JUSTICE MARSHALL delivered the opinion for the Court.
The issue presented is whether an employer who participates in a multiemployer benefit plan that is governed by the Employee Retirement Income Security Act of 1974, 29 U. S. C. § 1001 et seq., must allow the plan to conduct an audit involving the records of employees who the employer denies are participants in the plan.
Petitioners are two large multiemployer benefit plans, the Central States, Southeast and Southwest Areas Pension Fund and the Central States, Southeast and Southwest Areas Health and Welfare Fund (hereinafter referred to collectively as Central States).
Respondents (hereinafter referred to collectively as Central Transport) are 16 interstate trucking companies, each of which, either individually or through a multiemployer association, engages in collective bargaining with the Teamsters. Pursuant to that bargaining, each has become a signatory to the National Master Freight Agreement and supplemental, individual collective-bargaining agreements. Under these collective-bargaining agreements, each employer must make weekly contributions to Central States for each employee who performs work covered by the collective-bargaining agreements, and each employer agrees to be bound by the trust agreements that govern Central States.
Because the plans are so large — with thousands of participating employers — Central States relies principally on employer self-reporting to determine the extent of an employer's liability.
On December 5, 1979, Central States contacted Central Transport to arrange an audit, which it described as part of a program of " `periodic reviews of participating employer contributions for the benefit of Plan Participants and their Beneficiaries.' " 522 F.Supp. 658, 662 (ED Mich. 1981). The audit was to take place at Central Transport's offices and was to encompass, among other subjects, the " `[d]etermination of eligible Plan Participants covered by Collective Bargaining Agreements.' " Ibid. Among the documents the auditors requested access to were payroll, tax, and other personnel records of those employees who the employer claimed were not plan participants.
Central States explained that access to these records would allow the auditors independently to determine the membership of the class entitled to participate in the plans, and thus to verify that Central Transport was making all required contributions.
The parties agreed that the facts of the case were not in dispute, and that the court should treat their pleadings as cross-motions for summary judgment. The District Court granted summary judgment in favor of Central States. After examining Central States' contractual relationship with Central Transport and Central States' responsibilities under ERISA, the court concluded that Central States had a right to conduct the requested audit. The audit was a reasonable means of "independently verify[ing] the status and duties of all individuals employed by Central Transport in order to insure that proper benefit contribution payments are being made." Ibid. The court thus ordered "that Central Transport provide to the audit representatives of Central States all of the documentation requested and that the audit procedure undertaken by Central States be allowed to continue." Ibid.
The Court of Appeals for the Sixth Circuit reversed. 698 F.2d 802 (1983). Interpreting the collective-bargaining agreements and trust documents in light of ERISA, the Court of Appeals held that Central States had to show "reasonable cause" to believe that a specific employee was covered by the plans before gaining a right of access to that employee's records. Id., at 809-812. We granted certiorari, 467 U.S. 1250 (1984), and we now reverse the judgment of the Court of Appeals.
The documents governing Central Transport's contractual relationship with Central States include the collective-bargaining agreements between Central Transport and various affiliates of the Teamsters and the trust agreements of the Central States plans. Generally, the collective-bargaining agreements obligate Central Transport to participate in the Central States plans and to be bound by Central States' trust agreements. The trust agreements, which have been signed by Central Transport, govern the operation of the plans.
These trust documents include a number of provisions that are highly supportive of the right to audit claimed by Central States' trustees.
We note first that the Pension Fund trust agreement
The agreement contains various specific and general grants of power to the trustees to enable them to administer the trusts properly. Most generally, the agreements authorize the trustees to "do all acts, whether or not expressly authorized. . . , which [they] may deem necessary or proper for the protection of the property held [under the trust agreement]." Id., at A-47 (Art. IV, § 14(e)). The agreement also grants broad powers relating to the collection of employer contributions,
Among the more specific grants of trustee power is a power to demand and examine employer records:
Central States' trustees interpret these provisions as authorizing random field audits like the one at issue in this case. In particular, they argue that the records of not-concededly-covered employees are "pertinent records" because their examination is a "proper" means of verifying that the employer has accurately determined the class of covered employees. The plans have a substantial interest in verifying the employer's determination of participant status, the trustees argue, because an employer's failure to report all those who perform bargaining unit work may prevent the plans from notifying participants and beneficiaries of their entitlements and obligations under the plans and may create
The reasonableness and propriety of the audit are confirmed, the trustees argue, by the accounting profession's generally accepted auditing standards, which articulate the elementary principle that for an auditor to verify a certain selection decision, he must refer to a universe broader than the selection itself:
The Court of Appeals, nonetheless, rejected the Central States trustees' interpretation of their contractual power. In the court's view, such an auditing power would be unreasonable in light of the policies and protections embodied in ERISA. We agree with the Court of Appeals that trust documents cannot excuse trustees from their duties under ERISA, and that trust documents must generally be construed in light of ERISA's policies, see 29 U. S. C. § 1104(a)(1)(D), but we find no inherent inconsistency between ERISA and the interpretation of the trust agreement offered by the Central States trustees. Indeed, we find the
An examination of the duties of plan trustees under ERISA, and under the common law of trusts upon which ERISA's duties are based, makes clear that the requested audit is highly relevant to legitimate trustee concerns.
This Court has on a number of occasions discussed the policy concerns behind ERISA. In Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 361 (1980), we noted that Congress enacted ERISA after "almost a decade of studying the Nation's private pension plans" and other employee benefit plans.
In general, trustees' responsibilities and powers under ERISA reflect Congress' policy of "assuring the equitable character" of the plans. Thus, rather than explicitly enumerating all of the powers and duties of trustees and other fiduciaries, Congress invoked the common law of trusts to define the general scope of their authority and responsibility.
The manner in which trustee powers may be exercised, however, is further defined in the statute through the provision of strict standards of trustee conduct, also derived from the common law of trusts — most prominently, a standard of loyalty and a standard of care. Under the former, a plan
An examination of the structure of ERISA in light of the particular duties and powers of trustees under the common law leaves no doubt as to the validity and weight of the audit goals on which Central States relies. ERISA clearly assumes that trustees will act to ensure that a plan receives all funds to which it is entitled, so that those funds can be used on behalf of participants and beneficiaries, and that trustees
One of the fundamental common-law duties of a trustee is to preserve and maintain trust assets, Bogert § 582, at 346, and this encompasses "determin[ing] exactly what property forms the subject-matter of the trust [and] who are the beneficiaries." Id. § 583, at 348 (footnotes omitted). The trustee is thus expected to "use reasonable diligence to discover the location of the trust property and to take control of it without unnecessary delay." Id., at 355.
The provisions of ERISA make clear that a benefit plan trustee is similarly subject to these responsibilities, not only as a result of the general fiduciary standards of loyalty and care, borrowed as they are from the common law, but also as a result of more specific trustee duties itemized in the Act. For example, the Act's minimum reporting and disclosure standards require benefit plans to furnish all participants with various documents informing them of their rights and obligations under the plan, see, e. g., 29 U. S. C. §§ 1021, 1022, 1024(b),
Moreover, that these trustee duties support the auditing authority claimed in this case is strongly suggested by the other provisions of ERISA as well as by the positions of the administrative agencies charged with the administration of the Act. For example, § 209 of the Act supplements the benefit plans' duties to furnish reports to plan participants by requiring employers to maintain records on employees and to furnish to benefit plans the information needed for the plans' fulfillment of their reporting duties. 29 U. S. C. § 1059. The Secretary of Labor has explicitly interpreted the trustees' duty to prevent employer use of trust assets as creating a plan duty to verify employer determinations and requiring plans to adopt systems for policing employers. And the Secretary has endorsed the appropriateness of field auditing programs for this purpose. Thus, the Secretary notes that "many multiple employer plans have adopted written procedures for the orderly collection of delinquent employer contributions which involve reasonable, diligent and systematic
In light of the general policies behind ERISA as well as the particular provisions of the statute, we can only conclude that there is no conflict between ERISA and those concerns offered by Central States to justify its audit program. Both the concern for fully informing participants of their rights and status under a plan and the concern for assuring the financial integrity of the plans by determining the class of potential benefit claimants and holding employers to the full and prompt fulfillment of their contribution obligations are proper and weighty within the framework of ERISA.
