AGC Argues for Proper Interpretation of Construction Industry Exemption from Withdrawal Liability in Amicus Brief

On August 2, 2024, AGC of America filed an amicus brief in a case concerning the scope of the "building and construction industry" exemption from multiemployer pension fund withdrawal liability under the Employee Retirement Income Security Act of 1974 (ERISA). The case, Walker Specialty Construction, Inc. v. Construction Industry & Laborers Joint Pension Trust for Southern Nevada et al. is pending in the U.S. Court of Appeals for the Ninth Circuit. The brief supports Walker Specialty Construction's (Walker) argument that demolition and abatement work fall within the exemption.

Case Background

Walker, a small, family-owned company based in Washington state, had been performing asbestos abatement, demolition, and other specialty and environmental services in Nevada under a project labor agreement and an AGC chapter-negotiated master labor agreement with the Laborers. The company ceased all operations in Nevada in 2019 and continued working only in Washington.

The Laborers pension fund in Nevada to which Walker had been contributing then assessed the company with over $2.8 million in withdrawal liability. Walker claimed exemption under the construction-industry exemption, but the trust fund argued that this exemption does not apply to the type of work Walker performed. The trust fund's narrow interpretation of "building and construction industry" for withdrawal liability purposes only includes work involving the construction or improvement of structures, not demolition or removal.

After the trust fund won in arbitration, Walker sought review in federal district court and won. The trust fund is now appealing this decision in the Ninth Circuit.

AGC Involvement

AGC's brief highlights the broad significance of this issue to the contractor community and seeks to establish a clear precedent to protect contractors from unanticipated and potentially unfair withdrawal liability. It argues that the district court correctly determined that demolition and abatement work fall within the building and construction industry exemption. This interpretation aligns with the statutory text, legislative history, and decades of precedent.

The brief also emphasizes that the trust fund's narrow interpretation excludes a wide range of on-site construction activities that have long been considered part of the building and construction industry. Upholding this interpretation would undermine the purpose of the exemption, which is to recognize the unique and transitory nature of construction work.

Furthermore, the brief explains, allowing different Taft-Hartley funds to adopt individual definitions of "building and construction" would create uncertainty in the industry and expose employers to withdrawal liability inconsistently, undercutting the purpose of ERISA.

AGC will report on significant developments in this case as they arise.

For more info, contact Denise Gold, Vice President, Corporate & Labor Legal Affairs, at [email protected] or (703) 837-5326.

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