General Contractor’s Liability for Subcontractor’s Fringe Benefit Contributions

Earlier this year, a federal court ruled in favor of the multiemployer fund trustees’ claim for fringe benefit contributions due on behalf of individuals who performed work covered under a collective bargaining agreement. In Trustees of Operating Engineers’ Local 324 Pension Fund v. Tri-City Groundbreakers, Inc.et al, the plaintiff trustees sought fringe benefit contributions due on behalf of a subcontractor’s employees who performed work covered under a CBA between the union and the general contractor. In the alternative, the plaintiff trustees also argued that the general contractor was obligated to pay the contributions under the CBA if the court should find that the subcontractor was not liable for those contributions.

In finding for the plaintiff trustees, the court closely considered the general contractor’s obligation under the CBA to obtain a subcontractor’s compliance with the CBA’s “rates, terms and condition and fringe benefit contributions.” Although the general contractor argued that the contract between the general contractor and subcontractor did so, the court found that the subcontract agreement was silent with respect to the fringe benefit contributions. Moreover, when submitting its bid, the subcontractor included a specific disclaimer regarding fringe benefit contributions due to any operating engineers’ fringe benefit plans. Accordingly, the court found that there was no agreement that required the subcontractor to submit contributions on behalf to its employees who performed work covered under the CBA to the multiemployer funds. The court further found that the general contractor was liable for those very contributions due to its failure to require the subcontractor’s agreement to comply with the CBA’s “rates, terms and conditions and fringe benefit contributions”.