Pension Benefit Guaranty Corporation 

86-10 

April 10, 1986 

REFERENCE: 

 [*1] 4203(a) Complete Withdrawal. Definition of Complete Withdrawal

4212(a) Obligation to Contribute - Definitions 

OPINION: 

This responds to your request for the opinion of the Pension Benefit Guaranty Corporation regarding the withdrawal

liability of "joint employers" under Title IV of the Employee Retirement Income Security Act of 1974, as amended

(ERISA). Specifically, you ask whether a withdrawal occurs when an employer ceases making contributions to a

multiemployer plan because it entered into an arrangement with another employer that provides employees and that

makes some or all of the contributions for those employees. You also ask what contribution history is used in

determining the withdrawal liability of the first employer when that employer contributed directly to a multiemployer

plan only prior to the enactment of the Multiemployer Pension Plan Amendments Act ("MPPAA") and at all times after

enactment was a joint employer with the other company, which eventually withdrew from the plan. 

You represent that prior to 1977, A * * * made contributions directly to the * * * Fund * * *. In 1977, A entered

into a leasing agreement with B * * * and B began making some contributions to the [*2] Fund for the employees it

provided to A. A also made substantial contributions to the fund for those employees during its agreement with B. 

B and A terminated their agreement in 1979, and * * * C entered into an agreement with A. Under their agreement,

C made all of the contributions to the fund for the employees it provided A. C withdrew from the Fund in 1982. There

is no corporate affiliation or common ownership between A and C or A and B. However, you state that A exercised such

close supervision and control over the day-to-day working conditions of the employees provided by C and B that in your

opinion A was a joint employer for purposes of the NLRA. Further, you represent that as a joint employer was bound

under labor law by any collective bargaining agreement covering the employees provided by C and B, and therefore may,

like C and B, have been obligated to contribute to the Plan. 

Your first question is whether a withdrawal occurred when A entered into the agreements first with B and then with

C. Under section 4203(a) of ERISA, a withdrawal from a multiemployer plan occurs when an employer permanently

ceases to have an obligation to contribute or permanently ceases [*3] all covered operations under the plan. Section

4212(a) of ERISA defines "obligation to contribute" as an obligation arising under one or more collective bargaining

agreements or as a result of a duty under applicable labor-management relations law. 

The PBGC addressed a very similar question in Opinion Letter 85-14. In that letter, we concluded that if the first

employer was a joint employer with the second employer with whom it entered into the leasing agreement, and if as a

result the first employer had an obligation to contribute to the plan, then the first employer would incur a withdrawal

upon the permanent cessation of its obligation to contribute. In the instant case, that would have occurred when C

permanently ceased to be obligated to contribute. It follows, therefore, that A would not have incurred a withdrawal

when it entered into the leasing agreements. This conclusion, of course, assumes that A was a joint employer with C and

did have a duty to contribute under the NLRA. 

Your other question is how withdrawal liability should be calculated for that withdrawal. The amount of an

employer's withdrawal liability is based on its allocable share of unfunded vested benefits [*4] determined under section

4211 of ERISA. This amount is generally proportional to contributions required to be made by the employer. Since

neither A and C nor A and B appear to constitute a single employer within the meaning of section 4001(b) of ERISA,

A's obligatins and liabilities under Title IV would be determined separately from B's and C's. 

Since B withdrew from the Fund prior to enactment of MPPAA it is not subject to withdrawal liability. While C

withdrew after enactment of MPPAA, you represent that C was not required to contribute to the Fund prior to its

relationship with A. Therefore, C's contribution history should encompass only the years after the agreement. With

respect to A, the question is whether the years after its agreement with, when it was obligated to contribute as a joint
employer but was not required directly to contribute to the Fund, should be included in its contribution history. You

contend that these years should be included. 

Opinion Letter 85-14 also addressed this issue and concluded that there is a difference between "an obligation to

contribute" and "contributions required to be made by the employer", the latter being the operative term for [*5]

purposes of determining an employer's allocable share under section 4211. "An obligation to contribute" is a broader

term that includes both the present requirement to make contributions to a plan and an obligation to contribute that is

contingent upon an event that has not yet occurred. 

It is, therefore, our opinion that years in which A had an obligation to contribute to the Fund but was not required

to contribute should not be included in its contribution history for the purpose of calculating its withdrawal liability.

Since you represent that A was required to contribute to the Fund only in the years prior to its agreement with C, those

are the only years that should be included in its contribution history for purposes of calculating its withdrawal liability.

I hope this has been of assistance. If you have further questions please contact the attorney handling this matter,

Steven Rothenberg, of the Corporate Policy and Regulations Department. His telephone number is (202)956-5050. 

Edward R. Mackiewicz 

General Counsel