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Builder The

On The Safe Side

VOLUME 10, ISSUE 4 OCTOBER 2006 In this issue... Project Spotlight


Legal News


Member Milestones p5 Member Marketplace p5 AGC News


Guest Article: Fall Safety


COMING ATTRACTIONS Nov. 9 Builders Association Contractor Safety Forum Chicagoland Construction Safety Council Hillside, IL 11 a.m. - 2 p.m. Nov. 7-9 Construction Education Institute: SFT 100 OSHA 10-Hour Safety And Health Course Chicagoland Construction Safety Council Hillside, IL 5:45-9 p.m.

builders association BUILDING YOUR BUSINESS

Now In Its Fourth Year Of Encouraging Safety, OSHA Partnership 20 Companies And Growing BY DENISE CAPASSO Director of Labor and Safety The Builders Association and the Occupational Safety and Health Administration (OSHA) have been working together in a partnership since 2003. The two organizations share the common goal of promoting a safe and healthy work environment for employees engaged in Chicagoland construction activities. The Builders Association/OSHA Partnership Program provides an avenue for the employer and employees to improve their safety and health management systems while working with OSHA in a cooperative, non-adversarial way. One main benefit of the Partnership is that it opens the communication lines between OSHA and participating members. Most companies have a misunderstanding of OSHA, its role and enforcement policies. The Partnership helps correct this misunderstanding and encourages respect, trust and open lines of communication between members and OSHA. There are three levels to the Partnership: Bronze, Silver and Gold. Contractors who are accepted into these levels, will receive incentives from OSHA. For a list of the companies participating in the partnership, see page 9.

please see OSHA, page 9

McShane Construction Company employees work on the Hilton Garden InnO’Hare in Des Plaines, which opened in the summer of 2005. McShane is one of 20 Builders Association members enchancing the safety of its jobsites by taking part in the OSHA Partnership. Photo provided.

Easy Entry To reach the Bronze level in the OSHA Partnership, a company must develop and implement a written safety and health program, conduct a weekly employee safety meeting and document self-audits.



Project Spotlight

The angled roofs are one among the many things that made the Kohl Children’s Museum a unique construction job. Photo by Mark Ballogg.

Child’s Play BY ANDY COLE The Builder Different roof angles, window slopes and underground ductwork made Glenview’s Kohl Children’s Museum one of the most challenging projects Pepper Construction Company’s Lance Tritsch has worked on. Cooperation between Pepper and the client also made it one of his favorites. “It was a very challenging job, but it was a great one,” said Tritsch, who served as Project Manager on the museum which opened in October of last year. “Between the design team and the client and the team that we had there, everybody worked well together. It’s really rare that you get that kind of cooperation and it’d be great if every job were like that.” For those reasons, Pepper didn’t need an award to make it proud of the museum … but it doesn’t hurt to have one. Pepper Construction was awarded a 2006 Chicago Commercial Real Estate Award by the Chicago Food Depository for its work on the Kohl Children’s Museum. The award was in the Special Achievement category for the building’s use of space and adherence to the unique needs of the museum.

“The main building structure housed a two-story office component with two wings coming off of it,” Tritsch said. “The project was a challenge, because the angles of the roof on each side aren’t what you normally would see and the exterior windows are on a slope. We ended up with four different roof elevations to deal with. “The underground ductwork was part of the original design, so we knew it was something we’d need to do. Some of the things that made the building unique made it difficult, and putting the ductwork underground was really the only way to get the mechanical system to the two sides of the building. They needed different things for their displays, so that was just part of the job.” Crews began to put the fiberglassreinforced material underground as the foundation for the building was being set. “We hired Hill Mechanical for the work, and one of the reasons we hired them is that they’ve got experience with underground ductwork,” Tritsch said. “There aren’t a lot of companies around

please see museum, page 3

How Can We Help You? Have a construction-related problem or question? Call your professional trade association. While each BA staff member can assist you, you may often find it helpful to speak directly with the individual who has primary responsibility for a particular area. His or her name is provided for your convenience. Al Leitschuh………………BA Governance Industry Relations Strategic Planning AGC Liaison Mike Schultze.………...................Labor Government Relations Denise Capasso.................................Labor Safety Andy Cole....…........……Communications Media Relations Web site Nina Youhanna..........Education Programs Meeting Planning Administration


