Withdrawal liability

[Guest Sieve]

Employer has ceased doing business and received notice of withdrawal liability, which employer disputes (construction industry exception). Union has indicated a withdrawal liability monthly payment (to amortize the full liability), and has demanded payment of the monthly amount.

If the employer disputes the withdrawal liability, must it make monthly payments during the union's review? If arbitration results, must the employer make monthly payments during the arbitration?

If the answer is yes, that monthly payments must be made during either/or the review & arbitration processes, what is the consequence if the employer does NOT make those payments?

[Bill Ecklund]

Yes, the employer must make the monthly payments until the arbitration is completed. Failure to do so allows the plan to accelerate the payments and sue for the entire amount. Also follow strictly the timeliness for requesting review and arbitration. Failure to do so leaves the employer with no defenses.

[Guest Sieve]

Next question: What happens if the employer follows the review process in a timely fashion, but does not make any of the scheduled monthly payments? Does a judgment for the entire amount (resulting from failure to make scheduled monthly payments) make any arbitration decision in favor of the employer moot?

[Brian Haynes]

Employer has ceased doing business and received notice of withdrawal liability, which employer disputes (construction industry exception). Union has indicated a withdrawal liability monthly payment (to amortize the full liability), and has demanded payment of the monthly amount.

If the employer disputes the withdrawal liability, must it make monthly payments during the union's review? If arbitration results, must the employer make monthly payments during the arbitration?

If the answer is yes, that monthly payments must be made during either/or the review & arbitration processes, what is the consequence if the employer does NOT make those payments?

[Brian Haynes]

Employer has ceased doing business and received notice of withdrawal liability, which employer disputes (construction industry exception). Union has indicated a withdrawal liability monthly payment (to amortize the full liability), and has demanded payment of the monthly amount.

If the employer disputes the withdrawal liability, must it make monthly payments during the union's review? If arbitration results, must the employer make monthly payments during the arbitration?

If the answer is yes, that monthly payments must be made during either/or the review & arbitration processes, what is the consequence if the employer does NOT make those payments?

What Bill said is true. However, I note that a Pension Fund has a duty to conduct a good faith inquiry of the factual circumstances of the applicability of the building and construction industry exemtpion before imposing withdrawal liability. Take a look at Crown Clothing 854 F.Supp. 316 (D.N.J. 1994).

[Bill Ecklund]

You should look at PBGC opinion letter 85-23 which gives the PBGC's interpretation of the regulations regarding default in payment of the withdrawal liability and when the default actually occurs which allows the plan to accelerate.