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Mr. Richard L. Davenport, F.S.A
Deloitte & Touche LLP
Chase Tower
2200 Ross Avenue, Suite 1600
Dallas, Texas 75201
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2000-04A
ERISA Sec. 3(32)
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Dear Mr. Davenport:
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This responds to your request for an advisory opinion on behalf of the
International Association of Firefighters, AFL-CIO/CLC Local 176 Board of
Trustees, Tulsa Firefighters Health and Welfare Trust. You ask whether the
Tulsa Firefighters Health and Welfare Plan (Plan) is excluded from Title I
of the Employee Retirement Income Security Act of 1974 (ERISA) as a
“governmental plan” within the meaning of section 3(32) of ERISA.
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You represent that the Plan covers substantially all of the active employees
of the City of Tulsa, Oklahoma (City) who are represented by the
International Association of Firefighters, AFL-CIO/CLC Local 176 (Local
176), certain retirees of the City, and dependents. Prior to June, 1994, the
Plan’s participants were covered under the City’s medical, dental and
life insurance programs. Pursuant to collective bargaining negotiations and
a Memorandum of Understanding between the City and Local 176 executed June
17, 1994 (Memorandum), the City agreed to allow Local 176 to withdraw from
the City’s medical, dental and life insurance programs and provide those
benefits in a separate plan funded and operated under a trust created by
Local 176. That trust is the Tulsa Firefighters Health and Welfare Trust
(Trust) and its benefit program is the Plan at issue here. The affairs of
the Trust are conducted by a seven-person board of trustees. Two trustees
are members of the executive board of Local 176, four are elected at large
by the Local 176 membership, and one is designated by the Mayor of the City
of Tulsa and approved by the Tulsa City Council.
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The Memorandum specified, among other things, that full-time employees of
Local 176 may also participate in the Plan. You state that the Plan
currently covers one such employee and that other individuals could become
eligible for coverage in the future. In particular, you indicate that Local
176 might add a business manager and a secretary as full-time employees who
would be covered by the Plan. With the exception of these three Local 176
employees, the Plan covers only current or retired employees of the City and
their dependents. As of March 1999, there were 838 participants enrolled in
the Plan. The Plan provides medical, dental and life insurance benefits to
its participants in accordance with the collective bargaining agreement
between the City and Local 176. The benefits are funded primarily by City
contributions specified in the bargaining agreement, which amounted to
approximately 78 percent of total contributions to the Plan for the plan
year ending June 30, 1998. The remaining contributions are made by the
Plan’s participants, including the participant employed by Local 176. The
bargaining agreement requires the City to wire its contributions directly to
the Trust’s bank account identified in the agreement.
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ERISA section 4(b)(1) provides that Title I of ERISA does not apply to a
"governmental plan" as defined in ERISA section 3(32). Section
3(32) of ERISA defines the term "governmental plan," in pertinent
part, as "a plan established or maintained for its employees by the
Government of the United States, by the government of any State or political
subdivision thereof, or by any agency or instrumentality of any of the
foregoing."
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The Department of Labor (Department) has previously concluded that section
3(32) of ERISA includes in the “governmental plan” definition not only
plans established by the unilateral action of employers which are
governmental entities, but also collectively bargained plans and plans
jointly administered by trustees appointed by governmental entities and by
labor unions if these plans are funded by, and cover only employees of,
governmental entities. It is also the Department’s view that participation
by a de minimis number of private sector employees in an otherwise
governmental plan will not adversely affect the plan’s status as a
governmental plan. However, if a benefit arrangement were to cover more than
a de minimis number of private sector employees, the Department may not
consider it a governmental plan under Title I of ERISA.
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Your submission indicates that the Plan is maintained pursuant to a
collective bargaining agreement between Local 176 and the City; the Plan is
substantially funded by contributions from the City with the remaining
contributions being made by the Plan’s participants; the City appoints one
member of the Trust’s seven member Board of Trustees; and, except for the
three employees of Local 176 discussed above, the Plan covers only employees
and retired employees of the City (and their dependents). Based on this
information, it is the view of the Department that the Plan is a
"governmental plan" within the meaning of section 3(32) of ERISA,
despite its inclusion of three non-governmental employees, particularly
inasmuch as the activities of the non-governmental employees relate
exclusively to representing the governmental employees in regard to aspects
of their employment with their governmental employer. Accordingly, the Plan,
as a “governmental plan” within the meaning of section 3(32), is
excluded from ERISA Title I coverage by ERISA section 4(b)(1).
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This letter constitutes an advisory opinion under ERISA Procedure 76-1, and
is issued subject to the provisions of that procedure, including section 10
thereof concerning the effect of advisory opinions. This letter relates
solely to the application of the provisions of Title I of ERISA and is not
determinative of any particular tax treatment under the Internal Revenue
Code.
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Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting & Disclosure
Office of Regulations and Interpretations
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cc: Sam Schaunaman
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