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museum, from page 2 who have that, because it’s not very common for buildings around the Chicago area to have this kind of work done. “We put it about five feet down in the ground. Some of it is big stuff. It can be about 36 inches in diameter. You have to air test it section-by-section, assemble the pieces and then test the whole unit. The testing is very important, because there can’t be any leaks. If ground water gets in there, you get mold.” Tritsch, Project Executive Pete Zoras, Field Superintendent Bob Minarcik and the architects at Booth Hansen Associates were part of the team that put together the Kohl building. The museum encourages interactive learning for children up to the age of eight with a variety of exhibits. “Part of the challenge for Pepper involved the different angles in the ceiling,” said Kohl President &

please see museum, page 6

A look at some of the exhibits inside the Kohl Children’s Museum. Photo by Mark Ballogg.




Legal News

Be Aware Of Your Withdrawal Liability With Incidents Of Liability On The Rise, It’s Important To Know The Rules BY THOMAS VASILJEVICH, ESQ. Olgetree, Deakins, Nash, Smoak & Stewart, P.C. Construction contractors who contribute to multiemployer pension plans should be aware that they may have additional financial liability (over and above the contribution amounts stated in the contract) if the plan becomes under-funded. While the possibility of withdrawal liability has been in existence since 1980, the incidence of withdrawal liability has accelerated in the last several years due primarily to weak investment performance of these plans. The purpose of this article is to briefly explain the essential provisions of the withdrawal liability rules and to provide a road map for contractors to identify and potentially minimize the financial consequences of withdrawal liability. Of course, because these rules are complicated, contractors with specific issues and concerns should consult with legal counsel.

Definition Of Withdrawal Liability And Key Concepts The rules governing withdrawal liability

are found in the Multiemployer Pension Plan Amendments Act of 1980, which amended ERISA to impose withdrawal liability upon employers who cease contributions to a multiemployer defined benefit pension plan with unfunded vested benefits. Withdrawal liability is essentially an exit fee requiring employers to pay its share of a plan’s costs (future vested benefits) which have not been paid through previous contributions or investment returns. The funding status of a plan is determined each year by the plan’s actuary. Unfunded vested benefits arise when the actuarial value of a plan’s vested accrued benefits (the promised future benefits which participants have earned a right to receive) exceeds the value of the plan’s assets. These calculations are influenced by various assumptions (investment rate of return, mortality, contribution hours, etc.) and by the level of benefits promised to participants. For example, if the plan does not meet its investment return assumption, an imbalance may result and unfunded vested benefits may be created or increase. The employer’s share of a plan’s unfunded vested benefits is a fraction, the numerator is the employer’s contributions for a five-year period and the denominator is all employers’ contributions for the same five-year period. This amount can change from year to year depending on the level of unfunded vested benefits and the level

of the employer’s contributions to the plan compared to all other contributing employers. However, even if a plan has unfunded vested benefits, withdrawal liability will only be assessed to an individual contributing employer under certain circumstances.

Assessment Of Withdrawal Liability There are several circumstances under which a plan may assess withdrawal liability to an employer. Complete Withdrawal A complete withdrawal from a pension plan will occur when an employer either: * Permanently ceases to have an obligation to contribute; or * Permanently ceases all covered operations under the plan. Partial Withdrawal A partial withdrawal from a pension plan will occur when there is a: * Seventy percent contribution decline measured over a three-year period; or * Partial cessation of the employer’s contributions to the plan under one or more but not all collective bargaining agreements requiring contributions to the plan and the employer continues to perform work in the jurisdiction or transfers such work to another location; or * Permanent cessation of an obligation to contribute with respect to work performed at one or more but not all facilities but continues to perform work at the facility of the type for which contributions were previously required. Minimizing Or Eliminating Withdrawal Liability There are a number of exceptions to the withdrawal liability rules. De Minimis Rule Withdrawal liability may be reduced by a so-called “de minimis reduction rule.” Any withdrawal liability of $50,000 (or, if less, ¾ of one percent of the plan’s unfunded vested benefits) or less is completely eliminated. Between $50,001 and $150,000, the reduction is $50,000 less than the liability over $100,000. This

