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No joint employer liability under ERISA

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in Employee Benefits Program,Employment Law,Human Resources

The Employee Retirement Income Security Act (ERISA) requires employers to follow the terms of their collective bargaining agreements when they contribute to employee benefit plans. That is, employers that are parties to union contracts are required by federal law to honor the terms of those agreements when it comes to funding benefit plans set up in the contract.

The 9th Circuit Court of Appeals, which covers California employers, has refused to extend the concept of “joint employer” to ERISA’s collective bargaining agreement provision when the second entity has not signed that agreement.

Recent case: NYCA is a California advertising agency that has signed on to a collective bargaining agreement with the Screen Actors Guild (SAG). The agreement requires NYCA to contribute to the union’s benefit plan based on the compensation it pays to actors it uses in commercials.

Fred Couples, the professional golfer, signed on with TaylorMade-Adidas to make commercials and personal appearances, and received a hefty sum to do so. TaylorMade and NYCA then signed their own contract to have Couples advertise gold-related products and equipment. The two companies then split the bill for Couples’ services.

SAG sued, alleging they only received contributions from NYCA, and none from TaylorMade.

The union said TaylorMade was a joint employer and should also make benefits contributions even though it hadn’t signed the collective bargaining agreement.

The 9th Circuit Court of Appeals disagreed, saying nothing in the relevant ERISA section authorized joint employer liability. (Trustees of the Screen Actors Guild-Producers Pension and Health Plans v. NYCA, No. 08-55409, 9th Cir., 2009)

Final note: The case isn’t over. The 9th Circuit said the lower court still had to determine whether  NYCA may be liable for the portion not paid by TaylorMade.

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