"Hours Paid" Means Compensated Hours, Not Overtime Multipliers: The Third Circuit’s Textual Clarification for ERISA Multiemployer Contributions

Court: U.S. Court of Appeals for the Third Circuit (Not Precedential)

Date: September 19, 2025

Case: Board of Trustees Plumbers and Pipefitters Local Union No. 74 Funds v. Jones Lang LaSalle Americas Inc., Nos. 23-2202 & 24-2291

Panel: Judges Krause, Bibas, and Montgomery-Reeves (opinion by Judge Montgomery-Reeves; Judge Krause dissenting)

Introduction

This appeal asked a deceptively simple question with wide payroll and bargaining implications: when a collective bargaining agreement (CBA) ties multiemployer plan contributions to “hours paid,” must an employer increase contributions to reflect overtime premiums (e.g., time-and-a-half or double-time), effectively treating one hour of overtime as more than one “hour paid”? The District of Delaware said yes—finding ambiguity and, after a bench trial, accepting the union funds’ interpretation that one overtime hour at time-and-a-half equals 1.5 “hours paid.”

The Third Circuit reversed. Reading the CBAs as a whole and applying ordinary contract principles, it held that “hours paid” unambiguously means the number of hours for which an employee is compensated—regardless of the wage rate applied to those hours. Overtime changes the rate of pay, not the number of “hours paid.” Because the employer, Jones Lang LaSalle (JLL), contributed on every compensated hour at the applicable contribution rate without multiplying those hours by the overtime premium, it did not violate ERISA § 515. The Court also rejected three alternative bases for liability advanced by the funds.

A detailed dissent by Judge Krause would have affirmed, finding “hours paid” ambiguous, crediting the District Court’s extrinsic evidence and credibility determinations, and—had the Court reached the issue—recalibrating pre- and post-judgment interest awards under ERISA and 28 U.S.C. § 1961.

Summary of the Opinion

Holding: Under the CBAs at issue, “hours paid” denotes the number of compensated hours, not a figure inflated by overtime multipliers. Overtime is a premium wage rate; it does not increase the number of “hours paid” for purposes of contributions to multiemployer plans.
Disposition: Reversal of the District Court’s judgment imposing ERISA liability on JLL for allegedly deficient contributions. The Court dismissed an earlier appeal as premature (damages unresolved) and exercised jurisdiction over the later, final judgment.
Textual reasoning: The CBAs’ overtime and holiday provisions—and especially their anti-“pyramiding” clause—confirm that premium pay adjusts the wage rate, not the count of hours. The CBAs’ use of both “hours worked” and “hours paid” serves to capture unworked but compensated time (e.g., bereavement, paid holidays), not to convert overtime hours into additional “hours paid.”
Extrinsic evidence: Because the Court found the CBAs unambiguous, it refused to rely on extrinsic evidence to create ambiguity or to rewrite the contract.
Alternative grounds rejected:
- Successor liability via assumed practice: JLL assumed the CBA’s terms, not any “unwritten past practices.” Prior contributions by a predecessor could not override the CBA’s plain text.
- Notice of the funds’ interpretation: A party that objects is not bound by the other side’s contract interpretation; JLL repeatedly and clearly objected to the auditor’s “overtime equals additional hours paid” reading.
Not reached: The majority did not address pre- or post-judgment interest under ERISA; the dissent flagged significant questions for future cases.

Background and Procedural Posture

JLL was party to materially identical CBAs covering employees at properties for Honeywell and J.P. Morgan Chase (the latter initially negotiated by a predecessor, Cushman & Wakefield). Each CBA obligated contributions to several multiemployer funds based on “hours paid.” The CBAs included detailed compensation provisions for overtime, holiday work, bereavement leave, jury duty, paid time off, and unworked holidays.

In 2013 and again in 2018, a union auditor asserted that “hours paid” required converting overtime hours into a higher count of contribution hours (e.g., 8 overtime hours = 12 “hours paid”). JLL objected each time, took the position that it reported all compensated hours at the standard contribution rate, and continued contributing accordingly. The funds sued under ERISA § 515 (29 U.S.C. § 1145), claiming underpayment.

