Associations for Employers Contributing to Multiemployer Plans

[Guest gaham]

Does anyone know of any associations/political action committees of small employers who contribute to multiemployer plans? I would be particularly interested in any such associations of employers who contribute to the Central States Southeast and Southwest Areas Pension Fund. I have a client -- small employer -- who is totally exasperated with its participation in this Fund and would like to explore ideas with similarly situated employers. Thanks for any help.

[GBurns]

All you have to do is do a Google search on "Central States Pension Fund".

There you will find a number of such groups.

However, there are 2 very different issues, the management of the Funds and the laws (and pending laws) that govern the Funds. Your client will have to decide which is it that is not liked. The groups have different agendas.

If your client does not like being in the fund, they would have to either stop using Union truckers or reduce the number of union truckers. There is no law that says you have to be a union shop. There are many firms that are not union shops.

[JanetM]

Wouldn't life be grand if we could just stop using those union workers who cause us to contribute to those plans.

OMG now I remember why...................... the millions and millions it will cost for the withdrawal liability. Yes that was definately it. Note to self: the cost is 5M a year to stay in, and oh about 50M to pull out. Yes am sure that was the answer.

[JanetM]

Actually GBurns, the rules surrounding Multis are terrible. You can't just replace union folks with non union folks who do the same work in the geographic region. You can't reduce the numbers siginificantly without triggering partical withdrawal. The rules get you coming and going, if you are in one of the seriously underfunded plan you know you are going to pay - the only question is how much and when.

If there is easy way I want to hear it, we are participating employers in 3 multiempler plans and would love to jump ship in all of them.

[Guest gaham]

You're right JanetM. My client was facing a 5 figure withdrawal liability in '99. Now its a half million and the Pension Fund Trustees are demanding a 7% increase in employer contributions for CBA's expiring in '06. If you don't agree they will take action to remove the employer from the fund; the result, yes you guessed right -- withdrawal liability. I am aware that the big employers (UPS) are looking at ways (possible legislation?) to get out but it seems to me small employers are the ones truly taking the hit. I have done a "Google" search and have found no employer organizations devoted to their interests. Again, is anyone aware of any such groups?

[JanetM]

Gaham, I don't know about any groups. Using the old adage "misery loves company" you would think there would be hundreds of groups out there.

[GBurns]

The Trucking industry has a different sort of labor agreement, so it does not seem as restrictive regarding replacement as might occur elsewhere. I have not heard of that geographical restriction before and wonder whether such is applicable to the Trucking industry any at all. After all the very nature and structure of Interstate Trucking is that it covers all geographical areas. Any agreement that is that restrictive would probably be null.

But you are right, the withdrawal liability is a killer.

gaham,

I don't know how you search but my Google search brings up many from which I could easily find out who has grouped with whom and which employer have had court disputes etc etc, for example:

http://www.nopensionfreeze.org/

http://www.tdu.org/Pension/CSPF_heat/cspf_heat.html

[Kirk Maldonado]

Gburns:

You are also assuming that the union will acquiesce in the employer's decision to withdraw. While not all locals are wild about the Central States Pension Fund, other locals will threaten retaliatory action if the employer withdraws. Depending on the circumstances, the business disruption caused by those union activities could dwarf the amount of the withdrawal liability.

[Guest gaham]

GBurns -- the websites you cite are devoted to the interests of rank and file Teamsters. Needless to say they have a different axe to grind with the Pension Fund than employers. Again, there do not seem to be any employer groups that I can find.

[GBurns]

Kirk,

It was never suggested or even implied that the employer should withdraw from anything. I suggested that there are ways to reduce the use of union employees thereby reducing the involvement with and the impact of any mismanagement etc. of the Pension Fund.

gaham,

Think for a while. If the Google search gives you the names of employees and where they work, you therefore know who the employers are. If the search also tells you of employers who have had disputes such as lawsuits then you know has a gripe. Only employers who have gripes would be forming or would already be members of the association/groups that you are looking for.

How do you find out if they have formed or joined such an association/group? You simply call and ask.

The search result gives you the name of the employer and in many cases a spokesperson's or contact's name.

