A New Obligation Imposed on Employers Contributing to Multiemployer Plans

A New Obligation Imposed on Employers Contributing to Multiemployer Plans

June 29, 2017

Lawyers with clients that deal with multiemployer plans thought we knew what plans could require withdrawing employers to pay. After all, the employer’s potential liability – commonly known as “withdrawal liability” – is described fairly comprehensively in ERISA. The US Court of Appeals for the Eleventh Circuit disagrees, and said so in a recent case. According to the court, there is nothing in ERISA that indicates Congress intended for withdrawal liability to be the only payments a withdrawing employer would ever face.

The case is WestRock RKT Co. v. Pace Indus. Union-Mgmt. Pension Fund, Civ. Act. No. 16-16443 (11th Cir. May 16, 2017). It involves the rehabilitation plan established by the Pace Industries Union-Management Pension Fund (“Fund”). The Fund’s rehabilitation plan requires employers that withdraw to pay, in addition to their usual withdrawal liability, a portion of the Fund’s accumulated funding deficiency. WestRock argued this requirement violates ERISA. The Fund argued WestRock was not authorized to bring the lawsuit. The court said it didn’t need to decide whether WestRock could sue, because it agreed the Fund had not violated ERISA.

The court’s opinion is knotted with the hyper-technical complexities of ERISA and multiemployer plans. What is important is employers that contribute to multiemployer plans could, upon or complete or partial withdrawal, owe more than ERISA expressly requires as withdrawal liability. Most employers are surprised when they see the price tag associated with their withdrawal. Now the Eleventh Circuit has held multiemployer plans can charge more than what ERISA expressly allows.

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