On July 23, 2014, the Senate Committee on Health, Education,
Labor and Pensions unanimously approved S. 2511, a measure
that aims to clarify the definition of "substantial cessation
of operations" under Section 4062(e) of ERISA. According
to a statement issued by
the committee, "this legislation will bring clarity to the
pension downsizing liability rules and will ensure that there is a
workable mechanism to protect pension benefits when employers show
symptoms of financial distress."
Under Section 4062(e), if more than 20% of an employer's
total employees who participant in an employer-maintained pension
plan are laid off because the employer ceases operations at a
facility, the employer must notify the Pension Benefit Guaranty
Corporation (PBGC) and face certain withdrawal liability. The
committee-approved bill clarifies that "substantial cessation
of operations" triggering liability occurs only
when:
