Introduction

This appeal addresses a recurring question in multiemployer plan litigation under ERISA § 515 (29 U.S.C. § 1145): when a collective bargaining agreement (CBA) requires employer contributions based on “hours paid,” must the employer increase the number of contribution hours to reflect overtime premium rates (e.g., count 8 overtime hours as 12 “hours paid” at time-and-a-half)?

Jones Lang LaSalle Americas, Inc. (Jones) entered CBAs covering employees at Honeywell and J.P. Morgan Chase facilities with UA Local 74. The CBAs required contributions to multiple funds based on “hours paid.” After a 2013 audit and again in 2018, the Union’s auditor asserted that overtime hours must be multiplied by the premium rate (e.g., 1.5x) to determine the “hours paid” on which contributions are owed. Jones disagreed, contending “hours paid” means the actual number of compensated hours, regardless of pay rate. The District Court found the CBAs ambiguous, credited extrinsic evidence of bargaining history and practice, adopted the Union’s interpretation, and entered judgment. Jones appealed.

The Third Circuit reverses, holding that the CBAs’ unambiguous text uses “hours paid” to denote the count of compensated hours—not an overtime-inflated figure. Overtime is a premium rate of pay, not a multiplier of hours for contribution purposes, absent explicit CBA language to that effect.

Summary of the Opinion

• Holding: Under the CBAs at issue, “hours paid” refers to the number of hours for which the employee received compensation (including paid leave), regardless of the rate (straight time, time-and-a-half, double time, etc.). Overtime is a premium wage rate, not a basis to increase the number of contribution hours.
• Contract interpretation: Applying ordinary principles of contract law, dictionaries, and holistic reading, the court finds the term unambiguous. Extrinsic evidence cannot create an ambiguity where none exists.
• Alternative arguments rejected:
  • Extrinsic evidence: Not admissible to create ambiguity; no persuasive industry custom shown.
  • Assumption of predecessor’s practice: Jones assumed the CBA’s terms, not unwritten past practices; predecessor’s approach did not bind Jones.
  • Knowledge of Union’s interpretation: The record shows Jones consistently objected; thus it was not bound by the Union’s auditor’s interpretation.
• Disposition: Judgment for the Union reversed on liability; earlier premature appeal dismissed; issues relating to pre- and post-judgment interest left unresolved.
• Dissent (Krause, J.): Would affirm, finding “hours paid” ambiguous and concluding the District Court’s factual findings on intent and practice were not clearly erroneous. The dissent also flags errors in the District Court’s calculation of pre- and post-judgment interest.

Analysis

1) Precedents and Authorities Cited

• M&G Polymers USA, LLC v. Tackett, 574 U.S. 427 (2015) and CNH Indus. N.V. v. Reese, 583 U.S. 133 (2018): CBAs are interpreted under ordinary contract principles; when terms are clear, they are enforced as written. Reese emphasizes that a contract is not ambiguous unless, after applying established interpretive tools, it remains reasonably susceptible to multiple meanings.
• Williston on Contracts §§ 30:6, 32:3, 32:5, 32:6: Supports plain-meaning interpretation, holistic reading, use of contemporaneous dictionaries for undefined terms, and consistent usage across the instrument.
• Mastro Plastics Corp. v. NLRB, 350 U.S. 270 (1956): Read contracts as a whole—used to bolster the court’s holistic approach.
• Heimeshoff v. Hartford Life & Accident Ins. Co., 571 U.S. 99 (2013): Courts generally enforce ERISA plan provisions as written—underscoring textual fidelity in ERISA contexts.
• Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728 (Del. 2006): Use dictionaries for undefined terms—cited for the definitional approach to “premium,” “overtime,” and “time and a half.”
• Teamsters Indus. Emps. Welfare Fund v. Rolls-Royce Motor Cars, Inc., 989 F.2d 132 (3d Cir. 1993): Ambiguity threshold and the role of extrinsic evidence; the majority distinguishes this case by finding no ambiguity here.
• Pac. Emps. Ins. Co. v. Global Reinsurance Corp. of Am., 693 F.3d 417 (3d Cir. 2012): Parties’ disagreement does not itself create ambiguity.
• UAW v. Skinner Engine Co., 188 F.3d 130 (3d Cir. 1999): Extrinsic evidence cannot be used to create an ambiguity where none exists; invoked to exclude post hoc bargaining history/practice.
• Bidlack v. Wheelabrator Corp., 993 F.2d 603 (7th Cir. 1993) (Posner, J.): Quoted on when extrinsic evidence may be used—only where there is textual ambiguity or a gap to fill.
• Engelhard Corp. v. NLRB, 437 F.3d 374 (3d Cir. 2006): Do not read terms in isolation; supports the court’s whole-text reading.
• Emor, Inc. v. Cyprus Mines Corp., 467 F.2d 770 (3d Cir. 1972): A party who knowingly assents to the other’s interpretation may be bound—distinguished because Jones consistently objected.
• Vitale v. Latrobe Area Hosp., 420 F.3d 278 (3d Cir. 2005) and Marshak v. Treadwell, 240 F.3d 184 (3d Cir. 2001): Finality of judgments—used to dismiss the premature appeal.
• McCutcheon v. America’s Servicing Co., 560 F.3d 143 (3d Cir. 2009): Standards on appeal from bench trials—clear error for facts, de novo for law.
• United States v. Ashe, 130 F.4th 50 (3d Cir. 2025) and United States v. Montalvo-Flores, 81 F.4th 339 (3d Cir. 2023): Clear-error review and “definite and firm conviction” formulation—applied to reject the District Court’s reliance on “knowledge of interpretation.”

