Pay it here or pay it there? Part 2 + 2019 LRC Hotel Block Closes Next Week
2019 LRC Hotel Block Closes April 2
|We have a number of individuals who have registered for the conference but have not booked a room at the JW Marriott and some rooms reserved by individuals who have not yet registered for the conference itself. If you have planned to come to the conference, please check and make sure you have a reservation/registration in place.|
If you haven’t made plans yet, please do so this week while space is still available. Reservations must be made before 5pm EDT on April 2, 2019.
Pay it here or pay it there? Part 2
Paying at home when you can’t pay at home
When a contractor sends a current employee into the jurisdiction of another local union to work, there are times and circumstances where the contractor, and often the workers themselves, would rather that the worker’s fringe benefit fund contributions were made to the home fund. Unfortunately, because of federal law, in particular the Employee Retirement Income Security Act (ERISA), it really can’t be done this way.
Under the standard portability agreement, the employer must “comply with all of the terms of the collective bargaining agreement applicable to the work performed.” The employer must pay into the site local funds. When the local funds get the contributions and hours information, the Reciprocal Agreements allow the site local fund to send the money back to the home fund if the worker chooses to have that done.
The home fund determines how they will apply the contributions. In a defined contribution plan, it’s fairly simple, the money received must be added to the individual’s account. In a defined benefit plan, the fund can provide full hour-for-hour service credits, regardless of the contribution amount, or it can provide a pro-rata credit based on the ratio of the site local contribution to the home local contribution. Health and welfare plans are like defined benefit plans in that they also must decide whether to credit hour-for-hour or on a pro-rata basis.
Where a home fund decides to apply the contributions on a pro-rata basis, traveling employees run the risk of losing benefits, especially under health plans, if they are working in an area where the site contribution rate is significantly lower than the home rate. When that is the case, workers and their employers often ask if they can just pay the funds at home. As noted above, the law does not and the trust funds own rules may not permit this.
There are ways to address the issue, however. Local funds can be written to provide for self-contributions by participants who are on the road and workers who are traveling can assure continued coverage by making these payments in addition to what is provided under reciprocity (employers may provide extra compensation to the worker for this purpose, although that would likely be a taxable payment). The local funds can also be written to allow employers to make direct contributions to cover shortages incurred by workers traveling at the employer’s direction to make up for reciprocal shortages (that may be a tax-advantaged payment – competent tax advice should be sought). Contractors should check with their chapter managers who can review the trust funds with the trustees or administrators to see what options exist so that workers sent to other jurisdictions are able to maintain local coverage if desired. Traveling workers also have the option of participating in the site local plans without reciprocating any money back.
Employers working under the VDV National Agreement, certain IBEW International Specialty Agreements, and other multi-jurisdictional agreements (for example a state-wide portability agreement that allows for it) pay fringe benefit contributions directly to an employee’s home fund because these CBAs are what establish the jurisdiction the employer is working under, not the local agreement or trusts.