26 U.S.C. § 503 — Requirements for exemption

Page 1683 TITLE 26—INTERNAL REVENUE CODE § 503 Stat. 2095, provided that: ‘‘An organization which (without regard to the amendments made by this sec- tion [amending this section and sections 170, 2055, and 2522 of this title]) is an organization described in sec- tion 170(c)(2)(B), 501(c)(3), 2055(a)(2), or 2522(a)(2) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall not be treated as an organization not so described as a result of the amendments made by this section.’’ TAX EXEMPTION FOR CERTAIN PUERTO RICAN PENSION, ETC., PLANS Pub. L. 93–406, title II, § 1022(i), Sept. 2, 1974, 88 Stat. 942, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(1) GENERAL RULE.—Effective for taxable years be- ginning after December 31, 1973, for purposes of section 501(a) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to exemption from tax), any trust forming part of a pension, profit-sharing, or stock bonus plan all of the participants of which are residents of the Commonwealth of Puerto Rico shall be treated as an organization described in section 401(a) of such Code if such trust— ‘‘(A) forms part of a pension, profit-sharing, or stock bonus plan, and ‘‘(B) is exempt from income tax under the laws of the Commonwealth of Puerto Rico. ‘‘(2) ELECTION TO HAVE PROVISIONS OF, AND AMEND- MENTS MADE BY, TITLE II OF THIS ACT APPLY.— ‘‘(A) If the administrator of a pension, profit-shar- ing, or stock bonus plan which is created or organized in Puerto Rico elects, at such time and in such man- ner as the Secretary of the Treasury may require, to have the provisions of this paragraph apply, for plan years beginning after the date of election any trust forming a part of such plan shall be treated as a trust created or organized in the United States for pur- poses of section 401(a) of the Internal Revenue Code of 1986. ‘‘(B) An election under subparagraph (A), once made, is irrevocable. ‘‘(C) This paragraph applies to plan years beginning after the date of enactment of this Act [Sept. 2, 1974] ‘‘(D) The source of any distributions made under a plan which makes an election under this paragraph to participants and beneficiaries residing outside of the United States shall be determined, for purposes of subchapter N of chapter 1 of the Internal Revenue Code of 1986 by the Secretary of the Treasury in ac- cordance with regulations prescribed by him. For purposes of this subparagraph the United States means the United States as defined in section 7701(a)(9) of the Internal Revenue Code of 1986.’’ EXCHANGES FOR SALE OF POULTRY Pub. L. 89–44, title VIII, § 811, June 21, 1965, 79 Stat. 169, provided that certain corporations, associations, or organizations organized and operated exclusively for the purpose of providing an exchange for the sale of poultry growers of a particular locality shall be treated for purposes of this title as an exempt organization and that such exemption shall apply to taxable years begin- ning after Dec. 31, 1953, and ending after Aug. 16, 1954, which begin before Jan. 1, 1966. § 502. Feeder organizations (a) General rule An organization operated for the primary pur- pose of carrying on a trade or business for profit shall not be exempt from taxation under section 501 on the ground that all of its profits are pay- able to one or more organizations exempt from taxation under section 501. (b) Special rule For purposes of this section, the term ‘‘trade or business’’ shall not include— (1) the deriving of rents which would be ex- cluded under section 512(b)(3), if section 512 ap- plied to the organization, (2) any trade or business in which substan- tially all the work in carrying on such trade or business is performed for the organization without compensation, or (3) any trade or business which is the selling of merchandise, substantially all of which has been received by the organization as gifts or contributions. (Aug. 16, 1954, ch. 736, 68A Stat. 166; Pub. L. 91–172, title I, § 121(b)(7), Dec. 30, 1969, 83 Stat. 542.) Editorial Notes AMENDMENTS 1969—Pub. L. 91–172 redesignated first sentence of ex- isting provisions as subsec. (a), and substantial portion of second sentence as subsec. (b)(1), and, in subsec. (b)(1) as so redesignated, inserted reference to section 512 of this title, and added pars. (2) and (3). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1969 AMENDMENT Amendment by Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title. § 503. Requirements for exemption (a) Denial of exemption to organizations engaged in prohibited transactions (1) General rule An organization described in paragraph (17) or (18) of section 501(c), or described in section 401(a) and referred to in section 4975(g) (2) or (3), shall not be exempt from taxation under section 501(a) if it has engaged in a prohibited transaction. (2) Taxable years affected An organization described in paragraph (1) shall be denied exemption from taxation under section 501(a) by reason of paragraph (1) only for taxable years after the taxable year during which it is notified by the Secretary that it has engaged in a prohibited transaction, un- less such organization entered into such pro- hibited transaction with the purpose of divert- ing corpus or income of the organization from its exempt purposes, and such transaction in- volved a substantial part of the corpus or in- come of such