Following a bench trial, the District Court found “hours paid” ambiguous and, based on extrinsic evidence, adopted the funds’ interpretation that overtime multipliers increase the contribution-hour count. It entered judgment for the funds. JLL appealed; the Third Circuit dismissed the first appeal as premature (damages were unresolved) but exercised jurisdiction over the later final judgment, ultimately reversing on the merits.

Analysis

Precedents and Authorities Cited

Ordinary contract principles for CBAs: The Court reiterated that CBAs are interpreted under ordinary contract law (CNH Industrial N.V. v. Reese; M&G Polymers USA, LLC v. Tackett). When terms are unambiguous, they are enforced as written, a principle the Supreme Court has deemed especially apt in ERISA contexts (Heimeschoff v. Hartford Life & Accident Ins. Co.).
Whole-text reading and consistency: The Court applied the familiar maxims to read the CBAs as a whole and to give terms consistent meaning throughout (Williston on Contracts; Mastro Plastics Corp. v. NLRB; Engelhard Corp. v. NLRB).
Dictionaries for undefined terms: Guided by Lorillard Tobacco Co. v. American Legacy Foundation, the Court consulted contemporaneous dictionaries to confirm “premium” and “time-and-a-half” denote wage rates, not hours, and that “overtime” is the extra wages paid for excess hours worked (e.g., Black’s Law Dictionary, Oxford English Dictionary).
Ambiguity and extrinsic evidence: Ambiguity exists only if a term remains reasonably susceptible to at least two conflicting, reasonable meanings after standard interpretive tools are applied (Reese). Extrinsic evidence may not be used to manufacture ambiguity (International Union, UAW v. Skinner Engine Co.). The Court reaffirmed that courts can consider bargaining history, structure, and conduct to interpret ambiguous terms (Teamsters v. Rolls-Royce), but not to override unambiguous text.
Contract finality and appeals: A liability finding without resolved, disputed damages is ordinarily not a final decision (Vitale v. Latrobe Area Hosp.; Marshak v. Treadwell). Hence, the Court dismissed the first appeal as interlocutory and reached the second after final judgment.
Assent to another’s interpretation: A party is bound by the other’s contractual interpretation only if it enters the contract “willingly and without protest” with knowledge of that interpretation (Emor, Inc. v. Cyprus Mines Corp.). The record showed JLL consistently objected to the funds’ interpretation.

The Court’s Legal Reasoning

1) “Hours paid” means compensated hours; overtime is a rate, not a multiplier of hours. The CBAs’ overtime provisions say employees are paid “time and one-half” for hours over 40, and “double time and one half” for holiday work—terminology that plainly describes a wage rate premium, not a transformation of an hour into 1.5 or 2.5 “hours paid.” The anti-“pyramiding” clause—prohibiting stacking multiple premiums for the same hour and requiring payment of the highest premium—further anchors “overtime” and “holiday” as rate adjustments. Dictionary definitions for “premium,” “time and a half,” and “overtime” align: premiums are sums added above normal rates; time-and-a-half is a multiple of the usual rate; overtime is extra wages for extra hours worked.

2) Why the CBAs use both “hours worked” and “hours paid.” The dual terms serve to capture unworked but compensated time—e.g., bereavement leave or an unworked paid holiday—to ensure contributions are owed on compensated hours even when not worked. In this context, “hours paid” plainly refers to compensated time and cannot reasonably be repurposed as a “multiplier” for certain worked hours. A consistent reading across the CBAs requires the same meaning of “hours paid” in all provisions.

3) No ambiguity; extrinsic evidence cannot create one. The funds contended that disagreement alone signals ambiguity and proffered post hoc evidence (including audit positions) of the meaning of “hours paid.” The Court rejected that premise: disputes do not themselves create ambiguity, and extrinsic evidence cannot manufacture it. The funds also failed to establish an industry custom that would alter the ordinary meaning of the disputed terms. Indeed, the only cross-CBA evidence in the record supported JLL’s position: when parties intend to increase contributions in lockstep with premium wages, they say so expressly (e.g., a clause stating contributions rise to time-and-a-half or double-time when the wage rate does).

