Multiemployer Withdrawal Liability

[Guest dvandaele2]

If a contributing employer for a Multiemployer plan transfers his union employees to a leasing organization and the leasing organization continues to make contributions to the Multiemployer plan, is there anyway that the "former" contributing employer can avoid being accessed a withdrawal liability? If so how?

[mbozek]

If the contributing employer is a party to the CBA then then withdrawal liability will be applied against the employer. Why whould the union realase the employer from withdrawal liability just because the employees are transferred to a leasing organization? If the leasing organizaton goes out of business then union would not have any recourse for recovery of the pension liabilities.

[GBurns]

Good question, Why would the union release the "former" employer?

Also, Does the PD of the Multiemployer Plan accept contributions from an entity (the leasing org) who is not a party to the CBA?

Does the Multiemployer Plan allow contributions fron non-sponsors?

[Guest dvandaele2]

The Employer wanted to know if there was a way to have his employees leased without having the withdrawal liability assessed. Please keep in mind that the "former employer" would still be making the contributions to the leasing company for the leased employees. He just did not want to have to make contributions and be assessed the withdrawal liability. Is there a way around this? Is there a way that that withdrawal liability can be avoided?

If the document was amended to have the Plan cover leased employees, non sponsor contribute to the plan and a contract was drawn up to have the "former employer" secondarily liable for the contribution if something were to happen to the leasing company, would this be sufficient to avoid the assessment of the withdrawal liability?

[mbozek]

I really dont understand why the employer wants to transfer the employees to a leasing organization if the employer will continue to make the pension plan contributions. I dont see any economic savings by moving the employees to a leasing entity. Second, the employer has signed the CBA with the union regarding the rights and benefits of the union employees. The employer cannot unilaterly transfer its employees to a non participating employer without being brought before the NLRB for violating the CBA. You should read the CBA. For participating employers multiemployer pension plans are like the roach motel- you can enter but you cant leave without paying the withdrawal liability. Your client needs to retain labor counsel.

[GBurns]

I am curious as to what this employer finds in this leasing arrangement that is so advantageous or beneficial that he is going to all this trouble?

As mbozek points out there is not only the issues of the NLRB because of the CBA, but also the difficulty of leaving the Plan.

However, it might be possible that the employees although leased could still be covered as eligible employees of the client ("former employer") because of their hours worked per year. But that would mean that the client would still stay in the MEP and still be a sponsor and contributor. I think competent legal advice and guidance is needed.

By the way, INMHO, since the leasing org does not have the legal support to have already provided this client with the pros and cons etc and the actions that have to be taken etc, I would seriously question anything that they do or say about anything and would consider not doing any business with them.

[Guest dvandaele2]

Thank you all for your input. I will pass this information along to my colleague.

Hopefully, this will provide him with a direction that he needs to go.

Have a great day.

Dianne

[Bill Ecklund]

Yes there is at least one. If the employer sells assets to the leasing compnay and enters into a 4204 agreement that is approved by the fund, withdrawal liability would not be imposed on the employer, assuming that the requirements of 4204 are met