees is the "plan sponsor" when talking about a multiemployer fund. Our unions have been asked to sign a business associate agreement since they assist with collections, eligibility problems, etc. Absent an agreement, the union will be effectively cut off from the HW plan. The amendment to the plan document will allow the Board access to PHI, but not the union itself.

I never knew about this until our actuary/consultant brought it to the attention of our Boards. I would say it is a real problem for multi-employers since most have seen the NRA drop from age 65 down to the 60-62 range. Our plans now send the suspension notice, but refuse to take action on those who are already in pay status, but who may be owed more.

We recently looked at this issue and determined there was no affirmative duty on the part of the trustees to give notice of a withdraw liability, but that there was a duty to respond to a request for info about such liability. How bad is the Sheet Metal situation?

Member X works in covered employment for a contributing contractor. He decides he is fed up with working for "the man" and would like to go into business for himself. He therefore forms a company (LLC, etc.) and signs the CBA as an employer. Member X continues to work with his tools, but also accepts referrals from the hiring hall. He is an employer, but also a bargaining unit alum. My recollection is that the partication rules are different for this type of person depending upon the type of entity which he forms.

I am referring to members of a union who begin to work as contractors. They will sometimes set up shop as an LLC, a corporation, a sole proprietorship, or a partnership. These "alums" will often sign the collective bargaining agreement and continue to work with their tools while employing other members of the union.

I didn't put it there because I was seeking the opinion of those who work with or are familiar with collective bargaining agreements. My understanding is that it would apply to our group under the EDI regs. Two of the covered transactions are "benefit enrollment and maintenance" and "health plan premium payment." Hopefully I am just missing the boat and we can continue with business as usual.

Can anyone provide a reference to an article, etc., discussing the ability of owners, directors, incorporators, sole proprietors, etc., to participate in a multiemployer DB/DC plan? Some of our plans allow former bargaining unit alums to participate in a limited fashion, while other prohibit it altogether. I need a refresher on the IRS/DOL guidelines. Thanks

So would it be your opinion that the HW plan would be forced to accept the remittance report and the contributions electronically (even though the remainder of the monies and report would be sent in hard copy to the custodian)? The 301 action would be injunctive in nature asking the court to force the employer to follow its obligations under the CBA regardless of HIPAA. I do agree that the rights under HIPAA and the obligations under the CBA seem to be mutually exclusive of one another.

We represent a number of multiemployer (union) health plans in the construction industry. Almost every one of our plans allows contractors to enroll their administrative staffs, etc., in the plan. It is done through a participation agreement and the benefits are typically different for a non-union employee. For example, the union employee is credited with contributions for each hour of service and can accumulate extra hours in a "dollar bank." Contributions for the non-union employees are based on the monthly cost of insurance to the plan. THere is also a carve-out of benefits such as disability coverage, etc. I don't think there is any concern over withdraw liability as the welfare coverage is not a vested benefit. If the plan became too expensive the employer could seek alternative arrangements.

This situation may have arisen as a result of the Supreme Court's decision in "Knudson." Our self-funded HW plans are struggling to provide benefits to members injured in accidents while simultaneously protecting our subrogation rights. Due to the Knudson ruling, many plans have rewritten their plan documents to prohibit payments until all issues of liability are settled. We used to pay benefits when a participant signed the reimbursement agreement, but due to Knudson, we have few options to enforce such agreements. I hope this issue is resolved soon as many participants find themselves in this situation.

By October our plans will be required under the EDI regulations to receive contributions and remittance information electronically. A question that has recently arisen concerns the interplay of the collective bargaining agreement with the EDI regs. Suppose the CBA says an employer must send all contributions and reports in paper form to the custodian. Must the plan still have the ability to receive this information electronically? If the employer asks to send the information electronically (in violation of the CBA) is the plan's only recourse a grievance or 301 action? Can an employer violate the CBA and still exercise its rights under the EDI regs?? Any thoughts are appreciated.