In a decision published on April 15, the Second Circuit said that a cable company owed $13 million in withdrawal liability to a multiemployer pension plan.

In this case, the question was, is a cable company in the “building and construction industry” and therefore exempt from withdrawal liability?

The court said, no, the exemption does not apply and the employer must pay upon exit.

The court found that cable installation services do not involve work in the “building and construction industry.”

The employer performed work involving the installation, servicing, and disconnection of telecommunications cables necessary to provide cable television, internet, and telephone services.  

The employer shut down its operations and ceased contributions to the Pension Fund, arguing that substantially all its employees were performing work in the building and construction industry, and thus subject to an exemption from withdrawal liability under ERISA. 

The court confirmed that an arbitrator was correct to find that the employees “worked almost exclusively in existing buildings that were prewired for their purposes” and were generally not required to make “any repairs and/or alterations to an existing building or other structures.” 

Some relevant factors:

  • Sixty to seventy percent of the work consisted of “reconnections,” which involved installing a cable box onto premises that were already wired for cable.
  • Twenty to thirty percent of the work consisted of cable “upgrades,” which occasionally involved drilling holes and running of wires, requiring nailing or stapling along a wall but never “beyond a wall.”
  • Ten percent or less involved “new connections,” which also largely required laying wires along walls to create connections in pre‐wired buildings.   

Although the phrase “building and construction industry” is not defined in ERISA, the court in this case noted that the exemption applies only if “substantially all the employees with respect to whom the employer has an obligation to contribute under the plan perform work in the building and construction industry.” 

The case is a good reminder that those employers that contribute to a multiemployer pension plan should consult with #ERISA counsel to make sure they understand when pension withdrawal liability might apply.

Dycom Indus., Inc. v. Pension, Hosp’n & Benefit Plan of the Elec. Indus. – CourtListener.com