The Court of Appeals offered a number of reasons why the requested audit would nevertheless be improper as a matter of law. The Court of Appeals largely relied on the presence of alternative means of protecting a plan's interests to conclude that a plan's access to employee records could safely be limited to those instances where a plan shows "reasonable cause" to believe that a specific employee is a participant. The court speculated that "[t]he Funds enjoy a number of protections against being called upon to dispense benefits to a participant on whose behalf no contributions or insufficient contributions were made," 698 F. 2d, at 813, that the plans thus did not need primarily to rely on its own monitoring to safeguard its interests, and that therefore "the possibility of
The Court of Appeals first noted that employer contributions could effectively be policed by interested unions or by the Secretary of Labor, thus diminishing the trustees' interests in independently monitoring employer compliance. Moreover, in the court's view, a plan's reliance on union or Government oversight of an employer's contributions would be more consistent with federal policies in the pension and labor fields than would be a plan's reliance on the sort of audit at issue here.
The notion that federal policy favors union enforcement of an employer's collectively bargained obligations to a benefit plan, to the exclusion of enforcement by the plan's trustees, simply did not survive last Term's decision in Schneider Moving & Storage Co. v. Robbins, 466 U.S. 364 (1984). In Schneider, we held that a benefit plan could bring an independent action for judicial enforcement of an employer's trust obligations, and we in large part relied on the proposition that there was no federal policy favoring trustee dependence on a union's use of a grievance and arbitration system for such enforcement.
Of greatest significance here is this Court's conclusion that compelling benefit plans to rely on unions would erode the protections ERISA assures to beneficiaries, for the diminishment of trustee responsibility that would result would not necessarily be made up for by the union. ERISA places strict duties on trustees with respect to the interests of
A trustee's duty extends to all participants and beneficiaries of a multiemployer plan, while a local union's duty is confined to current employees employed in the bargaining unit in which it has representational rights. The breadth of the trustee's duty may result in a very different view of the special situations that may exist in any single unit, and, as we recognized in Schneider, a union's arrangements with a particular employer might compromise the broader interests of the plan as a whole:
See also Lewis v. Benedict Coal Co., 361 U.S. 459, 469 (1960). See generally Schneider, supra, at 376, n. 22 (the union's duty "runs only to the members of its collective-bargaining unit, and is coextensive with its statutory authority to act as the exclusive representative for all the employees within the unit").
Similarly, a local union's duties to bargaining-unit workers is a general duty to act in the group's interests regarding the overall terms and conditions of employment. The trustees'
See also NLRB v. Amax Coal Co., 453 U.S. 322, 336 (1981) ("The atmosphere in which employee benefit trust fund fiduciaries must operate, as mandated by [29 U. S. C. § 186(c)(5)] and ERISA, is wholly inconsistent with th[e] process of compromise and economic pressure [that characterizes collective bargaining]").
The rationale in Schneider and our other cases in this area thus precludes a holding that a benefit plan must primarily rely on union monitoring of an employer's compliance with its trust obligations.
There are also compelling reasons why the Department of Labor's power to police employer compliance must be rejected as an alternative to audits by the plans themselves. Indeed, the structure of ERISA makes clear that Congress did not intend for Government enforcement powers to lessen the responsibilities of plan fiduciaries.
