ERISA Building and Construction Rule Exemption Denied to Contractor by Court Ruling

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In the case “Dycom Industries, Inc. v. Pension, Hospitalization & Benefit Plan of the Electrical Industry,” the U.S. Court of Appeals for the Second Circuit upheld a decision that Dycom Industries, a signatory electrical contractor, is liable for withdrawal liabilities after an arbitrator found that its predecessor, Midtown Express LLC, was not engaged in the “building and construction industry” and thus not exempt under a specific provision of the Employee Retirement Income Security Act of 1974 (ERISA). The Second Circuit emphasized that the cable installation services provided by Midtown did not involve significant construction or alteration of buildings, which are key criteria for the exemption.

This ruling underscores the importance of being aware of how different activities are categorized under labor laws, such as ERISA, particularly in contexts where the ‘building and construction’ activities may be narrower than expected. While this case involved a specific scenario with cable installation services, it highlights potential complexities surrounding industry classifications that could impact any subcontractor.