please see legal, page 12


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Member Milestones Joseph J. Duffy Co. recently broke ground on four independent living facilities. Those projects include a 65-unit facility for Mayslake Village in Oak Brook, a 73-unit facility for Catholic Charities Housing Development Corp. in Northlake, the 73-unit Victory Centre of Sierra Ridge in Country Club Hills and a supportive living and independent living facility in Bartlett. In addition, Duffy completed a 120-bed supportive living facility in Country Club Hills, also called Victory Centre of Sierra Ridge. Pepper Construction Company has earned the Torch Award for Marketplace Ethics from the Better Business Bureau of Chicago and Northern Illinois. The BBB called Pepper “a beacon of light in the ethics field.” Opus North Corp. broke ground in August at the Science & Arts Academy, a school for the gifted in Des Plaines. Opus North has been contracted to build a new home for the school at 1826 Miner St., next

Victory Centre of Sierra Ridge supportive living facility in Country Club Hills, recently completed by Joseph J. Duffy Co. Photo Provided

door to the school’s current facility, which is in an old office building. The school, which draws 170 students from around 40 Chicagoland communities now, will be able to serve around 230 students. The new building – slated for completion in Aug. 2007 – will include science labs, performance spaces and specialized classrooms. Lombard Company announces the additions of Project Manager David Falesena and Project Superintendents

Terry Farrell, Ray Breault and Warren Watterson. George Sollitt Construction Company is anticipating LEED Gold Certification on two of its current projects - the Orland Park Police Department and Greenworks Campus Development. The anticpated completion date for the police department project is January of 2007. The Greenworks building will include a rooftop greenhouse to provide fresh air to the building.

Member Marketplace The Builders Association’s Affiliate members are respectable and responsible companies. The products and services are among the best in the area in their fields. By virtue of their association membership, these companies support the Chicagoland construction industry. The Builders Association encourages its contractors to use A f f i l i a t e m e m b e r s w h e n l o o k i n g f o r p r o d u c t s o r s e r v i c e s.

Assurance is a leading provider of full-service insurance, bonding, safety consulting and other risk management products servicing the construction industry. Celebrating over 40 years in business, Assurance Agency remains privately held and committed to be customer focused through technological advances, steady growth and an exceptional reputation.

Assurance 1670 E. Golf Rd. Schaumburg, IL 60173 847-797-5700 Troy Stanton, Account Executive

DLZ Industrial, LLC offers professional surveying, material testing and inspections, NDT/CWI Services and geotechnical/environmental drilling services. Testing services include soils evaluation and testing; pile driving and caisson inspection, concrete testing, post-tensioning inspection and review, construction monitoring, testing for footings, slab, structural steel, and masonry.

DLZ Industrial Surveying 316 Tech Drive Burns Harbor, IN 43604 219-764-4700 Kurt S. Schmiegel, Industrial Division Manager



museum, from page 3 CEO Sheridan Turner said. “We needed a lot of different things to accommodate our exhibits. It was very challenging. Just watching them put the structure together … it didn’t look like a normal building. “They just about had the whole frame up when we had a tremendous storm. Somebody came along and, because of the angle of the beams, said ‘the storm damaged the building!’ The Site Manager told them ‘that’s the way it’s supposed to look.’ Everyone who worked on the project did an incredible job with the challenges they had in front of them.” Adequate space for those exhibits was important for those planning the museum, but a project that did the right things for the local environment was just as important. In this way, too, Pepper filled the bill.

green buildings, and we have a strong commitment to giving them what they want in that area,” said Ted Krasnesky, a Pepper Construction Company Account Executive. “It’s a passion of a lot of people at Pepper. “We built the annex to our Barrington office to LEED specifications. It’s not only for our clients, but it’s something we wanted for our building, as well.” Plants in the parking lot to break down toxic runoff, lowflow water fixtures and toilets and carpet tiles constructed from recycled materials are just a few of the things that earned the museum Silver certification as a LEED building from the U.S. Green Building Council. Pepper’s desire to build an environmentally-sound structure played a big role in its selection for the project after museum organizers had received 15 proposals. “(The ability to build to LEED specifications) is a big part of what won them the project,” Turner said. “We didn’t have an unlimited budget, but it was important to us to have a LEED building, and they came to us with a definite understanding of the whole process. “They let us know, from a LEED standpoint, what would work and what wouldn’t work. They really brought us through and helped us to understand every element of it. I’d hire them again any day.” One ambition that proved to be too expensive for the not-for-profit organization was geo-thermal heating, in which coils in the ground would have used the earth’s temperature to heat and cool the building. “We actually had a company assess some things, but it would have been very expensive,” Turner said. “We actually would have been the first building in this area with geo-thermal heating and cooling. “There are always decisions you need to make based on cost, but we were able to do a lot of the things we wanted to do, and a lot of that has to do with Pepper being so helpful in leading us through the process.”

