Seventh Circuit: Sole Proprietorship Is Liable for Unpaid Pension Contributions to Multi-Employer Plan

In Trustees of the N.E.C.A./LOCAL 145 I.B.E.W. Pension Plan v. Mausser, No. 24-1472, 2024 WL 4647936 (7th Cir. Nov. 1, 2024), the Trustees of the National Electrical Contractors Association and the Local 145 I.B.E.W. Pension Plan (jointly “the Plan”) sued Linda Mausser under ERISA, 29 U.S.C. § 1001–1461, “asserting that Mausser, the sole proprietor of an electrical company bound by a collective bargaining agreement between N.E.C.A. and the Union, failed to make pension contributions required under the agreement. The district court granted the Plan’s motion for summary judgment on Mausser’s liability, and after a bench trial, the court determined the exact amount of contributions she owed.” The Seventh Circuit affirmed.

Mausser disputed that she was obligated to maintain records on her husband’s hourly work because the IRS does not require sole proprietorships to keep payroll records and that revenue is reported on personal income tax returns. The court explained that ERISA requires employers to “maintain records with respect to each of his employees sufficient to determine the benefits due or which may become due to such employees.” 29 U.S.C. § 1059(a)(1). And the collective bargaining agreement requires an employer to provide “payroll records, reports, and other reasonably requested information necessary to conduct a compliance audit.” Because Mausser failed to provide any records during the audit, the court properly determined that she was liable for delinquent contributions under the agreement.

Mausser also asserted that she is not obligated to contribute to the Plan because ERISA requires contributions only for employees, and her husband—a working owner of a sole proprietorship—is not an employee under Title I of ERISA. The court concluded that Mausser waived the argument but not raising it below but also that her interpretation of § 2510.3-3(c) is incorrect. The Supreme Court held in Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1, 6, 20–21 (2004), that ERISA applies to plans covering owners (including owner spouses) so long as the plan also covers non-owner employees. QCA Electric participates in a multi-employer plan that includes numerous other owners and employees. Therefore, Yates controls.