An Ethical Issue in a Multiemployer Benefit PlanBondBeebe
Larry Beebe, CPA
Trustees to a multiemployer benefit plan are generally appointed by either a sponsoring labor union or a sponsoring employer or employer association. Once a trustee is appointed, he or she does not act as a representative of the appointing authority in making plan decisions. Instead, the trustee must act solely in the interest of plan participants and their beneficiaries.
Does the trustee face any ethical issues by representing both a bargaining party to the collective bargaining agreement and the plan and its participants and beneficiaries? This potential conflict is often referred to as the two hat dilemma.
The solution to the two hat dilemma is that the trustee must understand which hat he or she is wearing. The trustee often seeks advice from plan legal counsel to determine the proper course of conduct in exercising his or her fiduciary duties. The trustee who puts the interests of the plan participants and their beneficiaries at the forefront when making a decision affecting the plan will make the proper ethical decision.