The UA Local 525 Plumbers and Pipefitters maintains three multi-employer trust funds; a health and welfare, a pension and a Joint Apprentice Training Committee (JATC). The health and welfare plan was established in 1951, the pension plan originated in 1962 and the JATC took form in 1965, go to JATC for more information on the training trust.
Multi-employer plans cover workers from more than one employer. This is in contrast to the traditional company pension plan for example that covers workers from one employer or single-employer plans.
Multiemployer plans are authorized and defined by ERISA Section 3(37), 29 U.S.C. §1002(3)(37). The National Labor Relations Act of 1935 (NLRA) gave initial authority to allow employer contributions to multi-employer plans and provides the governance requirements for these plans.
Multi-employer plans under the NLRA were later amended by the Labor Management Relations Act of 1947, known as the Taft-Hartley Act. Under Taft-Hartley, a multi-employer plan is established by negotiating an employer contribution as part of a written labor-management agreement and establishing a trust fund. It also required trust funds to be audited annually for financial integrity.
Employer contributions, determined by collective bargaining, fund the plans. Said contributions to support such plans are negotiated at the initiative of a labor union or a group of labor unions representing the workers of a number of companies, usually in a given geographic area. The workers are usually engaged in the same kind of employment or skilled craft. Thus, individual workers moving from job-to-job continue to earn benefits. The NLRA states that employers cannot give money or anything else of value to employee representatives (individuals or unions). The law, however, permits employers to contribute money into a joint trust if it is established for the sole and exclusive benefit of employees and their dependents.
There are two broad types of multiemployer plans. The first, a welfare benefit plan, may provide group life insurance; disability insurance; coverage for hospitalization, surgical, and/or medical costs; prepaid legal services; vacation; or unemployment benefits. The other, a pension plan, is designed to provide retirement income benefits. The multiemployer concept can also be used to provide other benefits. Its collective approach has been used effectively in areas such as employee training. Under Taft-Hartley a separate trust fund must be established to hold contributions for pensions or annuities. Pension fund monies, for example, cannot be commingled with welfare fund monies.
Interestingly enough, the first union-sponsored benefit fund predates the passage of Taft-Hartley when the Cigar Makers Union established the first fund in 1867.
Multi-employer plans are governed by a board of trustees with equal representation from labor and management; an equal number of employer and employee representatives are appointed as trustees, with an established procedure for resolving deadlocks. The respective trust documents state how many trustees will govern the plan and how they are appointed or elected.