Background

Merit shop contractors are typically wary of competing for taxpayer-funded construction contracts subject to a government-mandated project labor agreement for a number of reasons. Among them are concerns about the viability of multiemployer pension plans as a way to help employees achieve their retirement goals—and exposing their business to potentially catastrophic MEPP liability.

In 2018, 25 out of 60 MEPPs sending Critical and Declining Status Notices to plan participants were in the construction industry, according to a list posted by the U.S. Department of Labor’s Employee Benefits Security Administration. In addition, 71 out of 122 MEPPs sending Critical Status Notices and 49 out of 71 plans sending Endangered Status Notices were in the construction industry.

In March 2021, President Joe Biden signed the American Rescue Plan Act of 2021 (H.R. 1319) into law, including a controversial provision providing a Congressional Budget Office-estimated $86 billion taxpayer bailout of struggling union multiemployer pension plans.

While dozens of construction industry MEPPs have been granted relief by the Pension Benefit Guaranty Corporation’s Special Financial Assistance Program, contractors participating in such plans may still face heavy withdrawal liability. Beneficiaries should be cautious about retirement promises made by some MEPPs, and contractors may be unaware of MEPP liabilities that could cripple a business financially.

Desired Outcome

ABC will continue to monitor all legislative proposals concerning the Pension Benefit Guaranty Corp. and MEPPs. ABC will also oppose government-mandated PLAs and other laws mandating contractor and employee participation in MEPPs, which can result in lost wages and benefits by for nonunion employees as much as 34%. ABC is supportive of legislation that would reform struggling pension plans and provide plan participants with increased transparency and control over their retirement.