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MEMO: Teamsters Underground Agreement

Monday, May 10, 2010   (0 Comments)
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TO:                Companies that have given MITA Power-of-Attorney for Teamsters Underground Agreement
 
FROM:           Michael A. Nystrom, Executive Vice President


SUBJECT:      Teamsters Central States Pension Fund Auditing Change May Affect Your Company
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As a company who employs Teamsters under the MITA/Teamsters Underground Collective Bargaining Agreement (CBA), I felt it was important that I inform you of a potential area of concern.
 
Recently auditors from the Teamsters Central States Pension Fund notified a Michigan contractor (a MITA member) of a pension contribution delinquency for the audit period of 2006 – 2008 based on vacation pay that was required to be paid by the MITA/Teamsters Underground CBA.
 
During the audit review, the auditor noted the gross amount that had been paid by the contractor to each employee for vacation pay.  The auditor then retroactively took that annual amount and divided it by the hourly pay rate to come up with a number of hours for each employee that was then allocated to weeks where the employee had not reached the weekly pension contribution maximum.
 
Due to the fact that the MITA/Teamsters Underground CBA requires that pension contributions be made for “each day worked…” MITA supported the member firm in its assertion that no pension contributions should be owed based upon annual vacation pay. Vacation pay is paid in a lump sum without respect to any vacation days or other missed days that the employee may have had.  Under the CBA, the employee is entitled to receive nothing for any period missed; there are no days missed for which vacation pay is received or entitled to be received.  Simply, there is no relationship between vacation pay and days missed from work.
 
However, in its response, the Teamsters Central States Pension Fund claimed that in the Participation Agreement (which must be signed by MITA each year in order for companies to avoid full withdrawal liability) there is language that says “The employer agrees to remit contributions on behalf of each covered employee for any period he/she receives, or is entitled to receive compensation…including vacation pay…” It also states that “To the extent there exists any conflict between provisions of this Participation Agreement and any provisions of the Collective Bargaining Agreement, the Participation Agreement shall control”.
 
This issue presents a challenging dilemma in that the language in the Participation Agreement is being manipulated by Central States to create a potential liability and failure to sign a Participation Agreement would constitute a withdrawal from the Pension Fund, and an attempt may be made by Central States Pension Fund to collect the full withdrawal liability from any companies working under the MITA/Teamsters CBA.  In the original case, the financial impact was approximately $730 for each Teamster that was employed for each audited year.  Ultimately, a judge may have to decide how to interpret these provisions.
 
Please feel free to contact me with any questions.


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