Withdrawal Liability and Rejoining a Union

[benniegirl]

Client terminated its union contract because it was no longer performing covered work. However, it may have continued covered work through the use of subcontractors without making trust contributions. Now, it is asking whether it can avoid liability by rejoining the union. I assume the employer would still owe contributions for covered work when it was not a party to the CBA, but I'm having trouble finding the right statutory/regulatory source to explain this and show how the calculation would work, and my search terms are not giving me good case law results. Does anyone have any thoughts for where I should be looking?

[benniegirl]

I should note that this is a construction-industry employer who would otherwise fall under the exemption.

[Bill Ecklund]

If the employer has already been assessed withdrawal liability, the procedure is to sign a new CBA, and then follow the abatement procedures under ERISA § 4207 to abate the withdrawal liability. The employer will not be able to get back the withdrawal liability payments already made. If the employer can negotiate a new CBA with retroactive contributions back to the date the prior CBA terminated, and with the approval of the Plan, the withdrawal liability assessment could be withdrawn.

Normally a building and construction industry employer that meets the definition in ERISA § 4203(b)(2), who stops self-performing the work but continues doing the same work through subcontracting, will not have withdrawn from the plan as provided in § 4203(b)(2) unless the prior CBA had a clause making that employer liable for contributions owed to the plan by a subcontractor who fails to pay. See PBGC Opinion letter 85-5

[Bill Ecklund]

The second paragraph of my previous post should be:

Normally a building and construction industry employer that meets the definition in ERISA § 4203(b)(1), who stops self-performing the work but continues doing the same work through subcontracting, will not have withdrawn from the plan as provided in § 4203(b)(2) unless the prior CBA had a clause making that employer liable for contributions owed to the plan by a subcontractor who fails to pay. See PBGC Opinion letter 85-5

[benniegirl]

Thank you, Bill!

[Brian Haynes]

Just an additional after-thought: Although somewhat unclear under the case law, be careful if the contributing employer and the subcontractor are considered either a "joint or single employer" under the labor laws. If this is the case, the work by the subcontractor (being performed without an obligation to contribute to the pension fund) may be attributed to the employer and Section 4203(b) may have been violated.