Dissent’s authorities: The dissent cites Third Circuit ambiguity cases emphasizing a relatively low threshold (e.g., American Flint Glass Workers Union v. Beaumont Glass Co., 62 F.3d 574 (3d Cir. 1995); Mack Trucks, 917 F.2d 107; Mellon Bank, 619 F.2d 1001), a Fourth Circuit decision recognizing the plausibility of counting “all hours paid” irrespective of pay rate (U.S. Foodservice, Inc. v. Truck Drivers & Helpers Local 355 Health & Welfare Fund, 700 F.3d 743 (4th Cir. 2012)), and ERISA remedies cases on interest calculations (Silverman, Marshall v. Anderson Excavating, Jaspan, Slyman, Iola).

2) The Court’s Legal Reasoning

Text first, read as a whole. The CBAs require contributions based on “hours paid,” while separately setting premium wage rates for overtime and holidays (e.g., time-and-a-half for hours over 40; “double time and one-half” on certain holidays) and prohibiting “pyramiding” (only the highest premium applies for the same hours worked). The court reads these provisions together to conclude that “overtime” and other premiums change the pay rate for an hour, not the number of hours for which the employee is deemed paid.

Ordinary meaning and dictionaries. Contemporary legal and general dictionaries treat “premium” as an amount paid above the regular rate and define “time and a half” as a rate multiplier, not an hours multiplier. “Overtime” refers to extra wages paid for excess hours worked. None of these definitions recharacterize the count of hours; they modify the price per hour.

Why the CBAs use both “hours worked” and “hours paid.” The court explains the two phrases serve a different binary: “hours worked” captures worked time; “hours paid” captures compensated-but-unworked time (e.g., bereavement leave, paid holidays, jury duty). “Hours paid” ensures contributions for paid leave, not for increasing hours when an overtime rate applies. If “hours paid” operates as a multiplier for overtime, the term would inexplicably behave differently across provisions (e.g., multiplying paid leave hours where there is no rate to multiply). Consistent usage principles (Williston § 32:6) favor the court’s single meaning for “hours paid” across the contract.

Extrinsic evidence cannot create ambiguity. Because the text, read holistically, yields one reasonable reading, the court holds that extrinsic evidence of bargaining history or practice cannot be used to manufacture ambiguity (Skinner Engine; Reese). The Union did not show a relevant and consistent industry custom that redefines “hours paid” to mean “hours at base-rate equivalents.” Evidence of other CBAs introduced by Jones showed that when parties intend to increase contributions for overtime, they say so expressly (e.g., “contribution rate shall be likewise increased to time-and-one-half or double time”).

No binding by predecessor’s practice or the auditor’s interpretation. Jones assumed the CBA terms, not “unwritten past practices.” And the record shows Jones repeatedly objected to the auditor’s “hours paid = hours × overtime multiplier” view; thus, the Emor principle (assent by silence) does not apply.

3) The Dissent’s Counter-Analysis

• Ambiguity threshold met: Judge Krause emphasizes that our task is to decide whether “hours paid” can reasonably bear more than one meaning, not to pick the best reading. Given the CBAs’ repeated use of time-based descriptors (“time and one-half shall be paid”) and the distinct phrases “hours worked” vs. “hours paid,” the dissent sees at least a plausible reading that “hours paid” could mean base-rate-equivalent hours (e.g., 8 OT hours at 1.5x = 12 “hours paid”).
• Extrinsic evidence supports Union’s interpretation: The District Court credited witnesses with broad industry experience and found that the predecessor employer treated overtime as inflating “hours paid.” That finding was not clearly erroneous, and courts should defer to the trial judge’s credibility determinations (Anderson v. Bessemer City).
• Analogy to Fourth Circuit: U.S. Foodservice recognized the reasonableness of construing “all hours paid” to include both straight-time and overtime-compensated hours for contribution purposes.
• Interest calculations: The dissent would remand for recalculation: (a) pre-judgment interest under ERISA § 1132(g)(2) must be a “rate provided under the plan,” raising questions whether a collection policy qualifies as a plan document; and (b) post-judgment interest is governed by 28 U.S.C. § 1961, not a plan’s interest rate.

4) Impact and Practical Implications

For employers and funds in the Third Circuit. Although designated non-precedential, this decision is a detailed, persuasive exposition likely to influence district courts within the Circuit. Unless CBAs expressly state that contribution hours should be increased by overtime multipliers, “hours paid” will typically be read to mean the raw number of compensated hours, regardless of rate.