organization. (b) Prohibited transactions For purposes of this section, the term ‘‘prohib- ited transaction’’ means any transaction in which an organization subject to the provisions of this section— (1) lends any part of its income or corpus, without the receipt of adequate security and a reasonable rate of interest, to; (2) pays any compensation, in excess of a reasonable allowance for salaries or other compensation for personal services actually rendered, to; (3) makes any part of its services available on a preferential basis to; Page 1684 TITLE 26—INTERNAL REVENUE CODE § 503 (4) makes any substantial purchase of secu- rities or any other property, for more than adequate consideration in money or money’s worth, from; (5) sells any substantial part of its securities or other property, for less than an adequate consideration in money or money’s worth, to; or (6) engages in any other transaction which results in a substantial diversion of its income or corpus to; the creator of such organization (if a trust); a person who has made a substantial contribution to such organization; a member of the family (as defined in section 267(c)(4)) of an individual who is the creator of such trust or who has made a substantial contribution to such organization; or a corporation controlled by such creator or person through the ownership, directly or indi- rectly, of 50 percent or more of the total com- bined voting power of all classes of stock enti- tled to vote or 50 percent or more of the total value of shares of all classes of stock of the cor- poration. (c) Future status of organizations denied exemp- tion Any organization described in subsection (a)(1) which is denied exemption under section 501(a) by reason of subsection (a) of this section, with respect to any taxable year following the tax- able year in which notice of denial of exemption was received, may, under regulations prescribed by the Secretary, file claim for exemption, and if the Secretary, pursuant to such regulations, is satisfied that such organization will not know- ingly again engage in a prohibited transaction, such organization shall be exempt with respect to taxable years after the year in which such claim is filed. [(d) Repealed. Pub. L. 101–508, title XI, § 11801(a)(22), Nov. 5, 1990, 104 Stat. 1388–521] (e) Special rules For purposes of subsection (b)(1), a bond, de- benture, note, or certificate or other evidence of indebtedness (hereinafter in this subsection re- ferred to as ‘‘obligation’’) shall not be treated as a loan made without the receipt of adequate se- curity if— (1) such obligation is acquired— (A) on the market, either (i) at the price of the obligation prevailing on a national secu- rities exchange which is registered with the Securities and Exchange Commission, or (ii) if the obligation is not traded on such a na- tional securities exchange, at a price not less favorable to the trust than the offering price for the obligation as established by current bid and asked prices quoted by per- sons independent of the issuer; (B) from an underwriter, at a price (i) not in excess of the public offering price for the obligation as set forth in a prospectus or of- fering circular filed with the Securities and Exchange Commission, and (ii) at which a substantial portion of the same issue is ac- quired by persons independent of the issuer; or (C) directly from the issuer, at a price not less favorable to the trust than the price paid currently for a substantial portion of the same issue by persons independent of the issuer; (2) immediately following acquisition of such obligation— (A) not more than 25 percent of the aggre- gate amount of obligations issued in such issue and outstanding at the time of acquisi- tion is held by the trust, and (B) at least 50 percent of the aggregate amount referred to in subparagraph (A) is held by persons independent of the issuer; and (3) immediately following acquisition of the obligation, not more than 25 percent of the as- sets of the trust is invested in obligations of persons described in subsection (b). (f) Loans with respect to which employers are prohibited from pledging certain assets Subsection (b)(1) shall not apply to a loan made by a trust described in section 401(a) to the employer (or to a renewal of such a loan or, if the loan is repayable upon demand, to a con- tinuation of such a loan) if the loan bears a rea- sonable rate of interest, and if (in the case of a making or renewal)— (1) the employer is prohibited (at the time of such making or renewal) by any law of the United States or regulation thereunder from directly or indirectly pledging, as security for such a loan, a particular class or classes of his assets the value of which (at such time) rep- resents more than one-half of the value of all his assets; (2) the making or renewal, as the case may be, is approved in writing as an investment which is consistent with the exempt purposes of the trust by a trustee who is independent of the employer, and no other such trustee had previously refused to give such written ap- proval; and (3) immediately following the making or re- newal, as the case may be, the aggregate amount loaned by the trust to the employer, without the receipt of adequate security, does not exceed 25 percent of the value of all the as- sets of the trust. For purposes of paragraph (2), the term ‘‘trust- ee’’ means, with respect