Our colleague Mark M. Trapp recently wrote an article entitled “Going Through Withdrawal: A Step-By-Step Guide to Arbitration in Multiemployer Withdrawal Liability Disputes” which appears in the current issue of the ABA Journal of Labor & Employment Law (members only).
Following is an excerpt:
Many employers with a unionized workforce contribute to multiemployer pension funds established by collective bargaining agreements. In recent years, due to a variety of factors, most multiemployer funds have faced significant underfunding. As employers have exited these funds, either voluntarily through negotiating out or involuntarily because of union decertification, many have had to become familiar with the concept of withdrawal liability.
Withdrawal liability is the employer’s proportional share of the pension plan’s unfunded vested benefits. Under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), which amended ERISA to establish liability, when an employer withdraws, the plan sponsor must determine the amount of withdrawal liability, notify the employer of the amount, and collect the amount from the employer. Those three words—determine, notify, and collect—sum up the one-sided nature of the process established under the MPPAA and describe what almost always happens: The fund determines, notifies, and collects. Employers simply pay the amount demanded by the fund, usually hundreds of thousands, or even millions, of dollars.