Also if you read the websites given in the search results you will also find out who else might be organizing what. For example, the left side of the www.tdu.org website gives you links for certian categories, UPS, Freight, Carhaul etc. These links take you to stories about what is happening with disputes etc. You will see names like Convoy Dispatch, ABF, allied, Auto Truck etc etc. These are employers with gripes. These are the employers who would be forming and joining the associations/group that you are looking for. Help yourself or get someone to help you.

[Kirk Maldonado]

Gburns:

You first said:

If your client does not like being in the fund, they would have to either stop using Union truckers or reduce the number of union truckers. There is no law that says you have to be a union shop. There are many firms that are not union shops.

Then you said:

It was never suggested or even implied that the employer should withdraw from anything. I suggested that there are ways to reduce the use of union employees thereby reducing the involvement with and the impact of any mismanagement etc. of the Pension Fund.

It is obvious that you don't know the first thing about withdrawal liability.

If you don't know what you are talking about, don't post anything. All that most of your posts do is prove to the rest of the people here on BenefitsLink that you are ignorant about many topics, but you have such an ego you think that we want to read your drivel. I wish you would stop posting here because you are doing nothing but wasting everybody's time with your inane posts.

You are lucky that this isn't a reality TV show because you'd be voted off the island immediately in a unanimous vote.

[Effen]

Do you guys also blame the athletes when the owners agree to huge salaries and then cry poor?

Generally, the unions traded wages today for benefits tomorrow. The companies took their savings as spent it on other things. The unions aren't the only ones to blame, the companies agreed to provide the benefits.

I know the unions have their share of issues, but I think the companies deserve some of the blame for unfunding their pension obligations. Ownership constantly gives in to union demands to avoid labor conflicts. They make future promises and then fail to fund them. Then they go bankrupt anyway and shift their unfunded liability to the government. (Airlines, Steel, Auto) The unions ended up trading todays wages for tomorrows benefit and ended up with neither.

I'm just pointing out that there are two sides to every issue.

[JanetM]

GBurns, there are numerous cases where companies with truckers have lost to multiemployer plans. This is the first that comes to mind.

US-CT-APP-7, PENSION-CASES ¶105,325, NESTLE HOLDINGS, INC. and NESTLE TRANSPORTATION COMPANY, Plaintiffs-Appellants, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, Defendant-Appellee., (Sept. 05, 2003)

You can begin with ERISA 4201 to learn about withdrawal liability.

[GBurns]

Employers losing lawsuits to Plans is not the issue. How to calculate or understand the technical issues of withdrawal liability is not the issue either. The issue is how to get out from under a Plan without the withdrawal liability and without union action.

While the withdrawal liability makes it impractical to withdraw from the Fund, What else can the employer do but to gradually reduce its number of union truckers?

If the employer does not like the actions, management, performance etc of the Fund, What else can the employer do but reduce involvement with the Fund by reducing the number of participating employees until it become too minimal to worry about?

[JanetM]

That is the heart of it. Once you are in it is virtually impossible to get out a- quickly or b- without going broke. Short of bankrupting the company and fleeing to a foreign country you don't have many options.

Options

Close up shop and move the compnay to new location that is non union. That triggers complete withdrawal and you can pay it off with the savings you achieve by having inexpensive non union work force.

Open new location in non union location and slowly over time as folks leave, retire, or die reduce the number you cover at union location. If you do this slow enough over a long enough period you don't incur withdrawal liability. Key is slow - could take you least 20 years.

Open new location in non union location then hire the most incompetent imbeciles as managers and HR/payroll for union location you can find. Make it the worst place to work and soon folks will leave. Note - you will still have withdrawal liability.

Believe me - this was all tounge in cheek, but honestly I am stuck in 3 multiemployer plans and I don't see anyway to just pull the plug and get out. At least not at what the union is saying it will cost.

[Bill Ecklund]

There is an alliance of Trucking Companies that contribute to Central States.. It is called the Multiemployer Pension Plan Alliance. Contact person is Herve Aitken at Ford & Harrison LLP Tel: 202 719 2000.

