The other union benefit crisis: multiemployer (Taft-Hartley) plans

The political and often emotional debate over unions continues to escalate, a timeline for which is reported in the Washington Post’s article, Protests Over State Budget Cuts, Anti-Union Bills Spread Throughout U.S.

The focus, of course, is public employee unions. But flying under the radar - or rather limping – are the issues affecting multiemployer benefit plans. Those are benefit plans most always established under the Labor Management Relations Act of 1947 also popularly referred to as the Taft-Hartley Act from which these plans get their name.

Unlike single employer plans, Taft-Hartley plans are structured as follows:

  • The plan is collectively bargained with each participating employer who each contributes to the plan.
  • The plan and trust assets are managed by a joint board of trustees comprised of equal representatives of management and labor
  • The plan covers employees who frequently move between employers in the same industry, e.g., trucking, retail, and construction.

The number of employees covered under these plans is nowhere as prevalent as it was in years past when union membership was significantly higher. Such was the case during my early involvement with ERISA in the mid-1970s which included administration of multiemployer plans. At that time, union membership was approximately 26% of the non-agricultural workforce.

But much less now as reported by the Bureau of Labor Statistics in January of this year:

  • In 2010, the union membership rate, the percent of wage and salary workers who were members of a union, was 11.9% with 14.7 million union workers.
  • In 1983, the first year for which comparable union data are available, the union membership rate was 20.1% with 17.7 million union workers.

Despite this precipitous decline, there are approximately 10 million employees in nearly 1,500 multiemployer plans who are covered for health and retirement benefits.

For these plans to continue to be viable, they have to overcome three difficult challenges:

  1. Financial and demographic
  2. Legislative
  3. Judicial

Our blogging buddy, Paul Secunda, one of the editors of Workplace Prof Blog and Associate Professor of Law at Marquette University, takes on this topic in his recent Research Paper, The Forgotten Employee Benefit Crisis: Has The Moment of Truth Arrived for Multiemployer Benefit Plans? He provides some suggestions how to overcome the three challenges highlighted above.

Paul says in his conclusion:

This article provides a first time look at the numerous challenges that face Taft-Hartley plans in the post-global recession and post-health care reform world in which we now live. It has sought to offer some future internal, legislative, administrative, and judicial reforms with which to overcome the financial, legislative, and judicial challenges that these plans now face.

The outlook today no doubt looks bleak, but this article seeks to shine the light on how various structural and substantive plan reforms may help Taft-Hartley plans survive these difficult times. Although the pain of the present is not pleasant for Taft-Hartley plans nor for the employees whose retirement, health, and other welfare plan interests they represent, the hope is that through this necessary recalibration and restructuring multiemployer benefit plans will become stronger, with more secure participants and beneficiaries in the near future.

His article is scheduled for publication in November in the Cornell Journal of Law and Public Policy, but you can download it here.