• CBA Provision Obligating Union to Indemnify Employer for Withdrawal Liability No Violation of Public Policy
  • March 28, 2012 | Author: Jed L. Marcus
  • Law Firm: Bressler, Amery & Ross A Professional Corporation - New York Office
  • Those of us representing employers who contribute to multiemployer pension funds know all about the dangers of "withdrawal liability" for employers who withdraw from a fund deemed underfunded, meaning that it possesses more liabilities than assets. Under the Multiemployer Pension Plan Amendments Act ("MPPAA"), employers who partially or completely withdraw from a multiemployer pension plan are required to contribute to the plan a proportionate share of the "unfunded vested benefits." Once a plan sponsor determines that an employer has withdrawn from a pension plan, either partially or completely, the sponsor must notify the employer of the amount of liability due, prepare a schedule of payments, and demand payment in accordance with that schedule. 29 U.S.C. ยงยง 1382, 1399(b)(1). The question arises as to whether a union may, in its collective bargaining agreement ("CBA") with an employer, agree to indemnify an employer for its withdrawal liability. The Sixth Circuit Court of Appeals says "Yes." See Shelter Distribution, Inc. v. General Drivers, Warehousemen & Helpers Local Union No 89, No. 11-5450 (6th Cir. Mar. 16, 2012).