Have A Story That Needs To Be Told?

We’re looking for challenging projects or other items pertaining to your business to be featured in The Builder. If you have a story idea or are interested in contributing a story, feel free to contact: Andy Cole Communications Manager (847) 318-8585


AGC News

AGC Lauds Lawmakers For Vote On Pension Bill A bill voted into law by the United States Senate and the United States House of Representatives in July will be a boost to the long-term security of unionized construction workers, according to the Associated General Contractors of America. The Pension Protection Act of 2006 (H.R. 4) was passed by the House in what AGC CEO Stephen E. Sandherr said was “an important addition to retirement security for unionized labor in our industry.” The bill, which President George W. Bush signed into law on Aug. 17, increases the maximum deductibility limit. The President called this “the most sweeping reform of America’s pension laws in over

30 years.” According to the AGC, the construction industry funds over 40 percent of multiemployer pension plans nationwide. The Pension Protection Act increases the deductibility limit for those plans to 140 percent of current liability, up from 100 percent, providing protection for those pensions against economic downturns. Employers whose pension plans are less than 80 percent funded are now required to come up with a 10-year outline for bringing those plans up to full funding. In addition, the bill clears the way for critical status plans, wherein to protect retirement benefits extra contributions could be collected from employers on an emergency basis.

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Inflation Alert On Materials Associated General Contractors of America warns contractors of a sharp increase in inflation rates for materials on the way, said AGC Chief Economist Ken Simonson. “Construction materials prices are likely to keep rising at a much faster rate than the three-to-four percent increase in the consumer price index or board producer price index for finished goods,” Simonson said. “The extreme cost increases or volatility of some construction inputs are proving troublesome to contractors because they have been sudden, extreme and unexpected.” Simonson expects an inflation rate of six-to-eight percent on the horizon, with periods of inflation as high as ten percent. One example Simonson cited was steel prices, which went up over 50 percent in the first half of 2004 and are on the rise again in 2006. Inflation rates for copper have been steeper.



Safety News Use Of Personal Protective Equipment, Other Topics Covered At September Safety Forum The Chicagoland Construction Safety Council’s Paul Satti showed video of a series of construction accidents and an electrical mishap that had one construction worker stamping the fire out of his clothes for several minutes. He also related that two construction workers have told him they’d no longer have their noses if it weren’t for the brims of their hard hats. Satti’s intention wasn’t to scare the twenty three safety professionals assembled at the Builders Association Safety Forum Sept. 13 in Hillside, but to prove a point. His presentation underscored the advantages for, proper use for and proper care of Personal Protective Equipment. Mr. Satti spoke about PPE on jobsites. He highlighted the need for safety systems that address problems before they occur. Mr. Satti also discussed the dangers of letting protective wear expire, and went over proper uses and care for hearing, foot, hand and respiratory protection and appropriate clothing.

The discussion also covered different sorts of fall-arrest systems. Satti pointed out the importance of having an emergency response procedure in place in the event of a fall. The presentation was followed by a session where the safety professionals could ask and answer each other’s questions - a discussion led by Paul Flentge, Safety Director of Pepper Construction Companies. The power was out for most of the discussion, but that didn’t stop a forum disussion on a variety of topics, including enforcement policies for safety violations, OSHA safety training implementation, and employee allergy and drug-screening policies. The next Builders Association Safety Forum will take place Nov. 9 at the Chicagoland Construction Safety Council. For safety-related questions or information on the next forum, contact Denise Capasso at the Builders Association at (847) 3188585.

