§1401 Resolution of disputes

Summary

Arbitration must be used when an employer and a multiemployer plan sponsor disagree about decisions under sections 1381–1399. Either side has 60 days after the earlier of two events (the sponsor’s notice to the employer or 120 days after the employer’s request) to start arbitration. The arbitrator follows fair procedures set by the corporation. If the parties did not agree who pays, the arbitrator assigns fees and may award reasonable lawyer fees. A plan sponsor’s decision is assumed correct unless the challenger proves by a preponderance of the evidence that it was unreasonable or clearly wrong. For a plan’s unfunded vested benefits, the challenger must show either that the actuarial methods or assumptions were unreasonable overall or that the actuary made a major error. If no arbitration is started, the plan sponsor’s demand is due as scheduled and the sponsor can sue to collect. After an arbitration award, a party may go to a U.S. district court within 30 days to enforce, change, or cancel the award. Arbitration has the same powers and court enforcement as an arbitration under Title 9. In court, an arbitrator’s factual findings are assumed correct unless overturned by clear preponderance. Employers must keep making payments as determined until the arbitrator issues a final decision, with later adjustments for over- or underpayments; failure to follow the final decision makes the employer delinquent. If a sponsor says an employer withdrew and that a past transaction was mainly to evade withdrawal liability, different rules apply. For transactions before January 1, 1999, and at least 5 years before the withdrawal, the sponsor does not get the usual presumption and must prove the evasion claim by a preponderance. If the contested transaction happened after December 31, 1998 (or at least 2 years before withdrawal for a “small employer”), an employer who objects and wants the special rule must notify the sponsor within 90 days. If there is no final decision within 12 months after that notice, the employer must post a bond or escrow equal to 12 months of the required payments (and renew it each year if needed). A “small employer” means one that averaged not more than 500 employees and made contributions for not more than 250 employees in the year of the transaction and each of the three years before it. The bond or escrow is reduced by any amount paid to the plan.