Author: LegalEase Solutions
Our client appears on behalf of Persons Services, Inc., (“Persons”) which is a waste transportation company with a work force comprised of union members. The Operating Engineers Local 324 Pension Fund has sued PERSONS in Federal District Court for non-compliance with the union contract and related statutes pertaining to union pension contributions. The suit was filed under Section 302 of the Labor Management Relations Act and the Employee Retirement Income Security Act of 1974. The allegation is that the company failed to make appropriate pension fund contributions for trainees/apprentices in accordance with the contract and the statues. The facts underlying the allegations are that, by making pension contributions for trainees/apprentices on a graduated scale analogous to that used for determining regular wages (rather than making contributions at the same rate as for full employees), the company should be required to compensate the fund for the resulting deficiency. The Collective Bargaining Agreement in place between the parties is silent on this issue, though it does provide that for each employee covered by the agreement, the company shall pay Operating Engineers Local 324 Pension Fund $2.70 per hour on all hours paid not exceeding 40 hours per week.
- Does federal statute or case law require union apprentices/trainees to be paid full or partial pension contributions?
- Exhaustive research of federal cases and statutes does not provide a clear, definitive answer. In the absence of collective bargaining agreement provisions outlining pension contribution obligations for trainees/apprentices, colorable arguments can be mounted on both sides. On one hand, it is possible to assert that apprentices are not to be classified as “employees” subject to the terms of the CBA. On the other hand, there is some authority to suggest that any person being paid to do the type of work covered by the agreement qualifies for pension contributions as they are broadly outlined by the contract. In addition, it has been held that in the context of an employee benefits fund contribution case, the trustees of such a plan are afforded broad discretion to determine eligibility for plan participation, as they are thought to be in the best position to ascertain the meaning and intent of the agreements.
Collective bargaining is one of the keystones of the Labor Management Relations Act. Section 1 of the Act declares that the policy of the United States is to be carried out “by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.”
Collective bargaining is defined in the Act. Section 8(d) requires an employer and the representative of its employees to meet at reasonable times, to confer in good faith about certain matters, and to put into writing any agreement reached if requested by either party. The parties must confer in good faith with respect to wages, hours, and other terms or conditions of employment, the negotiation of an agreement, or any question arising under an agreement.
Ideally, the rights and obligations of each classification of employee covered by such an agreement will be fully expressed in the agreement, as in the case of the graduated wage scale in effect during the apprenticeship process. Unfortunately, the agreement between PERSONS Services, Inc. and the Operating Engineers Local 324 failed to delineate expectations and requirements with regard to pension fund contributions for trainees/apprentices. The omission is unusual, as various examples of similar union agreements uncovered in the research process include specific provisions for pension contribution amounts to be paid during apprenticeships.
- Are Trainees/Apprentices Considered “Employees” Covered Under the Collective Bargaining Agreement for Purposes of Full Pension Contributions?
The unpublished opinion of the 6th Circuit in Iron Workers Local No. 25 Pension Fund, et al., v MCS General Contractors, Inc. 2000 U.S. App. LEXIS 22688 (6th Cir., 2000) discusses a situation in which there was a dispute as to whether “pre-apprentices” were rightly considered employees covered by the CBA’s requirement that pension contributions be made on their behalf by the defendant company. The plaintiff fund argued that the CBA in effect between the parties required contributions to be made for all work covered by the agreement, regardless of what classification of worker performed it. The defendant asserted that the CBA required contributions only for employees described in the agreement as “journeymen, apprentices, and probationary apprentices”.
In ultimately concluding that the pre-apprentices were entitled to receive contributions, the court found that while the CBA detailed wage rates and fund contributions for work done by journeymen, apprentices and probationary apprentices, it was silent on those issues when it came to pre-apprentices. Importantly, the court stated that the CBA did not state that journeymen, apprentices and probationary apprentices exclusively comprise the category of “employees” covered by the agreement. Instead, the CBA contained sections that described what type of work was covered by the agreement (“all facets involving the erection of a pre-engineered building”). Id. at 12-13.
