Withdrawal Liability. Those two words can hit a contractor right where it hurts: in the pocket. If you are a construction company that contributes to a multiemployer pension fund, such as a union fund pursuant to a collective bargaining agreement (CBA), you may want to find out about unfunded liabilities in the pension fund before you decide not to renew the your CBA. In many cases, an employer that decides to withdraw from a multi-employer pension plan will have to pony up his share of the unfunded liabilities upon withdrawal.  The requirement is the result of a national law called ERISA, and is triggered when the employer completely withdraws from a pension plan. 

The Multi-Employer Pension Plan Amendments Act (MPPAA) contains certain special exceptions and considerations for the construction industry:

1) If you have an obligation to contribute to a plan in the building and construction industry, a complete withdrawal occurs when
(2) the majority of the employees for whom you are contributing work in the building and construction industry, except when
(3) the PLAN principally covers employees in the building and construction industry, but only if
(4) the construction or building company continues to work
a) in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required, or
b) resumes such work within 5 years after the date on which the obligation to contribute under the plan ceases, and does not renew the obligation at the time of the resumption.

Before withdrawing from a collective bargaining agreement, make sure you have gone through these steps to ensure that you will not be hit with an unfunded liability charge.

The law firm of Vedder Price has a detailed primer on MPPAA withdrawal liability that may of use to anyone considering pulling out of a CBA.