[Guest gaham]

Bill Ecklund, thank you for that helpful information. For more on the plight of the small employer stuck in the Central States Pension Fund, see the testimony of John Ward, a small business owner, before a Congressional committee this past summer: http://help.senate.gov/testimony/t325_tes.html

[GBurns]

JanetM

Re your option that you think might take 20 years. Isn't the turnover in the trucking industry exceptionally high? A high rate should accelerate the process.

I looked have looked over a couple trucking companies in the last few years and it seems that if there really was the desire, a company could accomplish this in about 5 years. I see as much as 10% turnover some months frequently. These companies mainly in Illinois, Michigan, Indiana and New Jersey, so I do not know if the same situation exist elsewhere. This was natural attrition.

I suspect that if a company wanted it could easily accelerate this rate by changing working conditions etc.

[JanetM]

GBurns not all trucking companies have high turnover. We have three in the group and they are at less than 5% turnover. Most of that is due to disability or retirement, not job hopping.

Depending on the size of the company - the smaller it is the longer it takes to withdraw and not trigger withdrawal.

Maybe you should read up on the sections, Multiemployer plans have many quirks.

[mal]

I assume most of you are aware of the different rules for construction industry employers. We represent local/regional plans and are frustrated by the ability of a smart contractor to escape the WL monster. This can be done by leaving the jurisdiction for 5 years or by gradually shifting work to an alter ego.

[GBurns]

Multiemployer plans can have as many quirks as they want, that is not the issue, and neither are the Code sections.

The issue is how to get away from the Plan in as pragmatic as possible manner.

As mal points out it is within "the ability of a smart contractor to escape the WL monster". He posted "We represent local/regional plans" so he has seen first hand that escaping the "WL monster" can be done.

What he is attesting to is also done in other industries including the Trucking and Trucking related industries many times. One of the items that he points out is the same as the "phasing" out that I have been trying to explain.

The issue is How can an employer do this? It does not matter that he might have Withdrawal Liability, it matters How much and whether or not the benefits outweigh the WL. It is a business decision not a matter of any Code section. The Code section only says what the guidelines etc are. The terms of the Pension Fund contract might even be more onerous. But even that does not matter. What matters is whether the benefits outweigh the costs etc. And then again there should be some employers who might not care about the cost anyhow.

[JanetM]

WOW GBurns you have proved Kirk's point about giving your opinion without a bit of knowledge regarding the subject. Please note that mal stated contruction industry. If you have knowledge of ERISA 4203 you would be familiar with the two HUGE exceptions made to withdrawal rules. The rules for "building and construction industy" and the "entertainment industry" are different than the rules for other industry types.

Some of us participating in multiemployers are control groups, this makes the rules we play under even more onerous.

[GBurns]

But at least I read the posts and try to understand them.

mal clearly stated "the different rules for construction industry employers" but he also stated that there was "the ability of a smart contractor to escape the WL monster".

So BOTH the construction industry AND the trucking industry have what he calls "the WL monster". So where is there any difference in the substance? Don't they BOTH have WL? So it does not matter if there are different rule or exemptions as long as there is still WL.

Unless you are saying that the construction industry has no WL because of ERISA 4203 exemption, which would then put mal's statement into question. You state "HUGE exceptions made to withdrawal rules" while mal has contractors trying to "escape the WL monster".

Note his statement that he was "frustrated by the ability of a smart contractor to escape the WL monster".

Isn't that the issue, How "to escape the WL monster" for those employers who are, as the OP put it, "totally exasperated".

[JanetM]

I am not saying construction and entertainment industries dont have WL, I am saying they have easier time in changing thier workforce to non union and reducing contributions.

Here is example of how it works.

We have auto parts plants in OH and AL. OH is union while AL is not. Both plants opened in the 1950s. Both make the same parts and are running at 40 to 50% capacity. Work at the OH is stopped and the AL plant goes to about 95% capacity. We just triggered WL liability.

Had we been construction or entertainment industry that would not have happened.

[Guest mjb]

There is a major difference between the construction and entertainment industries on onehand and the auto and trucking industries in that entertainment /construction co form corporations that are project oriented with a limited lifespan whereas trucking and auto parts are corporations with indefinite life to pay wl liabilities. (Another thing is that movies can easily be made outside of the US such as in Canada-Toronto frequently substitutes for NYC). I once represented the owner of an incorporated trucking co. who was retiring and closing down the business. The Multi-er plan sent notice of a $260,000 wl which was to be amortized over 30 years at about 12k a yr. The client made 1 payment before the corp. ran out of assets and was liquidated. No further contributions were made by the owner.