First, the Department of Labor denies that it has the resources for policing the day-to-day operations of each multiemployer benefit plan in the Nation. The United States, as amicus, informs us that approximately 900,000 benefit plans file annual reports with the Secretary of Labor, and that between 11,000 and 12,000 of these are multiemployer plans. As the petitioners' situations illustrate, some multiemployer plans can be quite large. See n. 1, supra. It is therefore not surprising that the United States argues that "[i]t is thus wholly unrealistic to suggest that centralizing all auditing authority in the Secretary would provide protection to benefit plan participants comparable to that afforded by trustee audits." Brief for United States as Amicus Curiae 20, n. 11.
Second, although ERISA grants the Secretary of Labor broad investigatory powers, see, e. g., 29 U. S. C. § 1134, neither the structure of the Act nor the legislative history shows any congressional intent that plans should rely primarily on centralized federal monitoring of employer contribution requirements. Indeed, Congress expressly withheld from the Secretary the authority to initiate actions to enforce an employer's contribution obligations. See 29 U. S. C. §§ 1132(b)(2), 1145. In contrast, as we have noted, trustees
The Court of Appeals also challenged Central States' need for the audit because of the likelihood that covered employees would themselves come forward to assure that employers are making required contributions on their behalf. The court emphasized that participants could become aware of their status through the Act's reporting provisions. 698 F. 2d, at 813 (citing 29 U. S. C. § 1021). But although the reporting requirements are designed to assure that participants receive information about their status and rights, they do so by placing a reporting duty on the plans. Thus, to give participants initial notice of their status, the plans need to know the identities of participants. See nn. 14, 15, supra, and accompanying text. That is, of course, precisely the information that Central States sought to verify in its requested audit.
The Court of Appeals' remaining reason for questioning Central States' interest in the audit focused on the fact that a benefit plan would have an action against a delinquent employer should any benefit claims ever be made by a participant who had never been the subject of contributions. We reject the notion that the plan's ultimate ability to remedy an employer's breach of its obligations forecloses the plan from seeking to deter such breaches or to discover them early. Such a suggestion ignores the trustees' fiduciary duty to inform participants and beneficiaries of their rights, to gain immediate use of trust assets for the benefit of the trust, to avoid the time and expense of litigation, and to avoid unfunded liabilities that might eventually prove uncollectable as a result of insolvencies. For a plan passively to allow an employer to create such unfunded liabilities would jeopardize the participants' and beneficiaries' interests as well as those of all participating employers who properly comply with their obligations. See Schneider, 466 U. S., at 373, and n. 17.
The Court of Appeals' argument obviously conflicts with one of the principal congressional concerns motivating the passage of the Act, that plans should assure themselves of adequate funding by promptly collecting employer contributions.
Given Congress' vision of the proper administration of employee benefit plans under ERISA, we have little difficulty holding that the audit requested by Central States is well within the authority of the trustees as outlined in the trust documents. But we should also specify what we do not hold. First, we do not hold that under ERISA a benefit plan's interests in fully identifying participants and beneficiaries require that it conduct the sort of audit in question. This case involves only the trustees' right to conduct this particular kind of audit program, not their duty to do so. Second, we have no occasion to determine whether ERISA would independently confer on the trustees a right to perform the sort of audit demanded in this case in the face of trust documents that explicitly limit the audit powers of trustees. Cf. 29
The judgment of the Court of Appeals is accordingly reversed.
It is so ordered.
JUSTICE STEVENS, with whom THE CHIEF JUSTICE and JUSTICE REHNQUIST join, concurring in part and dissenting in part.
If an employer who participates in a multiemployer benefit plan enters into an agreement that authorizes the trustees of the plan to conduct an audit of the employer's personnel records, such an agreement is not prohibited by ERISA. That is the proposition of law that I understand the Court to announce today and I agree with it.
