§1401 — Title 29 Labor | U.S. Code

Summary

If an employer and the sponsor of a multiemployer pension plan disagree about certain plan decisions, they must use arbitration to settle it. Either side has 60 days to start arbitration. That 60‑day window starts either when the employer gets the plan’s notice or 120 days after the employer asked for the decision, whichever comes first. The agency that runs the program will set fair rules for the arbitration. If the parties do not agree who pays, the arbitrator will decide who pays the costs and may award reasonable lawyer fees. The 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 calculations of unfunded vested benefits, the challenger must show that the actuarial assumptions or methods were unreasonable overall or that the actuary made a major error. If no arbitration is started, the plan sponsor’s payment demands are due as scheduled and the sponsor may sue to collect. After an arbitrator issues an award, a party has 30 days to ask a U.S. district court to enforce, change, or throw out the award. Arbitration awards are treated like other federal arbitration awards and can be enforced in court, and courts will presume the arbitrator’s factual findings are correct unless plainly disproved. There are special rules when the plan sponsor says a past transaction was mainly done to evade withdrawal responsibility. If the transaction happened at least 5 years before the withdrawal and before January 1, 1999, the sponsor must prove that claim by a preponderance of the evidence, and the employer does not have to pay withdrawal amounts while the dispute is pending. For transactions after December 31, 1998, and at least 5 years before the withdrawal (or 2 years for a “small employer”), an employer who wants to delay payments must tell the plan sponsor within 90 days. If the dispute is not decided within 12 months after that notice, the employer must post a bond or put money in escrow equal to the withdrawal payments due for the next 12 months. The bond must be renewed each year the dispute continues. A “small employer” means one that in the transaction year and each of the three years before it employed no more than 500 workers and was required to contribute for no more than 250.

Title 29, §1401

Labor — Source: USLM XML via OLRC

(a)(1)Any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 1381 through 1399 of this title shall be resolved through arbitration. Either party may initiate the arbitration proceeding within a 60-day period after the earlier of—

(A)the date of notification to the employer under section 1399(b)(2)(B) of this title, or

(B)120 days after the date of the employer’s request under section 1399(b)(2)(A) of this title.

(2)An arbitration proceeding under this section shall be conducted in accordance with fair and equitable procedures to be promulgated by the corporation. The plan sponsor may purchase insurance to cover potential liability of the arbitrator. If the parties have not provided for the costs of the arbitration, including arbitrator’s fees, by agreement, the arbitrator shall assess such fees. The arbitrator may also award reasonable attorney’s fees.

(3)(A)For purposes of any proceeding under this section, any determination made by a plan sponsor under sections 1381 through 1399 of this title and section 1405 of this title is presumed correct unless the party contesting the determination shows by a preponderance of the evidence that the determination was unreasonable or clearly erroneous.

(B)In the case of the determination of a plan’s unfunded vested benefits for a plan year, the determination is presumed correct unless a party contesting the determination shows by a preponderance of evidence that—

(i)the actuarial assumptions and methods used in the determination were, in the aggregate, unreasonable (taking into account the experience of the plan and reasonable expectations), or

(ii)the plan’s actuary made a significant error in applying the actuarial assumptions or methods.

(b)(1)If no arbitration proceeding has been initiated pursuant to subsection (a), the amounts demanded by the plan sponsor under section 1399(b)(1) of this title shall be due and owing on the schedule set forth by the plan sponsor. The plan sponsor may bring an action in a State or Federal court of competent jurisdiction for collection.

(2)Upon completion of the arbitration proceedings in favor of one of the parties, any party thereto may bring an action, no later than 30 days after the issuance of an arbitrator’s award, in an appropriate United States district court in accordance with section 1451 of this title to enforce, vacate, or modify the arbitrator’s award.

(3)Any arbitration proceedings under this section shall, to the extent consistent with this subchapter, be conducted in the same manner, subject to the same limitations, carried out with the same powers (including subpena power), and enforced in United States courts as an arbitration proceeding carried out under title 9.

(c)In any proceeding under subsection (b), there shall be a presumption, rebuttable only by a clear preponderance of the evidence, that the findings of fact made by the arbitrator were correct.

(d)Payments shall be made by an employer in accordance with the determinations made under this part until the arbitrator issues a final decision with respect to the determination submitted for arbitration, with any necessary adjustments in subsequent payments for overpayments or underpayments arising out of the decision of the arbitrator with respect to the determination. If the employer fails to make timely payment in accordance with such final decision, the employer shall be treated as being delinquent in the making of a contribution required under the plan (within the meaning of section 1145 of this title).

(e)(1)If—

(A)a plan sponsor of a plan determines that—

(i)a complete or partial withdrawal of an employer has occurred, or

(ii)an employer is liable for withdrawal liability payments with respect to the complete or partial withdrawal of an employer from the plan,

(B)such determination is based in whole or in part on a finding by the plan sponsor under section 1392(c) of this title that a principal purpose of a transaction that occurred before January 1, 1999, was to evade or avoid withdrawal liability under this subtitle, and

(C)such transaction occurred at least 5 years before the date of the complete or partial withdrawal,

(2)(A)Notwithstanding subsection (a)(3)—

(i)a determination by the plan sponsor under paragraph (1)(B) shall not be presumed to be correct, and

(ii)the plan sponsor shall have the burden to establish, by a preponderance of the evidence, the elements of the claim under section 1392(c) of this title that a principal purpose of the transaction was to evade or avoid withdrawal liability under this subtitle.

