Contingent employer liability makes collective bargaining unrealistic for employers. In bargaining, both management and labor come to an agreement on the full terms and conditions under which management will employ labor. ERISA, however, adds a new wrinkle for management. By executing an agreement which contains provisions for employee benefit trusts that will be construed as "defined benefit" plans under ERISA, management agrees to the full terms and conditions plus one unknown element. As a party to the resultant collectively bargained contract, management agrees to a potential undetermined liability which may be imposed at some unknown time in the future. Moreover, an individual employer involved agrees to this unknown liability even to the extent that that employer may not cause the liability. For an employer, ERISA makes collective bargaining unworkable and undesirable. the last employer in business is "left holding the bag". Ultimately, In the construction industry, employers make hourly contributions to multi-employer employee benefit plans based on a rate specified in the collective bargaining agreement. Nowhere in the agreement is a benefit promised. The contributions are made for each hour worked by each employee. The trustees of the benefit plan determine the hours of employment of each employee involved according to reports submitted by participating employers and by conducting audits of the employers' payroll records. The trustees keep track of the number of hours worked by each employee and the amount owed for each participating employee by each participating employer. Therefore, such plans should be considered "defined contribution" and not "defined benefit" plans. To date, the construction industry has a good record in maintaining solvent employee benefit plans. Through a combination of self-policing, state laws and Federal laws, both the unionized and open shop segments of the industry have operated successful employee benefit programs. We view such ERISA provisions as contingent employer liability and potentially skyrocketing premiums due the Pension Benefit Guaranty Corporation as uncalled for and inequitable in light of construction's experience rating and the nature of the industry. We would also like to address the question of joint administration of ERISA by the Department of Labor and the Internal Revenue Service. Basically, we feel one agency should be responsible for administration in order to eliminate duplication of effort and jurisdiction and to streamline operations. The more concise and cohesive the administration of any program, the better. We feel it is also important to note that approximately 80% of AGC contractor members are small to middle size, family-owned corporations. The constant addition of burdensome Federal requirements pushes these companies closer to extinction. Occupational Safety and Health Act requirements, ERISA requirements, IRS requirements, Equal Employment Opportunity requirements and so on force the smaller general contractor to take on more and more administrative and clerical staff which many can no longer afford. Whereas such concerns as safety or pensions are important, the plethora of all these Federal regulations and reporting requirements taken together place an inequitable burden on this nation's smaller businessmen. We thank the Subcommittee for the opportunity to express our views. If the Associated General Contractors of America may be of any assistance, please do not hesitate to contact us. The Association of Private Pension and Welfare Plans, Inc. The Association of Private Pension and Welfare Plans, Inc. welcomes this opportunity to add to the public dialogue on the ERISA oversight hearings held May 17 and June 1, 1978. The APPWP is a national organization whose membership represents the many and varied disciplines that are involved in employee benefits administration. Last spring the Association made a major policy decision to take positions on employee benefit issues when there is agreement between labor and management. As a result of this decision a series of member committees have been formed to deal with various aspects of the employee benefits industry. I chair the ERISA Amendments Committee. We have been active in developing our industry paper, which is not yet complete. To provide input to your committee, we asked the ERISA Amendments Committee members for their comments which are attached. These are the opinions of the individuals and do not constitute the official position of the Association. We are We would like to thank the Labor Subcommittee for this opportunity |