South-Western Legal Studies in Business

Decertification of Union Does Not Automatically End Employer Pension Obligations
Description Appeals court affirmed that when a union is decertified the pension plan defined in the collective bargaining agreement continues in force until the employer goes through a specific procedure under federal law to change the terms of the pension plan.
Topic Labor Law
Key Words Union Decertification; Employer Obligation; Pension Plan
C A S E   S U M M A R Y
Facts Under a collective bargaining agreement (CBA), Truck Transport, whose employees were represented by the Teamsters, contributed specific amounts to a pension fund on behalf of the employees. The employees voted to decertify the union. Terms of employment changed little after that until the company lost its biggest customer. It then reduced the size of its operation and ended contributions to the pension plan. The pension administrator sued and the district court held that the employer was liable for pension contributions. Employer appealed.

Affirmed. Decertification of the union did not terminate the employer’s obligation to contribute to a pension plan. Under ERISA, the federal law governing pensions, although the union no longer enforces the employer’s obligation, the employer must still contribute to the plan according to the terms of the CBA. To end its liability for pensions, employers must follow procedures set forth under ERISA.

Citation Central States v. Schilli Corp., 420 F.3d 663 (7th Cir., 2005)

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