Unequal Representation on BOT

[Fielding Mellish]

Taft-Hartley defined benefit plan. Per the Trust, there are to be 3 Union Trustees and 3 Employer Trustees. An employer trustee passed away, but the Trust provides for equal votes on both sides, so that hasn't been a problem. However, there are a very small number of employers in this area, so the Plan can't find anyone to fill the 3rd Employer Trustee seat. And, there's now talk that the other 2 Employer Trustees want to retire soon.

So, what happens when you can't find any Employer Trustees? Keep in mind, the employers themselves aren't leaving the Plan. They are still covered by the CBA and will still be making contributions. The problem is that no one wants to be an employer trustee.

If there aren't any Employer Trustees, then there isn't a jointly-administered board, correct?

Your thoughts?

[Jim Dexter]

This is really a question for the lawyers and not for an actuary but I'll give my thoughts. To comply with the Taft-Hartley Act they simply must have employer trustees. If there are no employer trustees, any employer contributions to the plan would be a violation of Taft-Hartley potentially subject to penalties (criminal penalties, I believe). Some plans I'm aware of have gone the route of finding people such as retired executives from the industry, retired bankers, etc. to serve as paid trustees.

[My 2 cents]

If there will be employers remaining, they should get together and find three "volunteers" to look out for their own interests. Don't think "nobody wants to be an employer trustee" is an acceptable reason for closing down the whole thing.

I suppose (not being a multi-employer practitioner) that if they can't find anyone to be a trustee, they should have a mass withdrawal and pay the Withdrawal Liability. What else could be done? But won't the employers continue to have a contractual obligation under their CBAs to contribute to the plan for the ongoing accruals of their employees?

Maybe some union members would be willing to step up and become the Employer Trustees!

[Fielding Mellish]

Thanks for your responses. Would there still be mass withdrawal if the employers aren't leaving the plan? Though that might be the practical end since the fund couldn't go on without employer trustees.

And the employers have been looking for volunteers for some time, but to no avail.

[My 2 cents]

Thanks for your responses. Would there still be mass withdrawal if the employers aren't leaving the plan? Though that might be the practical end since the fund couldn't go on without employer trustees.

And the employers have been looking for volunteers for some time, but to no avail.

Based on what I have read here:

1. The employers will continue to have a contractual obligation (no chance of getting a court to let them out of that) to pay into the multiemployer plan.

2. The employers are prohibited by law from making contributions if there are no employer trustees.

3. Nobody wants to be an employer trustee.

Sounds like it is time to draw straws/engage in a heavy duty game of rock-paper-scissors/pay someone to do it/etc. No choice but for there to be one or more individuals serving as employer trustee, however arrived at.

[DTK_NJ]

I work with several multiemployer plans that have paid employer trustees. It usually requires amending the trust to allow it. Generally, the trustee must be appointed by one or more of the contributing employers, and the appointment is subject to periodic review and reappointment. Once money is involved, you'll find trustees. (Retired employer Trustees make great paid trustees.)

[Peter Gulia]

There are experienced yet unretired ERISA lawyers who are ready to serve as an employer-side trustee for a fee and expenses.

[Brian Haynes]

It is my understanding that it is also possible to go to federal district court and ask the judge to appoint an employer trustee. In extreme cases and as a last resort, union trustees have resorted to this procedure.

[Peter Gulia]

Brian, thank you for this useful information.

In your experience, what information (if any) does a judge consider to satisfy herself that a trustee selected by the judge results in "employers ... [being] equally represented in the administration of [the plan]" within the meaning of 29 U.S.C. section 186©(5)(B)?