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June 10, 2005
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Printer Friendly
Version
2005-15A
ERISA Sec. 3(1)
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Jared N. Kawashima
Ning, Lilly & Jones
707 Richards Street, Suite 700
Honolulu, HI 96813
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Dear Mr. Kawashima:
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This is in reply to your request for an advisory
opinion regarding the applicability of Title I of the Employee Retirement
Income Security Act of 1974 (ERISA). Specifically, you ask whether the
Painting Industry of Hawaii Labor Management Cooperation Trust Fund (Fund)
is an “employee welfare benefit plan” within the meaning of section
3(1) of Title I of ERISA.
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You represent that the Fund was jointly established by the International
Brotherhood of Painters and Allied Trades, Union Local 1791, AFL-CIO (Union)
and the Painting and Decorating Contractors Association of Hawaii
(Association) as of February 13, 1998, pursuant to the Trust Agreement of
Painting Industry of Hawaii Labor Management Cooperation Trust Fund (Trust
Agreement). You further represent that the Fund is designed to conform to
the requirements of section 302(c)(9) of the Labor Management Relations Act
of 1947 (LMRA), as amended.(1) You
represent the Fund was not established for the purpose of providing, nor
does it provide, any benefit described in sections 3(1) of ERISA. Although
references to ERISA are made in various places in the Trust Agreement, you
represent that the Fund has never operated as if it were an ERISA-covered
plan and no communications to employees have described the Fund as an ERISA
covered plan. In addition, you advise that no provision in the Trust
Agreement has been interpreted by the Board of Trustees as authorizing the
Fund to provide any benefits described in section 3(1) of ERISA. You further
advise that the Trust Agreement will be amended to delete all references to
ERISA.(2)
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The activities and affairs of the Fund are administered by a joint board of
trustees (Board), who are empowered to control and manage the operation and
administration of the Fund. You represent that the Board currently has a
total of six trustees; three Union appointed trustees and three trustees
appointed by the Association. You also represent that the number of trustees
on the Board may be changed from time to time by the Board, so long as the
positions open to Association trustees and Union trustees remain equal in
number. The Fund is funded by employer contributions at a rate set in
applicable bargaining agreements.
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The Fund’s purposes as stated in the Trust Agreement are as follows:
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To study and explore ways and means of promoting fair
competition in the area painting industry;
To provide Employers and their employees with
opportunities to study and explore new and innovative approaches to
achieving organizational effectiveness and recovering work traditionally
performed by Employers and their employees;
To assist Employers and their employees in solving
problems of mutual concern not susceptible to resolution within the
collective bargaining process;
To improve communication between representatives of
labor and management;
To enhance the involvement of employees in making
decisions that affect their working lives;
To expand and improve working relationships between
Employers and their employees;
To investigate and implement programs designed to
protect the integrity of the painting industry of Hawaii and the welfare
of the consumer;
To avoid disputes between labor and management before
they arise, and to assist in promptly and fairly resolving disputes when
they do arise;
To promote the use of safe, efficient, high quality
construction services in development, maintenance and rehabilitation of
industrial and commercial facilities;
To seek to maintain a productive dialogue with users
of painting services;
To foster the development of craft skills and high
quality training in the painting industry;
To foster improvements in occupational safety and
health and other working conditions in the painting industry;
To engage in activities to support or oppose
legislation in ways to advance the purposes of the painting industry in
Hawaii;
To advance and promote the Painting Industry through
activities and programs including but not limited to advertising and
contributing to charitable/non-profit programs and activities; and
To engage in any other, lawful activities incidental
or related to the accomplishment of these purposes.
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Section 3(1) of Title I of ERISA defines the term “employee welfare
benefit plan” to include:
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[A]ny plan, fund, or program which was heretofore or is hereafter
established or maintained by an employer or by an employee organization, or
by both, to the extent that such plan, fund, or program was established or
is maintained for the purpose of providing for its participants or their
beneficiaries, through the purchase of insurance or otherwise, (A) medical,
surgical, or hospital care or benefits, or benefits in the event of
sickness, accident, disability, death or unemployment, or vacation benefits,
apprenticeship or other training programs, or day care centers, scholarship
funds, or prepaid legal services, or (B) any benefit described in section
302(c) of the Labor Management Relations Act, 1947 (other than pensions on
retirement or death, and insurance to provide such pensions).
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Based on the information and representations you provided, it does not
appear that the Fund provides any benefit included in section 3(1)(A) or
section 3(1)(B) of ERISA. It is the Department's position that section
3(1)(B) of ERISA does not incorporate as a covered benefit every arrangement
described in section 302(c) of LMRA. Rather, the Department clarified the
definition of an “employee welfare benefit plan,” in 29 C.F.R. §
2510.3-1(a)(3), with regard to benefits described in section 302(c) of LMRA,
by stating:
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Section 302(c) of the LMRA lists exceptions to the restrictions contained in
subsections (a) and (b) of that section on payments and loans made by an
employer to individuals and groups representing employees of the employer.
Of these exceptions, only those contained in paragraphs (5), (6), (7) and
(8) describe benefits provided through employee benefit plans. Moreover,
only paragraph (6) describes benefits not described in section 3(1)(A) of
the Act. The benefits described in section 302(c)(6) of the LMRA but not in
section 3(1)(A) of the Act are “. . . holiday, severance or similar
benefits.” Thus, the effect of section 3(1)(B) of the Act is to include
within the definition of “welfare plan” those plans which provide
holiday and severance benefits, and benefits which are similar (for example,
benefits which are in substance severance benefits, although not so
characterized).
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Although this regulation was adopted prior to the
amendment of section 302(c) of LMRA that added subsection 302(c)(9), the
principle it articulates remains fully applicable. Only those arrangements
described in section 302(c) of LMRA that provide benefits to participants
or their beneficiaries would constitute employee welfare benefit plans.
Further, there is no indication in the submission that the Fund is an
employee pension benefit plan within the meaning of section 3(2) of Title
I of ERISA.
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Accordingly, based on the information and representations you provided, it
is the position of the Department that the Fund is not an employee benefit
plan covered under Title I of ERISA. The absence of any explicit limitation
in the Trust Agreement that would prevent the Fund from providing welfare or
pension benefits to participants or beneficiaries precludes us from assuring
you that the Fund will not be an employee benefit plan if, as is apparently
permitted under the above noted grant of broad authority in the Trust
Agreement, it is operated so as to provide a welfare or pension benefit
within the meaning of Title I of ERISA.
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This letter constitutes an advisory opinion under ERISA Procedure 76-1.
Accordingly, it is issued subject to the provisions of that procedure,
including section 10 thereof relating to the effect of advisory opinions.
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Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting and Disclosure
Office of Regulations and Interpretations
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29 U.S.C. § 186(c)(9).
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In addition, the Trust Agreement
references a document, the “Painting Industry of Hawaii
Labor-Management Cooperation Plan (Plan),” which you represent never
existed. You advise that the Trust Agreement will be amended in the
future to delete all references to the Plan.
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