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Employee Benefits Security Administration

Advisory Opinion

October 17, 2002

Neil D. Lipton, Esq.
Spivak, Lipton, Watanabe, Spivak & Moss
1700 Broadway, 21st Floor
New York, New York 10019

2002-11A
ERISA Sec. 3(32)

Dear Mr. Lipton:

This responds to your request for an advisory opinion concerning the applicability of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), to the Communications Workers of America, Local 1180 Members’ Annuity Fund (Fund). Specifically, the Fund, which now covers only eligible employees of the City of New York (City) and of certain public employers related to the City, proposes to extend eligibility to the Fund’s trustees, all of whom are Local 1180 officers. You asked whether the Department of Labor (Department) would consider the Fund, if modified as proposed, to be a “governmental plan" within the meaning of ERISA § 3(32) and, thus, excluded from Title I coverage by ERISA § 4(b)(1).

The Fund was established in 1999 pursuant to collective bargaining between Local 1180 and the participating public employers.(1)  It is a defined contribution, profit-sharing annuity plan. About 9,000 employees and former employees of the City or of related public employers participate in the Fund.(2)  Each covered employee works in a job title represented in collective bargaining by Local 1180 and participates in either the New York City Employees Retirement System or the New York City Board of Education Retirement System. The City and related public employers that bargain with Local 1180 are the Fund’s only sources of contributions.

Five Local 1180 officers sitting ex officio are the Fund’s board of trustees. They are Local 1180’s president, its first and second vice presidents, its secretary-treasurer, and its recording secretary. Each serves a three-year term unless, during a term as trustee, he or she fails to retain the Local 1180 office that confers trustee status. Trustees may hold union office while on “released time” from government employment, thereby remaining eligible for continued participation in the Fund as governmental employees, or they may hold office as Local 1180 employees while on leave of absence from government employment. The Fund’s proposal would permit participation by Fund trustees who, when no longer employed by any governmental employer that contributes to the Fund, become employees of Local 1180, and it would allow Local 1180 to contribute to the Fund on behalf of any trustees it employs.

The Trustees are responsible for, among other things, receiving contributions, paying expenses, paying benefits, managing and investing Fund assets, and adopting plan provisions and amendments. No trustees are appointed by the City or by any of the related public employers that contribute to the Fund, and the City and related public employers do not participate in day-to-day management of the Fund. Beyond being parties to collective bargaining agreements pursuant to which the Fund is established and maintained, involvement with the Fund by the City and by related public employers is limited to making contributions required by their collective bargaining agreements with Local 1180. The Fund is also subject to the New York City Comptroller’s right to audit its operations.

ERISA § 4(b)(1) provides that Title I of ERISA does not apply to a “governmental plan” as defined in ERISA § 3(32). Section 3(32) of ERISA defines the term “governmental plan,” in pertinent part, as “a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.” It is the view of the Department that the term "governmental plan" as defined in ERISA section 3(32) is not limited to plans established by the unilateral action of employers that are governmental agencies. In this regard, the Department has, in similar circumstances, interpreted the term "governmental plan" to include a plan established or maintained pursuant to a collective bargaining agreement between a governmental entity and a labor union where the plan covered only employees and former employees of a governmental entity and received substantial funding from the governmental employer. See ERISA Advisory Opinions 86-24A, 86-23A and 86-22A (dated September 9, 1986). The Department has also previously expressed the view that participation by a de minimis number of private sector employees in an otherwise governmental plan will not adversely affect the plan's status as a governmental plan. However, we have noted that if a benefit arrangement were to cover more than a de minimis number of private sector employees, the Department may not consider it a governmental plan under Title I of ERISA.

For purposes of your request, we assume that the City is a “political subdivision” of government within the meaning of ERISA § 3(32). Further, without examining the issues involved, we assume that each City-related public employer contributing to the Fund is a “political subdivision” or “agency or instrumentality” of government within the meaning of that section. In addition, we assume that all Fund participants are current or former employees of the City or of such governmental entities. Based on those assumptions, the Fund appears to be established and maintained pursuant to collective bargaining between Local 1180 and governmental entities described in ERISA § 3(32). Those governmental employers appear to be the Fund’s only source of contributions, except that, as discussed above, Local 1180 will begin contributing on behalf of the Fund’s trustees who are Local 1180 employees. The Fund appears to cover only employees and former employees of governmental entities that contribute to the Fund pursuant to collective bargaining agreements with Local 1180. Accordingly, based on your representations and the assumptions stated above, it is the view of the Department that the Fund, as now structured and operated, is a “governmental plan” within the meaning of ERISA § 3(32). Further, based on your representations concerning how the Fund will be amended, it is the Department’s view that making the Fund’s five trustees eligible would not involve more than a de minimis number of private sector employees participating in the Fund. Therefore, a plan amendment permitting all five of the Fund’s trustees to become participants and allowing Local 1180 make contributions to the Fund on their behalf would not, in the Department’s view, adversely affect the “governmental plan” status of the Fund within the meaning of ERISA § 3(32).

This letter constitutes an advisory opinion under ERISA Procedure 76-1, and is issued subject to the provisions of that procedure, including section 10 thereof, concerning the effect of advisory opinions. This letter relates solely to the application of provisions of Title I of ERISA to the Fund. It expresses no views concerning whether the Fund, as modified, would meet applicable requirements of state or local law, and it is not determinative of any particular tax treatment under the Internal Revenue Code.

Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting and Disclosure
Office of Regulations and Interpretations


Footnotes

  1. In addition to the City, related public employers that contribute to the Fund include, but are not necessarily limited to: the New York City Health and Hospital Corporation; the District Attorneys of New York, Kings, Bronx, and Richmond Counties; New York City Comptroller; New York City Transit Authority; New York City Board of Education; New York City Employees Retirement System; and New York City Board of Education Retirement System.

  2. After terminating employment covered by the Fund, participants may maintain their accounts in the Fund, but the Fund accepts no further contributions from them or on their behalf.