Twenty-three safety professionals gathered at the Chicagoland Construction Safety Council in Hillsdale Sept. 13 for a Builders Association Safety Forum. Paul Satti (right) of the safety council offerered a presentation on Personal Protective Equipment. In the top photo, Christian Jostlein of Midwest Mechanical (center) poses a question as Kevin Voda of Weis Builders (left) and John Plucinski of James, Schaeffer and Schimming listen in.


Proud Partners Twenty members of the Builders Association are participating in the partnership with OSHA. Companies participating in the partnership are, in alpabetical order: • Airtite, Inc. • Bulley & Andrews, LLC • Frank H. Stowell & Sons, Inc. • George Sollitt Construction Company • Glenn H. Johnson Construction Company • Herlihy Mid-Continent Company • Illinois Masonry Corporation

• Interior Alterations, Inc. • Joseph J. Duffy Co. • McShane Construction Corporaation • Midwest Mechanical Group • Paul H. Schwendener, Inc. • Pepper Construction Company • Ryan Companies U.S., Inc. • Sigalos & Associates, Ltd. • Thorne Associates, Inc. • Valenti Builders, Inc. • W.B. Olson, Inc. • W.E. O’Neil Construction Company • William J. Scown Building Co.

OSHA, from page 1 Bronze participants 1. Will not be issued citations for nonserious violations, provided the violations are abated immediately.

Silver participants 1. Will not be issued citations for nonserious violations, provided the violations are abated immediately. 2. Will be given special recognition from OSHA and the BA designating the contractor as a participant in the BA Partnership, such as a certificate of recognition. 3. Will be given the maximum amount of good faith penalty reductions currently available.

Gold participants 1. If cited by OSHA, Gold participants will be offered a penalty reduction of 40% in the Expedited Informal Settlement Agreement (EISA) process. 2. Will be given the highest recognition from OSHA and the BA designating the contractor as a participant in the BA Partnership, such as a plaque recognizing Gold level performance. 3. Gold participant job sites within the Area Office’s jurisdiction will be exempt from programmed inspections within the next 12 months. 4. Will receive unprogrammed inspections only in response to reports of imminent danger, fatalities/catastrophes and formal complaints. OSHA will use telephone or fax to handle all other complaints, except those cases involving

serious injuries. In the event of a serious injury, an inspection may be conducted. When an inspection of a non-formal complaint is deemed necessary, a copy of the complaint will be provided to the participant’s safety director or other designated representative at the time of inspection. 5. OSHA will not issue citations for nonserious violations provided the violations are abated immediately or in the presence of the compliance officer. 6. During an OSHA inspection where Gold member is present and that member had successfully concluded a monitoring inspection. That Gold member will be exempt from the site inspection if the elements of their safety and health program still meet Gold level criteria. However, the Gold member may be inspected if the compliance officer documents that the Gold member was responsible for any employee exposures to serious hazards such as, falls, struck by, caught in/between or electrocutions. The OSHA Partnership is good for the employee, the contractor and owners. The Builders Association highly encourages contractors to join the OSHA Partnership. Contractors are rewarded in many ways by showing they care about safety and their employees. The bottom line is: Joining the Builders Association OSHA Partnership makes good business sense and the time to act is now.

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What They’re Saying Comments from members of the OSHA Partnership on how it has benefitted their businesses. “It helps that the OSHA knows you’re a safety-conscious company. It earns respect. (OSHA) knows you’re making an effort, and that makes things with them go a lot smoother. “I think we’re a very prosafety organization. This is just another example of that. We strive for excellence in safety and hold ourselves to pretty high standards.” -Paul Hellermann Chief Operating Officer Bulley & Andrews

“The Builders Association/ OSHA Partnership has proven its worth to Pepper Construction. The program helps us keep our focus. If we slack off, we may not qualify to participate. If we do the right things, everybody benefits. “The local OSHA offices are a resource to us and to all program members. We welcome and actively promote their participation in our safety efforts.” -Paul Flentge Safety Director Pepper Construction Company



Fall Protection: A Matter Of Life And Death

BY JOHN E. SCHUMACHER, CSP Safety Director, Assurance Safety Counseling The Occupational Safety and Health Administration (OSHA) places a high emphasis on fall protection and has for years. Most companies consider fall protection a high priority safety issue. Entire companies have been established for the sole purpose of producing fall protection equipment. Almost every safety conference across North America includes fall protection as a primary topic of training and discussion. With all of that attention and effort, the majority of construction fatalities are still from employee falls (33 percent). These fatalities are related to falls from roof decks, scaffolding, ladders and general walking and working surfaces. Fall protection issues effect almost every trade at some point of their operations. The key to prevention is a well-trained work force that can identify fall hazards and apply fall prevention methods that allow them to carry out their operations. Common fall hazards on jobsites include:

