ERISA-Second Circuit Upholds Lower Court’s Interpretation Of Collective Bargaining Agreements and Funds’ Policies To Require That Contributions Be Made

In New England Health Care Employees Welfare Fund v. Bidwell Care Center, LLC, No. 10-1859-cv (2nd Cir. 2011) (Summary Order), the lower court had awarded the plaintiffs damages under ERISA for delinquent contributions, and denied defendants’ related counter-claim for alleged overpayments, to the plaintiffs. The plaintiffs are pension and welfare funds (the “Funds”). The defendants appealed.

In this case, the applicable collective bargaining agreements (“CBAs”) require the defendants to contribute to the Funds a certain percentage “of the gross payroll for [e]mployees in the bargaining unit who regularly work an average of twenty (20) or more hours per week.. . . Said contributions shall be calculated in accordance with the Fund’s contribution policies.” The defendants claim that the magistrate judge erred in failing to recognize the plain meaning of “work . . . hours”-used to determine whether contributions will be made on a particular employee’s behalf-as hours in which the employee was present at the worksite, instead deeming the term ambiguous and construing it, on the total record, to mean all hours for which an employee was paid, including vacation leave and sick time.

In analyzing the case, the Second Circuit Court said that the CBAs do not explain how employers should determine who regularly works an average of twenty hours or more per week. Instead, the CBAs explicitly instruct that the calculations be made in accordance with the Funds’ contribution policies. Those policies indicate that “work… hours” means “hours paid”. Also, the meaning of “work… hours” is ambiguous, so the magistrate judge may interpret that term in accordance with the evidence in the record, including extrinsic evidence. As such, the Court affirmed the lower court’s decision.

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