Trustees of labor benefit funds are fiduciaries and must always put the interests of the fund and its members first and foremost. Trustee responsibilities have evolved through a series of federal laws and through the rules of federal agencies that interpret and apply those laws.
The Taft-Hartley Labor Management Relations Act of 1947, a contentious piece of legislation in its time, was written by Congress to redefine and clarify the rights and responsibilities of unions after their rapid growth and rise to influence in the 1930s.
The Act nullified aspects of the 1932 Federal Anti-Injunction (Norris-LaGuardia) Act and amended parts of the 1935 National Labor Relations (Wagner) Act, both products of Depression-era Congresses that embraced President Franklin Roosevelt’s New Deal alliance with organized labor.
When the Taft-Hartley Act reached his desk, President Harry Truman vetoed it, but the veto was overridden by the post-war Congress.
Among other things, the law restricted the right of unions to strike, barred closed shops, banned secondary boycotts and authorized “right to work” laws in the states. Congress also asserted that union officials were mismanaging the dues and other monies collected for benefits under collective bargaining agreements and imposed stricter control by requiring that union benefit funds be jointly administered by labor and management. While many features of the Act angered and dismayed Labor, unions and their signatory employers had no choice but to adapt to the law.
The law enshrined “Taft-Harley Funds,” the form taken today by all of LIUNA’s health and welfare funds. Under the law, each fund’s Board of Trustees must consist of an equal number of union trustees and trustees from the management groups that sign the collective bargaining agreement establishing or sustaining the fund.
In 1974, responding to employer abuses, Congress augmented the Taft-Hartley Act with the Employee Retirement Income Security Act, commonly known as ERISA.
ERISA does not require employers to provide benefits; it simply requires those who do to follow uniform rules and procedures. Many of these rules concern the “fiduciary responsibilities” of fund trustees, a key issue that will be the subject of future articles in this series.
Since ERISA’s enactment, the Congress has continued to add other legislation that governs employee health benefits. The Consolidated Omnibus Budget Reconciliation Act of 1985, otherwise known as COBRA, outlines the means by which workers can continue their health benefits after leaving a job. ERISA was also amended by the Health Insurance Portability and Accountability Act (HIPAA) to prohibit some forms of discrimination in coverage based on an individual’s health status and to protect individual privacy in health matters.
LIUNA health and welfare funds were forged in a contentious era, but sixty years later, times have changed. While a cooperative spirit imbues labor-management relations today, the difficulty of administering employee benefits within the framework of the nation’s laws continues to make the trustee’s job a challenging, yet rewarding one.
This is the first article of a new trustee education series. Future articles will address such topics as fiduciary rules, health plan funding, plan options, value of prevention services, short- and long-term care management, cost issues in administration, service provider contracting and management and effective communication and education. We welcome your feedback and questions. Email us at email@example.com.