| 83-21 |
| September 8, 1983 |
| REFERENCE: |
| 4203(b) Complete Withdrawal. Building & Construction Industry Exemption |
| 4203(f) Complete Withdrawal. Special Withdrawal Liability Rules |
| OPINION: |
| This responds to your letter concerning the applicability and scope of Section 4203(b)(1) of the Employee Retirement |
| Income Security Act of 1974 ("ERISA"), as amended by the Multiemployer Pension Plan Amendments Act of 1980 (the |
| Section 4203(b)(1) provides: |
| Notwithstanding subsection (a) of this section, in the case of an employer that has an obligation to contribute under a plan |
| for work performed in the building and construction industry, a complete withdrawal occurs only as described in paragraph |
| (A) substantially all the employees with respect to whom the employer has an obligation to contribute under the plan |
| perform work in the building and construction industry, and |
| (B) the plan - |
| (i) primarily covers employees in the building and construction industry, or |
| (ii) is amendment to provide that this subsection applies to employers described in this paragraph. |
| In your letter you indicated that employees of your clients manufacture concrete blocks, carry blocks to a storage yard or |
| to a loading area, transport blocks to construction sites, and unload blocks at the contribution site. You also indicated that |
| the multiemployer plan, to which your clients contribute, has adopted a specific "construction industry exemption" and has |
| represented that this exemption covers the employees of your clients. |
| ERISA does not specifically define those activities that are included within the term "building and construction industry". |
| The Senate report in Section 4203(b) does indicate that PBGC and plan sponsors should refer to labor-management |
| relations law in defining the term "building and construction industry". Summary & Analysis of S. 1076 (Senate Labor |
| Comm.), p. 14 (April 1980). PBGC is currently in the process of developing a regulation on Section 4203(b), which will |
| define that activities that are included within the building and construction industry, as well as the terms "primarily" and |
| "substantially all", which are critical to the implementation of Section 4203(b). A copy of PBGC's advance notice of |
| rulemaking on this issue is enclosed (Enclosure A). |
| Our understanding of the cases under the labor-management relations law is that the term "building and construction |
| industry" includes, but is not necessarily limited to, work performed at the site of a building or other structure in connection |
| with the erection, alteration of the building or other structure. cf. Carpet, Linoleum & Soft Tile Local Union 1247, et al., |
| 156 NLRB 951 (1966). |
| In a case where an employer does perform work in the building and construction industry and substantially all the |
| employees with respect to whom such employer has an obligation to contribute under the plan perform work in such |
| industry, ERISA § 4203(b)(1)(B)(ii) permits a plan amendment which will subject such employer to withdrawal liability only |
| if the provisions of § 4203(b)(2) apply. n1 |
| n1 § 4203(b)(2) provides: |
| A withdrawal occurs under this paragraph if - |
| (A) an employer ceases to have an obligation to contribute under the plan, and |
| (B) the employer - |
| (i) continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions |
| were previously required, or |
| (ii) resumes such work within 5 years after the date on which the obligation to contribute under the plan ceases, and does |
| not renew the obligation at the time of resumption. |
| You should be aware that under limited circumstances rules similar to those for the construction and entertainment |
| industries may apply to plans in other industries. Section 4203(f) of ERISA provides: |
|
(1) The corporation [PBGC] may prescribe regulations under which plans in industries other than the construction or |
|
entertainment industry may be amended to provide for special withdrawal liability rules similar to the rules described in |
|
subsections (b) and (c) of this section. |
|
(2) Regulations under paragraph (1) shall permit use of special withdrawal liability rules - |
|
(A) only in industries (or portions thereof) in which, as determined by the corporation, the characteristics that would make |
|
use of such rules appropriate are clearly shown, and |
|
(B) only if the corporation determines, in each instance in which special liability rules are permitted, that use of such rules |
|
will not pose a significant risk to the corporation under this subchapter. |
|
The PBGC has adopted procedural rules (Enclosure B) under which a plan may request approval of a plan amendment |
|
providing for special withdrawal liability rules similar to those applicable to the construction an entertainment industries. |
|
The PBGC has also issued an advance notice of proposed rulemaking (Enclosure C) relating to possible PBGC regulatory |
|
standards for approval of plan amendments providing for special withdrawal liability rules. |
|
Henry Rose |
|
General Counsel |