Withdrawal liability: subcontract = cessation of covered operations

[Guest erisaattorney]

Employer subcontracts all of its work to a unionized subcontractor. Unionized subcontractor contributes to Fund on behalf of subcontractor's employees. Employer remains obligated to contribute under CBA, but has no employees. Has the employer ceased covered operations such that it is subject to withdrawal liability or does the subcontractor's continuation of the work constitute a continuation of operations. Is there any authority on this issue one way or the other?

[JanetM]

Is this a building & construction industry? Rules vary and there are exceptions to the rules for certain groups.

[Guest erisaattorney]

No, it's not a building and construction industry plan. I've seen cases addressing this situation in the construction industry, but I've not seen anything addressing it outside of the construction industry.

[JanetM]

From what I have been involved with, you may have problem. Union normally is sponsor specific and if you have sub'd out the work then you have ceased having an obligation to contribute and therefore have complete withdrawal. Now if there was control group relationship then you would be off the hook since the groups obligation didn't change.