Thus, as the court found that the only provisions treating scope of coverage were in terms of type of work, not type of worker, any individual performing the type of work covered were entitled to pension contributions (including “pre-apprentices”). All workers engaged in the erection of pre-engineered buildings, no matter their discrete classification, were to receive contributions. Id. at 13-14.
- Trainees/Apprentices Arguably Not “Employees”?
Another possible, though rather weaker argument that may be attempted is to
assert that trainees/apprentices are not really employees at all, in terms of eligibility for pension contributions, and instead are merely engaged in a training process which they may abandon at will. The case of Walling v Nashville C. & St. L. Ry 155 F.2d 1016 (6th Cir., 1946) held that trainees of a railroad were not employees within the meaning of the Fair Labor Standards Act, and therefore not subject to wage regulations contained therein. Id. at 1018. In the instant matter, though apprentices are permitted to work regular hours, they do not receive full employee pay until they have completed four years’ service. According to the court in Walling, if trainees are considered “employees”, the concept of voluntary apprenticeship would pass away. Id. at 1018. It could, perhaps, be argued that if the trainees in the instant matter were intended to be considered employees, their rights as such (with regard to the pension plan) would have been articulated in the contract with specificity. The portion of the agreement declaring that the pension fund would receive $2.70 per hour on all hours paid “for each employee covered by this agreement” would arguably have incorporated a list of worker categories falling under that umbrella.
Furthermore, neither the Labor Management Relations ACT, 29 USC §152 (Definitions) nor the Employee Retirement Income Security Act, 29 USC §1002 specifically defines the term “employee” to include apprentices or trainees.
- Dispute Resolution in Employee Benefits Context
There is some authority indicating judicial preference for affording trustees of employee benefits plans fairly broad discretion in determining eligibility and levels of plan participation. In the case of Suburban Teamsters of Northern Illinois Welfare Fund v C.H. Heist Corporation 1988 U.S. Dist. LEXIS 10374, the court held that such discretion is sensible because trustees of the plans are in the best position to properly ascertain the meaning of the trust and collective bargaining agreements. See also Giler v Board of Trustees of Sheet Metal Workers Pension Plan, 509 F.2d 848 (9th Cir. 1975). It was thought that it is the trustees of such funds who are familiar with the intricacies of, and concerned with the financial integrity of the trust. Wolfe v J.C. Penney Company, Inc. 710 F.2d 388, 394 (7th Cir. 1983). Though the question in Suburban Teamsters dealt more with the entitlement of non-regular, casual, emergency workers to pension contributions, the court held that contributions were owed for all persons performing collective bargaining unit work, regardless of their particular status of employment. The court said that to rule otherwise would be a violation of Section 8 of the Labor Management Relations Act, 29 U.S.C. §158(a)(3), as it would constitute discrimination in a term or condition of employment based on union membership.
Unfortunately, after culling federal statutes and cases in search of decisions directly addressing the issue of graduated pension contributions for union apprentices, no such concrete holdings have been found. There has been some limited judicial treatment in a broad sense of apprentices’ entitlement to pension contributions, but most of the discussions turn on the explicit provisions of the governing collective bargaining agreement.
There is some indication that it is the type of work being performed that places any participating worker into the class of “employees” eligible for full contributions (as described in the instant CBA–$2.70 per hour worked), and not the individual status or classification of the worker. However, as the CBA is silent on the use of a graduated scale for such contributions, similar to the one used for wages, there seems, at the very least, to be an argument that a sliding scale based on tenure in the apprenticeship was what was intended by the agreement. Furthermore, a possible argument can be advanced that the apprentices/trainees are not to be considered employees for purposes of the contribution provisions in the CBA, and that the CBA does not evince any intent to the contrary.
 The term “employee” shall include any employee, and shall not be limited to the employees of a particular employer, unless this subchapter explicitly states otherwise, and shall include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unfair labor practice, and who has not obtained any other regular and substantially equivalent employment, but shall not include any individual employed as an agricultural laborer, or in the domestic service of any family or person at his home, or any individual employed by his parent or spouse, or any individual having the status of an independent contractor, or any individual employed as a supervisor, or any individual employed by an employer subject to the Railway Labor Act [45 U.S.C. 151 et seq.], as amended from time to time, or by any other person who is not an employer as herein defined.
 The term “employee” means any individual employed by an employer.