Stairs • Access to upper areas requires safety. Stairs are preferred to ladders for access if tools and equipment must be moved. • All stairs must be equipped with a safety

or hand-rail. • All stair tread must be filled in. Metal pan stairs should not be used if they are not completely filled in.

Ladders • Only approved, heavy-duty ladders should be used. • Light duty ladders may not be strong enough to hold the employee and the weight of the tools and equipment. • Access ladders must be adequately secured at the top and the bottom. • All ladder safety rules and warnings must be followed. This means not standing on the top two rungs of the ladder.

Deck Levels • If working near a floor opening or deck edge, fall protection is needed. Fall protection may include safety railings or use of a safety harness if railings are not available. • Only approved anchor points should be used. If employees will be using safety harnesses and related equipment, they must be trained to use the equipment effectively. OSHA has established a trigger height of six feet while working on walking and working surfaces. Any employees working in these areas must be protected. Note that the OSHA has a separate scaffolding standard with a trigger height of ten feet.

Fall protection issues effect almost every trade at some point of their operations. The key to prevention is a welltrained work force that can identify with fall hazards and apply fall prevention methods that allow them to carry out their operations.

FALL PROTECTION SYSTEMS Railing Systems Railing systems consist of a top rail, mid-rail and toe board. Top rails are required to be 42 inches tall, mid-rails at 21 inches and a toe board extending four inches above the floor. The top rail must be capable of withstanding 200 pounds of force. Wire rope rails must not deflect more than three-feet when a force is applied. In addition, the top wire rope must be “flagged” every six feet to provide visibility of the location of the rails.

Floor Hole Covers A floor hole cover must be secured from movement and marked as a floor hole. In addition, the cover must be capable of supporting at least twice the maximum intended load.

Personal Fall Arrest Equipment (PFA) Personal fall arrest equipment is typically used when rails, nets or floor hole covers are not practical. PFA equipment includes a full body harness, lanyard with shock absorber, rope or retractable device. If a rope is used, a rope adjuster or “rope

please see falls, page 11

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falls, from page 10 grab” will be needed to allow for the adjustment in rope length relative to the location of the employee. A retractable lifeline is a preferred device for adjusting the amount of slack in the line. Employees must be trained to use the fall protection equipment properly. They must also know the limitations of the equipment. Anchor points for personal fall arrest equipment must be capable of supporting 5,000 pounds per person attached. Many rules exist regarding proper use of equipment, including not allowing lanyards to be knotted, not attaching a lanyard back to itself and use of doublelocking type connectors, among others. Your safety supplier can usually provide you with training instruction, videos and consulting on proper application on the job.

steel erection. Safety net systems have very specific requirements for installation, testing and inspecting. All employees working on a jobsite must have some degree of fall protection training. A higher degree of training should

be provided for employees using personal fall protection equipment. Fall protection is a major safety issue that needs to be addressed by your company. Make a plan to provide ongoing safety training and establish appropriate safety policies.

Fall Arrest System Terminology Personal Fall Arrest System Any combination of anchorage, connectors, body harness, lanyard, deceleration device or lifeline used to arrest a fall from any working level.

Safety Nets

Orthostatic Intolerance Experienced by workers using fall arrest systems. Following a fall, a worker may remain suspended in a harness. The sustained immobility may lead to a state of unconsciousness. Depending on the length of time the suspended worker is unconscious/immobile and the level of venous pooling, the resulting orthostatic intolerance may lead to death. While not common, such fatalities are often referred to as “harness-induced pathology” or “suspension trauma.”

