discrimination based on union membership status

[Guest SSS909]

I'm pretty sure it can't be done, but I'm at a loss as to where I would find a statute, regs, or case law which says so.

A multiemployer fund wants to provide a benefit only for those participants who are actively paying their union dues. I don't know if this would fall under labor laws, but I thought ERISA also required benefits to be provided to similarly situated participants and therefore this would violate ERISA. Does anyone have an idea?

[Effen]

I'm not sure I understand your question. A multi-employer plan is a negotiated plan, generally for union members. If someone isn't paying dues, they probably aren't a member of the union and therefore the employer is probably not making contributions on their behalf and therefore they wouldn't be benefiting.

If you are thinking about discrimination issues, collectively bargained plans are generally given an automatic pass on most pension related discrimination issues. In other words, if an employer employs 75 people, 50 of those are covered by a collective bargaining agreement that negotiates contributions into a multi-employer plan. The other 25 are not union members and are not represented by the union during negotiations. The employer doesn't have to provide any retirement benefits for the 25 non bargained employees. The counter is also true. If the employer wanted to give the non-bargained employees 5 times as much as the union employees, that would be ok as well.

There may be labor related issues in some states and there could be prevailing wage issues on some jobs, but those are generally not ERISA issues.

Do you have a situation where the non-union workers are covered by a multi-employer plan? Can you be more specific about your situation.

[Bill Ecklund]

I'm pretty sure it can't be done, but I'm at a loss as to where I would find a statute, regs, or case law which says so.

A multiemployer fund wants to provide a benefit only for those participants who are actively paying their union dues. I don't know if this would fall under labor laws, but I thought ERISA also required benefits to be provided to similarly situated participants and therefore this would violate ERISA. Does anyone have an idea?

This would be a violation of 8(a)(1) and 8(a)(3) of the National Labor Relations Act. The union could set up its own fund and provide that discriminatory benefit, but that fund could not be jointly trusteed nor could it receive contributions through the collective bargaining agreement. It would have to be funded through union dues.

[mal]

Proceed with caution! There are several cases which suggest it is improper to use a benefit plan to strengthen a union's bargaining power or to improperly advance union goals. We have always advised clients that plan fiduciaries cannot take any action to directly benefit a union, but that any plan change recommended by plan professionals which may be an indirect benefit is probably acceptable. I think the key is that the Board has documented legitimate reasons for the rule, and the rule affects more than just those who are not paying dues. In this regard, a cost-benefit analysis from an actuary or consultant is a great help.

For example, some health plans want to target those participants with a dollar bank/hour bank who leave covered employment and go to work for a non-union employer. I believe that such a rule aimed only at the non-union folks violates ERISA. On the other hand, if the Board adopts a rule under which the dollar bank is cancelled for all people who are no longer available for work with a contributing employer (for any reason, such as a new career, enrollment in school, multiple refusals of job offers, etc.) a court would likely uphold the rule. In the latter case, the participant who goes to work for a non-union employer is not available for work and is treated just like the participant who decides to leave the industry and pursue another career. Just my opinion.

Look at these cases for a discussion of rules designed to improperly advance union goals: Central Transport (Supreme Court, 1985); Deak v. Masters & Mates (11th Cir. 1987); Chambless v. Masters & Mates (2nd Cir. 1985); Duer Construction (6th Cir. 2005).

[Guest SSS909]

Thanks for the cites Mal. It is more of a matter where the member participant is no longer performing work covered under the CBA (for whatever reason) or is working in disqualified employment. Since the benefit they're looking at removing is not a protected benefit, there wouldn't be an anti-cutback issue but it is a question of whether a benefit can only favor one class of participants over another. I think the plan trustees would like to provide an incentive for the member participants to pay dues, even if they're not doing CBA work and reward those who do continue to pay dues. It seems logical to them, but I've got to prove this isn't the way to do it. Thanks again for the input!