• Drafting imperative: If the parties intend contributions to escalate with premium pay, say so clearly. Sample clause: “When an employee is paid at time-and-one-half or double time, the number of contributory ‘hours paid’ for that work shall be increased proportionally to 1.5x or 2.0x.”
• Audit practice: Auditors should not assume that “hours paid” includes overtime multipliers absent explicit CBA language. Instead, reconcile reported contribution hours to compensated hours (worked and paid leave) and separately track premium rates for wage compliance, not contribution counts.
• Bargaining strategy: Unions seeking enhanced contributions for overtime must negotiate text that ties contribution hours or contribution rates to premium pay. Employers should insist on clarity and include anti-pyramiding language for contributions if desired.
• Litigation posture: Defendants can rely on plain-meaning arguments, dictionary definitions, holistic reading, and consistent-usage principles to resist extrinsic evidence where the text is clear. Plaintiffs asserting industry custom should marshal robust, objective evidence of widespread, uniform usage in comparable CBAs.
• Successor liability/past practice: Assumption of a prior CBA’s terms does not import predecessor’s implementation or unwritten practices. Express disclaimers of “past practices” help preserve the successor’s textual interpretation.
• Potential inter-circuit tension: The dissent leans on a Fourth Circuit perspective that is more hospitable to the Union’s reading. Parties litigating outside the Third Circuit should check local precedent and be prepared to distinguish or align with U.S. Foodservice.
• Remedial issues left open: The majority leaves pre- and post-judgment interest issues for another day, but the dissent’s analysis signals future disputes about what qualifies as a “plan document” setting the ERISA § 1132(g)(2) interest rate and confirms that post-judgment interest remains governed by § 1961.

Complex Concepts Simplified

• “Hours paid” vs. “hours worked”:
  • “Hours worked” = time actually on the job.
  • “Hours paid” = all compensated hours, including paid leave (holidays, bereavement, jury duty), whether worked or not.
  • Under this opinion, “hours paid” does not convert overtime hours into a larger number of hours; it simply counts the hours compensated.
• Overtime and “premium” pay: “Time and a half” or “double time” changes the rate of pay for the hour, not the quantity of hours. One hour paid at 1.5x is still one hour for contribution-hour counting, unless the CBA says otherwise.
• Pyramiding: Prevents stacking multiple premiums for the same hour (e.g., overtime and holiday). The presence of pyramiding language reinforces that premiums are rate modifiers, not hour multipliers.
• Ambiguity and extrinsic evidence: Courts first apply interpretive tools (textual context, dictionary definitions, consistent usage). Only if language remains reasonably susceptible to two meanings may they consider bargaining history, practices, and industry custom to determine intent. Extrinsic evidence cannot fabricate ambiguity where the text is clear.
• Assumption of CBAs vs. past practice: A successor can adopt a predecessor’s CBA without adopting how the predecessor happened to administer it, especially if the successor expressly disclaims unwritten practices.
• ERISA interest:
  • Pre-judgment interest: Under § 1132(g)(2), use the rate “provided under the plan,” raising questions about which documents count as “plan documents” and whether a board-adopted collection policy qualifies.
  • Post-judgment interest: Generally governed by 28 U.S.C. § 1961 (Treasury yield), not plan rates—an issue the majority did not reach, but the dissent analyzes.

Key Takeaways and Drafting Tips

• Default rule in the Third Circuit: Absent specific language, “hours paid” means the count of compensated hours; overtime premiums do not inflate contribution hours.
• Say it explicitly if you want overtime-driven contributions: Add language such as “the number of ‘hours paid’ for contribution purposes shall be increased proportionally to the premium rate” or, alternatively, “contribution rates shall be increased to match premium pay.”
• Keep usage consistent: Use “hours paid” for counting compensated time (worked and unworked). If you wish to tie contributions to pay rates, refer explicitly to “premium rates” in the contribution clause.
• Integrate plan remedy terms into plan documents: If funds want a specific pre-judgment interest rate, ensure it appears in a governing plan document (trust agreement or incorporated plan rule) and that the CBA binds employers to that document—not merely to “reasonable rules” in the abstract.
• Successor transitions: When assuming a CBA, include clear statements that you assume only written terms and disclaim unwritten past practices; continue objecting promptly to contrary interpretations.

Conclusion

The Third Circuit’s opinion draws a clear textual boundary: where a CBA pegs contributions to “hours paid,” that phrase refers to the number of compensated hours, not to an overtime-inflated tally. Overtime and holiday premiums change the rate of pay, not the count of contribution hours—unless the agreement expressly provides otherwise. By insisting on a plain-meaning, whole-instrument reading and resisting the use of extrinsic evidence to manufacture ambiguity, the court privileges careful drafting and predictable administration of multiemployer plans under ERISA § 515.

While the decision is non-precedential, its reasoning is robust and offers a practical roadmap for parties and courts. The dissent underscores that ambiguity assessments can differ and flags unresolved remedial issues—especially the proper sources and limits for pre- and post-judgment interest. Going forward, parties should negotiate with precision: if premium-pay-driven contributions are intended, write them in; if not, “hours paid” will be read as hours, not as a multiplier.