Second Circuit clarifies decades-old ERISA ambiguity affecting multiemployer plans

A federal appeals court handed employers a major win on pension costs, ruling that a school bus company owes nothing after its workers switched unions.

The U.S. Court of Appeals for the Second Circuit delivered its decision February 18, settling a dispute that has puzzled benefits professionals for decades: What does an employer really owe when employees vote to change their union representation and pension plans come along for the ride?

For Mar-Can Transportation Company, a school bus operator serving Westchester and New York Counties in New York State, the answer turned out to be far better than expected. The company walked away owing zero dollars in withdrawal liability to its old pension plan, instead of the $1.8 million the fund had demanded.

The case offers a roadmap for benefits teams navigating the tricky intersection of union elections and pension obligations, particularly in industries where multiemployer plans are common.

Here's what happened. In March 2020, Mar-Can's employees voted to leave Teamsters Local 553 and join the Amalgamated Transit Workers. When the National Labor Relations Board certified the election results, Mar-Can had no choice but to pull out of the Teamsters-affiliated Local 854 Pension Fund and start contributing to the new union's plan.

Under federal pension law, that withdrawal typically comes with a price tag. In April 2020, the old pension fund assessed...

Read Full Story: https://news.google.com/rss/articles/CBMixwFBVV95cUxNREFNVXR5Q0h3YjA5V2xMei1r...