Pension Benefit Guaranty Corporation 

84-9 

December 27, 1984 

REFERENCE: 

 [*1] 4001(b) Definitions. Employer and Controlled Group

4203 Complete Withdrawal

4203(a) Definition of Complete Withdrawal

4211 Withdrawal Liability 

OPINION: 

This responds to your request for the PBGC's opinion concerning the meaning of "employer" as that term is used

in Title IV of ERISA with respect to withdrawals from multiemployer pension plans. You note that in the garment

industry a contractor is generally the common law employer of employees covered under the pension plan while a jobber

or manufacturer, who contracts with the contractor for work to be performed, often has the obligation under its collective

bargaining agreement to contribute to the pension plan based on such work. You wish to know which of these under the

circumstances you describe is the employer for purposes of Title IV's withdrawal liability provisions. 

Section 4203(a) of ERISA provides that a withdrawal from a multiemployer plan occurs when an employer: (1)

permanently ceases to have an obligation to contribute or (2) permanently ceases covered operations under a plan. Title

IV does not define "employer" for purposes of assessing withdrawal liability. However, Section 3(5) of Title I provides

that employer "means [*2] any person acting directly as an employer or indirectly in the interests of an employer, in

relation to an employee benefit plan. . ." (emphasis supplied). In our view this is an appropriate definition for

determining whether a business is liable under Title IV under the circumstances you describe. * Thus, a jobber or

manufacturer that has an obligation to contribute has withdrawn from a plan when its obligation ceases or it ceases

covered operations. If a withdrawal should occur, the amount of the jobber/manufacturer's allocable share of unfunded

vested benefits would be determined under Section 4211 based on the contributions it was required to make to the plan.

* Title I definitions are limited "[f]or purposes of this title"; thus, they are not necessarily applicable to Title IV.

See Nachman v. PBGC, 446 U.S. 359, 370 and n.14 (1980). However, in the absence of an express Title IV definition

or regulatory guidance by PBGC, guidance may be sought in Title I where it does not conflict with the purposes of Title

IV. 

Likewise a contractor which has an obligation to contribute will be liable if it ceases to have such an obligation or

ceases covered operations. [*3] This will be true even though one or more jobber/manufacturers also have an obligation

to contribute on behalf of the contractor's employees and even though the jobber/manufacturers generally make such

contributions. The amount of the contractor's liability, however, is based on the contributions it was actually required

to make. Thus, in a case where the jobber/manufacturers made all contributions and the contractor was required to make

none, the contractor's allocable share under Section 4211, and thus its withdrawal liability, would be zero. 

I hope this has been of assistance. If you have further questions, please contact * * * of my staff at the above address

or at (202) 254-4873. 

Henry Rose 

General Counsel