4) No assumption of “unwritten past practices.” The District Court had treated the predecessor’s method of contributing (which included overtime multipliers) as binding on JLL. The Third Circuit disagreed. JLL expressly assumed the terms of the prior CBA, not any unwritten practices. The plain CBA terms controlled, and they did not require increasing contribution hours based on overtime premiums.

5) Knowledge without assent does not bind. The District Court bound JLL to the funds’ interpretation because JLL knew of the auditor’s view from 2013 onward. The Third Circuit found clear error. Under Emor, assent requires entering the contract “willingly and without protest” while aware of the other party’s interpretation. Here, the undisputed record showed JLL objected—repeatedly and consistently—and never paid per the auditor’s formula.

The Dissent’s Key Points

Ambiguity exists. Judge Krause argued that “hours paid” is itself ambiguous. One reasonable reading treats “hours paid” as the tally of compensated hours (JLL’s view); another treats it as the number of hours credited at base rate, such that an hour paid at 1.5x equates to 1.5 “hours paid.” This alternative gives independent work to both “hours worked” and “hours paid.”
Deference to the trial court’s factual findings. Once ambiguity is found, meaning is a factual issue guided by bargaining history, structure, and conduct. The District Court credited the funds’ witnesses (including their experience across many funds and CBAs), noted the predecessor’s practice, and found that JLL undertook per-employee due diligence and knew of (yet, in the dissent’s view, effectively assumed) the funds’ interpretation. Those findings, in the dissent’s view, were not clearly erroneous and warranted affirmance.
Analogous support. The dissent referenced a Fourth Circuit decision noting that CBA references to “all hours worked” and “all hours paid” can reasonably support an interpretation that contributions are due regardless of whether the hour was paid at straight-time or overtime rates (U.S. Foodservice, Inc. v. Truck Drivers & Helpers Local Union No. 355 Health & Welfare Fund).
Interest calculations for future guidance. Although the majority did not reach remedies, the dissent highlighted two issues:
- Pre-judgment interest under ERISA § 1132(g)(2): Courts should confirm that any “rate provided under the plan” is actually set by a plan document (e.g., trust agreement or summary plan description), not a standalone collection policy, and that any unilateral rate is “essential” to fund administration.
- Post-judgment interest: Governed by 28 U.S.C. § 1961 (Treasury rate) rather than any ERISA plan rate; § 1132(g)(2) speaks to the components of the pre-judgment award, not post-judgment interest.

Practical Impact

Although designated “not precedential,” the decision offers persuasive and detailed guidance for parties drafting, administering, and litigating CBAs and ERISA § 515 contribution suits in the Third Circuit:

For employers:
- If a CBA ties contributions to “hours paid,” you generally count each compensated hour once at the applicable contribution rate; do not multiply hours to mirror wage premiums unless the CBA expressly says so.
- Maintain clear, contemporaneous objections to audits or interpretations you dispute. Knowledge alone does not equal assent; the record of protest matters.
- When assuming another employer’s CBA, expressly disclaim unwritten practices. The assumption of “terms” does not import prior contribution methods not embedded in the contract.
For unions and fund trustees:
- If the parties intend contributions to scale with premium wage rates (e.g., time-and-a-half equals 1.5 “hours paid”), spell it out. Cross-industry examples introduced by JLL showed just such clauses are commonplace when desired.
- To rely on industry custom, build a robust, objective record of that custom—not just “on the ground” impressions—demonstrating the usage of “hours paid” across comparable CBAs.
- On remedies, ensure that interest rates appear in plan documents recognized under ERISA, and be prepared that post-judgment interest likely follows § 1961.
For both sides’ counsel and drafters:
- Precision in wage and contribution provisions avoids costly litigation. If contributions should track premium rates, include explicit multiplier language.
- Remember that courts will read the CBA holistically: provisions on paid leave and holiday pay can illuminate what the parties meant by “hours paid.”
- In § 515 suits, expect courts to enforce clear text and to be reluctant to consider extrinsic evidence unless ambiguity persists after applying standard interpretive tools.