(B)Notwithstanding subsection (d) and section 1399(c) of this title, if an employer contests the plan sponsor’s determination under paragraph (1) through an arbitration proceeding pursuant to subsection (a), or through a claim brought in a court of competent jurisdiction, the employer shall not be obligated to make any withdrawal liability payments until a final decision in the arbitration proceeding, or in court, upholds the plan sponsor’s determination.

(f)(1)If—

(A)a plan sponsor of a plan determines that—

(i)a complete or partial withdrawal of an employer has occurred, or

(ii)an employer is liable for withdrawal liability payments with respect to such complete or partial withdrawal, and

(B)such determination is based in whole or in part on a finding by the plan sponsor under section 1392(c) of this title that a principal purpose of any transaction which occurred after December 31, 1998, and at least 5 years (2 years in the case of a small employer) before the date of the complete or partial withdrawal was to evade or avoid withdrawal liability under this subtitle,

(2)Notwithstanding subsection (d) and section 1399(c) of this title, if an electing person contests the plan sponsor’s determination with respect to withdrawal liability payments under paragraph (1) through an arbitration proceeding pursuant to subsection (a), through an action brought in a court of competent jurisdiction for review of such an arbitration decision, or as otherwise permitted by law, the electing person shall not be obligated to make the withdrawal liability payments until a final decision in the arbitration proceeding, or in court, upholds the plan sponsor’s determination, but only if the electing person—

(A)provides notice to the plan sponsor of its election to apply the special rule in this paragraph within 90 days after the plan sponsor notifies the electing person of its liability by reason of the application of section 1392(c) of this title; and

(B)if a final decision in the arbitration proceeding, or in court, of the withdrawal liability dispute has not been rendered within 12 months from the date of such notice, the electing person provides to the plan, effective as of the first day following the 12-month period, a bond issued by a corporate surety company that is an acceptable surety for purposes of section 1112 of this title, or an amount held in escrow by a bank or similar financial institution satisfactory to the plan, in an amount equal to the sum of the withdrawal liability payments that would otherwise be due under subsection (d) and section 1399(c) of this title for the 12-month period beginning with the first anniversary of such notice. Such bond or escrow shall remain in effect until there is a final decision in the arbitration proceeding, or in court, of the withdrawal liability dispute, at which time such bond or escrow shall be paid to the plan if such final decision upholds the plan sponsor’s determination.

(3)For purposes of this subsection—

(A)The term “small employer” means any employer which, for the calendar year in which the transaction referred to in paragraph (1)(B) occurred and for each of the 3 preceding years, on average—

(i)employs not more than 500 employees, and

(ii)is required to make contributions to the plan for not more than 250 employees.

(B)Any group treated as a single employer under subsection (b)(1) of section 1301 of this title, without regard to any transaction that was a basis for the plan’s finding under section 1392 of this title, shall be treated as a single employer for purposes of this subparagraph.

(4)If a withdrawal liability dispute to which this subsection applies is not concluded by 12 months after the electing person posts the bond or escrow described in paragraph (2), the electing person shall, at the start of each succeeding 12-month period, provide an additional bond or amount held in escrow equal to the sum of the withdrawal liability payments that would otherwise be payable to the plan during that period.

(5)The liability of the party furnishing a bond or escrow under this subsection shall be reduced, upon the payment of the bond or escrow to the plan, by the amount thereof.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2008—Subsecs. (e) to (g). Pub. L. 110–458 redesignated subsecs. (f) and (g) as (e) and (f), respectively, and struck out former subsec. (e). Prior to amendment, text read as follows: “If any employer requests in writing that the plan sponsor make available to the employer general information necessary for the employer to compute its withdrawal liability with respect to the plan (other than information which is unique to that employer), the plan sponsor shall furnish the information to the employer without charge. If any employer requests in writing that the plan sponsor make an estimate of such employer’s potential withdrawal liability with respect to the plan or to provide information unique to that employer, the plan sponsor may require the employer to pay the reasonable cost of making such estimate or providing such information.” 2006—Subsec. (g). Pub. L. 109–280 added subsec. (g). 2004—Subsec. (f). Pub. L. 108–218 added subsec. (f).

Statutory Notes and Related Subsidiaries

Effective Date

of 2008 AmendmentAmendment by Pub. L. 110–458 effective as if included in the provisions of Pub. L. 109–280 to which the amendment relates, except as otherwise provided, see section 112 of Pub. L. 110–458, set out as a note under section 72 of Title 26, Internal Revenue Code.

Effective Date

of 2006 Amendment Pub. L. 109–280, title II, § 204(d)(2), Aug. 17, 2006, 120 Stat. 889, provided that: “The

Amendments

made by this subsection [amending this section] shall apply to any person that receives a notification under section 4219(b)(1) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1399(b)(1)] on or after the date of enactment of this Act [Aug. 17, 2006] with respect to a transaction that occurred after December 31, 1998.”

Effective Date

of 2004 Amendment Pub. L. 108–218, title II, § 202(b), Apr. 10, 2004, 118 Stat. 609, provided that: “The

Amendments

made by this section [amending this section] shall apply to any employer that receives a notification under section 4219(b)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1399(b)(1)) after October 31, 2003.”

§1401 Resolution of Disputes

Summary

Title 29, §1401

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Amendments

Effective Date

Amendments

Citations & Metadata