(a) General. Section 3(37) of the Act contains in paragraphs (a)(i)-
(iv) a number of criteria which an employee benefit plan must meet in
order to be a multiemployer plan under the Act. Section 3(37) also
provides that the Secretary may prescribe by regulation other
requirements in addition to those contained in paragraphs (a)(i)-(iv).
The purpose of this regulation is to establish such requirements.
(b) Plans in existence before the effective date. (1) A plan in
existence before September 2, 1974, will be considered a multiemployer
plan if it satisfies the requirements of section 3(37)(A)(i)-(iv) of the
Act.
(2) For purposes of this section, a plan is considered to be in
existence if:
(i)(A) The plan was reduced to writing and adopted by the
participating employers and the employee organization (including, in the
case of a corporate employer, formal approval by an
employer's board of directors or shareholders, if required), even though
no amounts had been contributed under the plan, and
(B) The plan has not been terminated; or
(ii)(A) There was a legally enforceable agreement to establish such
a plan signed by the employers and the employee organization, and
(B) The contributions to be made to the plan were set forth in the
agreement.
(iii) If a plan was in existence within the meaning of paragraph
(b)(2)(i) or (ii) of this section, any other plan with which such
existing plan is merged or consolidated shall also be considered to be
in existence.
(c) Plans not in existence before the effective date. In addition to
the provisions of section 3(37)(A)(i)-(iv) of the Act, a multiemployer
plan established on or after September 2, 1974, must meet the
requirement that it was established for a substantial business purpose.
A substantial business purpose includes the interest of a labor
organization in securing an employee benefit plan for its members. The
following factors are relevant in determining whether a substantial
business purpose existed for the establishment of a plan; any single
factor may be sufficient to constitute a substantial business purpose:
(1) The extent to which the plan is maintained by a substantial
number of unaffiliated contributing employers and covers a substantial
portion of the trade, craft or industry in terms of employees or a
substantial number of the employees in the trade, craft or industry in a
locality or geographic area;
(2) The extent to which the plan provides benefits more closely
related to years of service within the trade, craft or industry rather
than with an employer, reflecting the fact that an employee's
relationship with an employer maintaining the plan is generally short-
term although service in the trade, craft or industry is generally long-
term;
(3) The extent to which collective bargaining takes place on matters
other than employee benefit plans between the employee organization and
the employers maintaining the plan; and
(4) The extent to which the administrative burden and expense of
providing benefits through single employer plans would be greater than
through a multiemployer plan.
[40 FR 52008, Nov. 7, 1975]