Complex Concepts, Simplified

“Hours worked” vs. “hours paid”: “Hours worked” are the hours actually performed on the job. “Hours paid” are the hours for which the employee is compensated—this includes worked hours plus paid leave (e.g., bereavement, unworked holidays). In this decision, “hours paid” does not convert one overtime hour into 1.5 “hours paid.”
Overtime and premiums: Overtime (e.g., time-and-a-half) and holiday premiums (e.g., double-time-and-a-half) are rates of pay. They increase the wage applied to an hour, not the number of hours themselves.
No pyramiding: A common CBA clause prevents “stacking” multiple premiums for the same hour: you pay the highest applicable premium, not both overtime and holiday premiums on the same hour.
Ambiguity and extrinsic evidence: Courts first apply standard interpretive tools (whole-text reading, dictionaries, general contract principles). Only if the term remains reasonably susceptible to two meanings will courts consider bargaining history and practice to resolve the ambiguity. Extrinsic evidence cannot create ambiguity if the text is clear.
ERISA § 515 suits: These enforce the employer’s written obligation to contribute under the CBA and plan documents. Courts tend to enforce the written terms as written.
Interest on delinquent contributions: Pre-judgment interest generally follows “the rate provided under the plan,” if the plan documents actually supply one; post-judgment interest usually follows the federal judgment rate in 28 U.S.C. § 1961.

Why the Court Rejected the Funds’ Three Alternative Theories

1) “Intent” evidence cannot trump clear text: The funds urged the Court to respect the trial court’s extrinsic findings on the parties’ intentions. The Third Circuit reiterated that such evidence cannot create ambiguity or override an unambiguous CBA.
2) Successor’s assumption of “terms,” not “practices”: JLL assumed the written CBA terms but expressly disclaimed unwritten practices. The predecessor’s method of increasing contribution hours for overtime could not bind JLL absent textual support.
3) Knowledge does not equal assent when objections are preserved: The Emor rule binds a party to the other’s interpretation only if it enters the contract “willingly and without protest” while knowing that interpretation. JLL consistently protested the auditor’s method; the District Court’s contrary conclusion was clear error.

Unresolved but Important Remedial Questions (Highlighted by the Dissent)

Is a fund’s collection policy a “plan document” that can set the rate under ERISA § 1132(g)(2)? Several circuits distinguish between plan documents (trust agreements; summary plan descriptions) and other materials; the dissent would require the interest rate to be grounded in a bona fide plan document or validly adopted rules essential to fund administration.
What rate governs post-judgment interest? The dissent would apply 28 U.S.C. § 1961’s federal judgment rate, not a plan’s higher rate, to post-judgment interest on ERISA § 515 awards.

Conclusion

This decision delivers a clear textual answer to a recurring payroll and contributions question: when a CBA pegs contributions to “hours paid,” premium wage rates for overtime and holidays do not convert one hour into more than one “hour paid.” The CBAs at issue made overtime a matter of rate, not hours; “hours paid” captured compensated time (including paid leave), not wage multipliers. The Third Circuit reversed the District Court’s contrary judgment and, in doing so, reinforced core contract-interpretation rules in ERISA contribution litigation: read the agreement as a whole; enforce unambiguous terms as written; and do not use extrinsic evidence to create ambiguity.

For bargaining parties and fund administrators, the opinion underscores a drafting imperative: if the intent is for contributions to scale with premium wages, say so explicitly. For litigants, it offers a roadmap for textual arguments under § 515, as well as a caution that knowledge of an opposing interpretation does not bind a party that consistently objects. Finally, while the majority did not reach remedies, the dissent’s analysis flags issues that are likely to recur—what counts as a “plan” rate under § 1132(g)(2), and whether post-judgment interest must follow § 1961—inviting careful attention to plan governance documents and remedial frameworks in future ERISA cases.