Employers who are considering using union labor should be aware of responsibilities they undertake by signing collective bargaining agreements (CBA). One such responsibility – contributing to a multiemployer pension plan (MEPP) – can have far-reaching effects. Agreeing to be bound by a CBA that requires contributions to a MEPP can result in, under certain circumstances, substantial withdrawal liability because many MEPPs currently are not 100 percent funded. Although a MEPP can continue to provide benefits for years while being less than 100 percent funded, an employer who decides to stop using union labor could be assessed its pro rata share of that underfunding as withdrawal liability. What is a MEPP? MEPPs, generally, are defined benefit plans that provide benefits based on a formula in the plan document. In order to fund these benefits, the CBA will require employer contributions to be made, generally as an add-on to each participant’s hourly wage. Union employees often work for more than one employer during their careers. To address this circumstance, many employers in the same industry contribute to one MEPP. For example, construction industry workers, such as carpen...