[GBurns]

mjb

Although in "theory" corporations do have an indefinite life, your client did what is not that unpopular. It is very simple to create a new entity then fold the old. Look at the corporate structures (including subs and related entities etc) and you will see that many are already set up to take advantage of this strategy whenever they need to. Where there is a will, there is a way.

JanetM

It is very easy to make critical comments, but harder to explain them. What would knowledge of ERISA 4203 etc have refuted in any of the options that I suggested? What would such knowledge have added?

It says nothing about planning strategies, hiring strategies, corporate restructuring or anything that would affect such planning of how to minimize WL or union Fund involvement. I wish that you would show where anything in ERISA has any relevance to the discussion.

When comments such as yours are made without saying what is incorrect or deficient, there is no way that any reader can either agree or disagree. There was no factual statement made. It seems cowardly to attack but while doing so, making sure that no one can point to you that you might be incorrect, missed the point or might even be irrelevant.

[Kirk Maldonado]

Gburns:

You must have been the person that Mark Twain had in mind when he said:

It is far better to remain silent and be thought a fool than to open one's mouth and remove all doubt.

All your posts do is to confirm to the rest of the people that read the Message Boards that you know nothing about the topics, but that doesn't stop you from wasting everybody's time with your ill-informed posts.

[GBurns]

You still cannot show what any knowledge of either ERISA or IRC etc would change or what the relevance would be to the employer trying to find ways to minimize the WL. Knowing ERISA does not change the business planning and decisions that have to be made, and that is what we were discussing. All you need to know is how much WL, not much else, and you do not need to know ERISA etc to find out how much WL would be involved.

As usual your post has no facts just venom. When will you put forward an opinion that is relevant to the topic or an opinion that can be discussed? When will you have the morals or guts to state a position that can be either agreed with or refuted?

Aren't you tired or embarassed of having your baseless attacks against me, vebaguru and others removed by Moderators? I can think of at least 3 times in the last part of 2005 alone when this has been done to you. I think that I have had only 1 post removed by a Moderator in all these years.

I notice that many of your "foaming at the mouth" attacking posts are done very very late at night (very early morning), I wonder why?

[Guest mjb]

GB: Your last post equates ignorance with knowledge by stating that it is not necessary for an employer to know ERISA in trying to minimize WL and have never advised a client on ML issues. Anyone who has read the WL rules in ERISA 4201-4245 will disagree with you because Congress has created an elaborate web of rules to prevent employers in most industries who participate in ML plans from escaping liabilities other than through insolvency. (Prior to 1980 an employer could escape Withdrawal liability simply by terminating participation in the Multi employer plan). Any actuary will tell you that computing Multiemployer liabilty requires extensive expertise in the determining liability under the rules of IRC and the PBGC. Multi employer plans retain large labor law firms to track down employers who terminate operations to seize personal assets of the owners of the business to pay WL liabilities. I have great respect for people who advise clients in this area because to me its much more complex than advising clients on qualification issues. Recognized experts such as Kirk volunteer their free time (after spending the day working at their regular jobs - which is why many of his posts are entered as such late hours) to help answer questions on this board and dont need to waste their time responding to kibitzers who flout their ignorance of the applicable laws and regulations. This board exists because the regulatory environment is complex and is full of nuances which you are totally unaware of and unprepared to answer. I dont know about other posters but I intend to ignore your posts in the future unless you have something knowledgeable to contribute.

[GBurns]

mjb

Thank you for explaining my points, although you probably did not realize that you were doing so.

As you correctly posted "Any actuary will tell you that computing Multiemployer liabilty requires extensive expertise in the determining liability under the rules of IRC and the PBGC".

That is 1 of the points. The employer does not need to know the law that is for the advisor. The employer needs to know the consequences. The employer then looks for ways to mitigate or minimize the liability that the actuary or legal advisor determined.

Those possible ways are what I outlined, that is all. And those possible ways need no in depth knowledge of ERISA etc. They are business decisions and business strategies.