For those employers that have obligations under collective bargaining agreements to contribute to multiemployer benefit plans, the employment implications of the COVID-19 crisis may have significant consequences. Here are some potential pitfalls and possible advantages to participating in multiemployer plans for employers grappling with the coronavirus pandemic.
On June 1, 2018, the U.S. Court of Appeals for the Ninth Circuit ruled that an asset purchaser that was deemed a successor was liable to pay the seller’s withdrawal liability even though the purchaser did not have actual knowledge of the liability.
On December 20, 2016, the Seventh Circuit issued an opinion holding that multiemployer benefit funds were entitled to collect contributions required under collective bargaining agreements that were not to expire until 2015, even though the employees had previously decertified the union in 2013.
On March 28, 2016, a district court in Massachusetts found two private equity funds (under the Sun Capital Partners, Inc. umbrella) jointly and severally liable for withdrawal liability imposed on one of its underlying portfolio companies, even though neither private equity fund owned 80 percent or more of the portfolio company.
Employers withdrawing from an underfunded multiemployer defined benefit pension plan may soon face not only an assessment of withdrawal liability, but also an additional payment called an “exit premium.” The Obama administration’s fiscal year 2017 budget, released on February 9, 2016, proposes that the Pension Benefit Guaranty Corporation (PBGC) impose an exit premium on employers that withdraw from unfunded multiemployer plans. This exit premium, along with a proposed variable-rate premium for underfunded multiemployer plans, is part of the administration’s effort to increase revenue to the PBGC by $15 billion over the next decade.
The U.S. Department of Labor recently issued final regulations providing fiduciary relief to plan fiduciaries who select default investment options for their individual account plans (including 401(k) plans) which give participants the right to direct investments. These regulations, which went into effect on December 24, 2007, implement a safe harbor for default investments. Under the