Employers who sign Collective Bargaining Agreements with labor unions may find it difficult to cancel those agreements according to the terms of the agreement and may also find it difficult to defend themselves if the labor union sues to collect money owed for unpaid fringe benefit contributions.
If the Labor Union decides to sue for unpaid fringe benefits there are few defenses available for the Employer. The Labor Union, through its trustee or fiduciary can obtain an award for the unpaid contributions, interest on the unpaid contributions, an amount equal to the greater of (i) interest on the unpaid contributions, or (ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent of the amount determined by the court on the amount of unpaid contributions, reasonable attorney’s fees and costs of the action, to be paid by the Employer, and such other legal or equitable relief as the court deems appropriate. Without many defenses to a lawsuit seeking to collect unpaid fringe benefits, an action by a Labor Union under a collective bargaining agreement can be devastating to the Employer.