The Pension Fund trust agreements, as the Court accurately quotes, provide that "each Employer shall promptly furnish to the Trustees, upon reasonable demand" information concerning "its Employees." App. to Pet. for Cert. A-46. The term "Employees," however, the first letter of which is capitalized in the trust agreements, does not comprise all employees of respondents. Instead, Article I, § 3, expressly provides that "[t]he term `Employee' as used herein shall include," in pertinent part, persons who are both employed pursuant to the collective-bargaining agreement and covered by the pension plan. Id., at A-43.
Nor do the trust agreements require this Court to acquiesce in the trustees' understandable assertion of power to investigate whatever personnel records they deem necessary. It is true that Article IV provides that interpretations of the trust agreements adopted by a majority of the trustees "in good faith shall be binding upon the Union, Employees and Employers." Id., at A-48. But as the Court of Appeals pointed out, this broad language "does not . . . give the trustees carte blanche powers to undertake an audit of the records of all of [respondents'] employees. They are limited in their discretion by . . . the common law concept that a trustee may only act within the scope of his or her authority." 698 F.2d 802, 810 (1983).
Brian G. Shannon filed a brief for Deloitte Haskins & Sells as amicus curiae urging affirmance.
"Traditionally, the Central States Funds have operated on a self-reporting basis, which required the employer to initially establish a base group of employees entitled to weekly contributions and then to inform [Central States] monthly of any fluctuations in the employment status of individuals covered by the collective bargaining agreement. Central States relies upon the status reports of [Central Transport] to compute an invoice statement which it forwards to Central Transport. Thus, when the employer reports the termination or layoff of an individual formerly covered by the collective bargaining agreement, Central States will adjust its records and reduce the defendant's invoice to reflect the reported change. Conversely, when an employer reports the addition of new employees, Central States will increase the invoice by an amount which corresponds to the weekly contribution figure multiplied by the number of weekly hired employees." 522 F.Supp. 658, 662 (ED Mich. 1981).
Central Transport, however, has submitted no evidence that Central States' audit program's actual goal was to expand the trust's coverage beyond that provided in the applicable collective-bargaining agreements or to acquire information for union goals; nor did it submit any evidence that the audits were unjustifiably costly. Thus, whether the auditing power claimed by Central States is consistent with ERISA must be analyzed in terms of the goal upon which Central States has rested its audit, that of policing Central Transport's " `[d]etermination of eligible Plan Participants covered by Collective Bargaining Agreements,' " 522 F. Supp., at 662 (quoting Central States' letter to Central Transport), so as to verify that Central Transport is indeed contributing all required amounts on behalf of all covered employees.
In addition, however, the argument has other major problems. First, we note that the Labor Department has consistently taken the position that any pension plan document language denying benefits to a participant because of an employer's failure to make required contributions would violate ERISA and would thus be unenforceable. See n. 7, supra. At a minimum, this means that Central States is reasonable in operating its audit program under the assumption that it would be liable for pension claims regardless of an employer's failure to make required contributions. Second, the Court of Appeals did not contend that the reports Central States sends to participants inform them of a burden of verifying their employer's contributions, or that the plan documents deny benefits on the basis of an employer's failure to make proper contributions. Thus, even if ERISA allowed a plan to operate in one of these manners, there has been no finding that the plans at issue here have done so.
"Failure of employers to make promised contributions in a timely fashion imposes a variety of costs on plans. While contributions remain unpaid, the plan loses the benefit of investment income that could have been earned if the past due amounts had been received and invested on time. Moreover, additional administrative costs are incurred in detecting and collecting delinquencies. Attorneys' fees and other legal costs arise in connection with collection efforts.
"These costs detract from the ability of plans to formulate or meet funding standards and adversely affect the financial health of plans. Participants and beneficiaries of plans as well as employers who honor their obligation to contribute in a timely fashion bear the heavier cost of delinquencies in the form of lower benefits and higher contribution rates. Moreover, . . . uncollected delinquencies can add to the unfunded liability for all employers." 126 Cong. Rec. 23039 (1980) (statement of Rep. Thompson).