ERISA-DOL Provides Guidance As To When A Plan Is Maintained Pursuant To Collectively Bargained Agreements

In Advisory Opinion 2013-02A (the “Advisory Opinion”), the U.S. Department of Labor (the “DOL”) provides guidance as to when a plan is considered to be maintained pursuant to collective bargaining agreements. The issue has considerable importance under ERISA. For instance, a plan cannot be a “multiemployer plan” under section 3(37) of ERISA unless it is so maintained. In the Advisory Opinion itself, the DOL had been asked to determine that certain documents involving participation in a plan by the local unions constitute “collective bargaining agreements” for purposes of making an election that the plan be treated as a multiemployer plan pursuant to ERISA section 3(37)(G)(i)(II).

The facts in the Advisory Opinion were as follows. The plan at issue was the Teamsters Joint Council No. 73 Pension Plan (the “Plan”). The Plan is a defined benefit pension plan that provides benefits for “officers, business agents, trustees, or clerical employees” of Local Unions affiliated with the Teamsters Joint Council No. 73 (the “Joint Council”) or of the Joint Council. On or about August 17, 1971, the Joint Council executed a trust agreement with its Executive Board for the Executive Board members to become the trustees of the Plan. By a resolution adopted at the Joint Council Convention in August, 1971, the Local Unions approved the Plan. The Plan rules governing eligibility have been amended from time to time. The Local Union and Joint Council make contributions to the Plan as employers.

The Joint Council is a “labor organization” as defined by applicable federal law, exempt from federal taxation under section 501 of the Internal Revenue Code. The Local Unions are also exempt from federal taxation as “labor organizations”. The Joint Council functions as the employee organization that represents the employees covered by the Plan for purposes of collective bargaining with their employers, the Local Unions. Several documents-such as the trust agreement and Board minutes- purportedly illustrate the existence of collectively bargained agreements between the Joint Council and the Local Unions to establish and maintain the Plan. These documents all focus on the existence of an obligation to make contributions to the Plan.

In analyzing the situation, the DOL said that it had not issued regulations interpreting the requirement “maintained pursuant to a collective bargaining agreement” for purposes of ERISA section 3(37). The DOL has defined, in its regulations, a similar phrase found in ERISA section 3(40)(A)(i). See 29 CFR 2510.3-40. The DOL further said that, based on the facts and regulations, it is unable to determine, in this case, whether the Plan should be treated as maintained pursuant to a collective bargaining agreement for purposes of ERISA 3(37)(G), since there is no evidence that the Plan was established or is maintained pursuant to an agreement resulting from a bona fide collective bargaining relationship. In the DOL’s view, such a conclusion in this case would require evidence of actual collective bargaining between one or more employers and an employee organization that represents the employer(s)’s employees covered by such agreement with respect to grievances, disputes, or other matters involving employment terms and conditions other than coverage under, or contributions to, the Plan. The information presented indicates only the existence of agreements by the participating Local Unions (in their capacity as employers) to make contributions to the Plan. These documents do not establish an agreement between the Local Unions, as employers, and the Joint Council, as a chosen representative of the employees, for purposes of negotiating with respect to the Plan or any other terms or conditions of employment.

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