Class action lawsuit against trustees of IUOE Local 18 alleges mismanagement of pension, health & welfare funds

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This past May, ten members of IUOE Local 18 in Ohio filed a class action lawsuit against their own local, claiming that those responsible for managing the Ohio Operating Engineers Pension Plan and Health and Welfare Plan failed to act in the best interests of the union members. The defendants, all trustees of the Pension Plan, Health and Welfare Plan, or both, are accused of “Breach of Fiduciary Duty” with regard to members of both the Pension and Health and Welfare Plans, as well as “Prohibited Transactions” for having settled numerous claims against employers for delinquent contributions for far less than what was owed at the expense of union members and for having taken no action when employers engaged in “double breasting.”

As a part of the negotiated collective bargaining agreement, employers who hire IUOE Local 18 members are required to make fringe benefit contributions of $5.00 for the Pension Plan and $6.66 for the Health and Welfare Plan for each hour worked. The rate for the Pension Plan went up to $5.50 on May 1, 2012. Participant benefits are dependent on employers paying into the plan as per the collective bargaining agreement; participants must achieve five years of credited service at 1000 hours of work per year to be fully vested in the Pension Plan. If employers fail to credit members with fringe benefits for hours worked, employees lose the benefits they should have earned by working those hours.

The suit alleges that trustees of Local 18 failed to collect from companies that were sometimes years delinquent in their payments to the Pension and Health and Welfare Plans and also capped fringe benefits at 1200 hours, regardless of the actual number of hours worked by each employee. The trustees additionally looked the other way from employers who “double breasted,” by bidding on jobs with non-union labor using an “alter ego” operation, thereby avoiding having to pay fringe contributions.

The trustees were well aware of those employers who were delinquent in their fringe contribution payments due to quarterly meetings with the Plans’ administrator, who prepared Employer Delinquency Reports for each meeting. Yet, on numerous occasions, the trustees failed to pursue any action against companies delinquent in their contributions and, on the few occasions they did pursue legal action, they often settled for just a small amount of the total contribution owed. In at least one instance, the trustees settled a delinquency for just 2.5% of the total owed by the employer. In other instances where legal action was taken, the court found on behalf of the union, but the trustees never made any attempt to collect the amount owed.

The trustees also failed to ensure that employers were bonded, which would have allowed them to collect delinquent contributions if the employer went out of business, the suit claims.

Members of Local 18 feel that they have no recourse but to file a lawsuit against their own union, since they feel that the actions of the trustees have made it clear that they are not looking out for the best interests of the union members. Stay tuned for updates…

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