Safety net systems are mesh devices secured below work areas in need of fall protection. The application of safety nets is more common during the initial structure stage of a building such as decking or

Free-Fall Distance The vertical distance a user falls before the fall arresting system begins to stop the fall. Source: Chicagoland Construction Safety Council



legal, from page 4 rule has the effect of exempting smaller employers from withdrawal liability. Sale Of Assets/Stock Certain business changes may or may not result in a complete or partial withdrawal. A sale of assets by an employer coupled with a cessation of contributors to a plan may trigger a complete or partial withdrawal unless the buyer assumes the contribution obligations and other technical requirements are satisfied. On the other hand, a sale of stock by an employer (or any other entity reorganization) will not by itself trigger withdrawal liability if there is no interruption in contribution or obligation to contribute. Construction Industry Exemption Another exception is the so-called “construction industry exemption” rule. Plans which cover primarily building and construction industry employees are eligible to adopt this special rule. Employers are considered construction industry employers if a substantial number (85 percent or more) of its employees for which it has a contribution obligation to the plan work in the building and construction industry. Under this rule, withdrawal liability occurs only if the employer ceases its obligation to contribute to the plan but continues to work within the jurisdiction of the collective bargaining agreement, or returns to do the same type of work in the jurisdiction within five years, without in either case resuming contribution obligations to the plan. Therefore, if an employer goes out of business under the provisions of this rule, withdrawal liability would not be assessed. If, however, the employer continued to work in the same jurisdiction (on a non-union basis), withdrawal liability could be assessed by the plan. Partial withdrawal liability would be assessed only when a construction industry employer has substantially shifted its work mix so that only an insubstantial portion of the work is covered by that plan.

Who Is Responsible For Paying Withdrawal Liability? Any person or entity acting directly or indirectly as an employer,including affiliates and trades and businesses (whether or not incorporated) under common control. Attempts to evade withdrawal liability by going out of business and resuming business under a different name and will generally be disregard.

Enforcement Of Withdrawal Liability If a plan determines that it believes an employer has withdrawn from the plan, it will generally investigate the circumstances and request information from the employer, usually in a document called a statement of business affairs. The plan generally has the legal right to receive the information requested. If the plan does make a withdrawal liability assessment, the employer has ninety days to contest the assessment and request review by the plan. Arbitration is available if a request is made within 60 days after the plan notifies the employer of its final determination, or if earlier, within 120 days of the date the employer seeks the initial review or arbitration may be initiated jointly within 180 days of the plan’s initial determination. During any review period, the employer must pay all installments of assessed withdrawal liability.

Action Plan For Contractors To Address Withdrawal Liability Concerns Prior to entering into a new union contract by which an obligation is imposed to contribute to a defined benefit plan, determine if withdrawal liability exists prior to signing the contract. If so, attempt to avoid contributing to the defined benefit plan, either by offering to provide other types of retirement vehicles or other financial incentives to employees. For contractors already obligated to contribute, determine whether any of the plans have withdrawal liability. Contractors have a right to request in writing from a plan an estimate of the contractor’s potential withdrawal liability. Each plan is run by a joint board of trustees, an equal number or union trustees and management trustees, who may be appointed by an employer association. Contact the employer association and the individual management trustees to determine what steps are being taken to reduce or eliminate the plan’s liability. If changes are contemplated in the manner in which you intend to operate your business, and withdrawal liability is an issue, consider some strategic planning well in advance of any implementation date of those changes. An awareness of withdrawal liability may well lead to different business and operational procedures and structures which will have the effect of minimizing or eliminating

exposure to withdrawal liability. There is some flexibility in this regard.


Builder The Builder is published periodically by the Builders Association, a trade association of commercial, industrial and institutional general contractors and affiliated industry firms dedicated to quality construction in the Chicagoland area. 2006 Board of Directors John Benz William J. Scown Building Company George Ferrell Henry Bros. Co. Paul Hellermann Bulley & Andrews Sam Krauss S.G. Krauss Leon LaJeunesse Custom Contracting, Ltd. J. David Pepper Pepper Companies John Russell W.E. O’Neil Construction Co. Howard Strong George Sollitt Construction Co. Sheri Tantari McShane Construction Corp. Dana Thorne Thorne Associates Lynn Treat Ryan Companies US, Inc. The Builder Staff Andy Cole Editor, Advertising Sales Builders Association 9550 W. Higgins Rd., Suite 380 Rosemont, IL 60018 (847) 318-8585 Copyright ©2006. All Rights Reserved.

Representing the Associated General Contractors of America in the Chicagoland metropolitan area.

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