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Union Pension Funds Not Entitled to Warn Notice

    Client Alerts
  • September 05, 2008

For unionized employers, the bargaining representative, along with individual employees are entitled to notice of a pending plant closing or mass layoff under the Worker Adjustment and Retraining Notification Act (WARN).  Last week, in a decision of first impression, the Third Circuit Court of Appeals refused to extend these notice requirements to a union-sponsored pension fund for the affected employees.

In In re APA Transport Corp. Consolidated Litigation, two pension funds established by the Teamsters sued a defunct trucking company, claiming that they never received notice of the company’s closing as required under WARN.  The bankruptcy trustee contended that under WARN, although the term “person” is never defined, the pension funds were not aggrieved employees, and therefore were not entitled to notice.  The Third Circuit affirmed dismissal of the complaint.  Even though the pension funds clearly managed employee benefits negatively affected by the lack of notice, the funds themselves did not have standing to sue the employer.  The court relied on the Department of Labor’s WARN regulations, which explain who receives notice of an imminent plant closing.

Although the pension funds are charged under ERISA with aggressively protecting employees, they must find some remedy other than WARN to seek contributions from the employer.  Individual aggrieved employees or the union itself would have to initiate any claim of lack of notice under WARN.