Excluding new employees--partial withdrawal?

[Guest Penelope]

If an employer and the union agree to limit participation and contributions to current employees, excluding new employees from a multiemployer plan, would that agreement trigger partial withdrawal liability? The employer would continue to contribute for current employees at all of its locations.

If this is a partial withdrawal, how would the liability amount be calculated? Based on my rudimentary understanding of the math involved, it looks as if it would be negligible.

[Bill Ecklund]

Many plans have rules that provide such an arrangement would result in a complete withdrawal from the plan. Central States, for example, does not allow that type of provison in a CBA, nor does the Sheet Metal Workers National Pension Fund. In both cases the employer would be terminated from the plan resulting in the assessment of withdrawal liability. See: Central Hardware v. Central States Pension Fund,770 F.2d 106, 110770 F.2d 106, 110 (8th Cir.1985). In additon the PPA of 2006 precludes this kind of provsion in a CBA under certain circumstances.

[Effen]

Not allowing new employees to participate in the multiemployer plan would not directly create a withdrawal liability. I could over time depending on turnover. Partial withdrawals are the result of a specific decrease in the number of contribution units over a specific time period.

Mr. Ecklund is correct that some plans will not accept this type of contract, but some will. Also, if the plan is critical or endanagered, it would be prohibited from negotiating such an agreement.