Court Says Employer Must Make Benefit Fund Contributions Even After Union Decertified
In the first holding of its kind by any United States Court of Appeals, the Seventh Circuit has ruled that employers are still obligated to contribute to union health and welfare and pension funds under the terms of a collective bargaining agreement even after the union is decertified and the collective bargaining agreement is rendered void by operation of law.
In the case of Midwest Operating Engineers Welfare Fund, et al. v. Cleveland Quarry, et al., three related employers were signatory to five-year agreements with a union that had been certified as the “9a” representative of their employees. Because federal law only allows a collective bargaining agreement to serve as a “contract bar” to decertification for a maximum of three years, the employees covered by the agreements were free to decertify the union during the term of the collective bargaining agreements rather than having to wait until the collective bargaining agreements were close to expiration. The employees at all three of the defendant employers voted to decertify the union a year before the agreements were due to expire.
Decertification renders a collective bargaining agreement void by operation of law, meaning that a union is no longer allowed to enforce an agreement after the union is decertified. However, in the Cleveland Quarry case, the U.S. Court of Appeals for the Seventh Circuit (which covers Wisconsin, Illinois, and Indiana, and which includes the troubled Teamsters Central States Pension Fund) held that a Taft-Hartley multiemployer benefit fund can still enforce a collective bargaining agreement rendered void by decertification until the agreement’s expiration date, despite language in the agreement stating that the employers were obligated to make contributions to the fund only for hours worked “under the terms of the agreement.” Although this is the only case of its kind in the United States, it is binding on federal district courts in each of the states in the circuit.
The takeaway from this decision is to include language in collective bargaining agreements that clearly terminates the employer’s obligation to contribute if the employees decertify the union, the union disclaims interest, or if the agreement is otherwise terminated by agreement of the parties or by operation of law. Absent this explicit language, employers operating in the Seventh Circuit – at least those operating on a “9a” rather than an “8f” basis – now face a substantial risk that their obligations to union benefit funds will continue even if their obligations to the union and the employees under those agreements cease.
The employers in the case petitioned for a rehearing, which was denied. They are now considering an appeal to the U.S. Supreme Court.
Editor’s Note: This article was written by the attorney representing the employers in the case, Andrew J. Martone of the law firm Hesse Martone, P.C., and edited and published with permission. Andy can be reached at (314-862-0608) or email@example.com.
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