to any trust for which there is more than one trustee who is inde- pendent of the employer, a majority of such independent trustees. For purposes of paragraph (3), the determination as to whether any amount loaned by the trust to the employer is loaned without the receipt of adequate security shall be made without regard to subsection (e). (Aug. 16, 1954, ch. 736, 68A Stat. 166; Pub. L. 85–866, title I, § 30(a), (b), Sept. 2, 1958, 72 Stat. 1629, 1630; Pub. L. 86–667, § 2, July 14, 1960, 74 Stat. 535; Pub. L. 87–792, § 6, Oct. 10, 1962, 76 Stat. 827; Pub. L. 91–172, title I, §§ 101(j)(7)–(14), 121(b)(6)(B), Dec. 30, 1969, 83 Stat. 527, 542; Pub. L. 93–406, title II, § 2003(b), Sept. 2, 1974, 88 Stat. 978; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 101–508, title XI, § 11801(a)(22), Nov. 5, 1990, 104 Stat. 1388–521; Pub. L. 113–295, div. A, title II, § 221(a)(63), Dec. 19, 2014, 128 Stat. 4048.) Page 1685 TITLE 26—INTERNAL REVENUE CODE § 503 Editorial Notes AMENDMENTS 2014—Subsec. (a)(1). Pub. L. 113–295, § 221(a)(63)(A), amended par. (1) generally. Prior to amendment, text read as follows: ‘‘(A) An organization described in section 501(c)(17) shall not be exempt from taxation under section 501(a) if it has engaged in a prohibited transaction after De- cember 31, 1959. ‘‘(B) An organization described in section 401(a) which is referred to in section 4975(g) (2) or (3) shall not be ex- empt from taxation under section 501(a) if it has en- gaged in a prohibited transaction after March 1, 1954. ‘‘(C) An organization described in section 501(c)(18) shall not be exempt from taxation under section 501(a) if it has engaged in a prohibited transaction after De- cember 31, 1969.’’ Subsec. (a)(2). Pub. L. 113–295, § 221(a)(63)(B), which di- rected amendment of par. (2) by substituting ‘‘described in paragraph (1)’’ for ‘‘described in section 501(c)(17) or (18) or paragraph (a)(1)(B)’’, was executed by making the substitution for ‘‘described in section 501(c)(17) or (18) or paragraph (1)(B)’’ to reflect the probable intent of Congress. Subsec. (c). Pub. L. 113–295, § 221(a)(63)(C), substituted ‘‘described in subsection (a)(1)’’ for ‘‘described in sec- tion 501(c)(17) or (18) or subsection (a)(1)(B)’’. 1990—Subsec. (d). Pub. L. 101–508 struck out subsec. (d) ‘‘Special rule for loans’’ which read as follows: ‘‘For purposes of the application of subsection (b)(1), in the case of a loan by a trust described in section 401(a), the following rules shall apply with respect to a loan made before March 1, 1954, which would constitute a prohib- ited transaction if made on or after March 1, 1954: ‘‘(1) If any part of the loan is repayable prior to De- cember 31, 1955, the renewal of such part of the loan for a period not extending beyond December 31, 1955, on the same terms, shall not be considered a prohib- ited transaction. ‘‘(2) If the loan is repayable on demand, the con- tinuation of the loan without the receipt of adequate security and a reasonable rate of interest beyond De- cember 31, 1955, shall be considered a prohibited transaction.’’ 1976—Subsecs. (a)(2), (c). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. 1974—Subsec. (a)(1)(A). Pub. L. 93–406, § 2003(b)(1), sub- stituted ‘‘section 501(c)(17)’’ for ‘‘section 501(c)(17) or (18)’’. Subsec. (a)(1)(B). Pub. L. 93–406, § 2003(b)(2), inserted ‘‘which is referred to in section 4975(g)(2) or (3)’’. Subsec. (a)(2). Pub. L. 93–406, § 2003(b)(3), substituted ‘‘or paragraph (1)(B)’’ for ‘‘or section 401’’. Subsec. (c). Pub. L. 93–406, § 2003(b)(4), substituted ‘‘or subsection (a)(1)(B)’’ for ‘‘or section 401’’. Subsec. (g). Pub. L. 93–406, § 2003(b)(5), struck out sub- sec. (g) which covered trusts benefiting certain owner- employees. 1969—Subsec. (a)(1)(A). Pub. L. 91–172, §§ 101(j)(7), 121(b)(6)(B)(ii), redesignated subpar. (B) as (A) and in- serted reference to section 501(c)(18). Former subpar. (A), referring to organizations described in section 501(c)(3) and to prohibited transactions engaged in after July 1, 1950, was struck out. Subsec. (a)(1)(B). Pub. L. 91–172, § 101(j)(7), redesig- nated subpar. (C) as (B). Former subpar. (B), referring to organizations described in section 501(c)(17) was amended by addition of a reference to section 501(c)(18), and redesignated as subpar. (A). Subsec. (a)(1)(C). Pub. L. 91–172, §§ 101(j)(7), 121(b)(6)(B)(i), added subpar. (C). Former subpar. (C), dealing with organizations described in section 401(a) and with prohibited transactions engaged in after Mar. 1, 1954, was redesignated as subpar. (B). Subsec. (a)(2). Pub. L. 91–172, §§ 101(j)(8), 121(b)(6)(B)(ii), struck out reference to organizations described in section 501(c)(3), and inserted references to organizations described in section 501(c)(18). Subsec. (b). Pub. L. 91–172, § 101(j)(14), redesignated subsec. (c) as (b). Former subsec. (b), setting out the or- ganizations to which section applied, was struck out. Subsec. (c). Pub. L. 91–172, §§ 101(j)(9), (14), 121(b)(6)(B)(ii), redesignated subsec. (d) as (c), struck out reference to organizations described in section 501(c)(3), and inserted reference to organizations de- scribed in section 501(c)(17). Former subsec. (c) redesig- nated (b). Subsec. (d). Pub. L. 91–172, § 101(j)(10), (14), redesig- nated subsec. (g) as (d) and substituted ‘‘subsection (b)(1)’’ for ‘‘subsection (c)(1).’’ Former subsec. (d) redes- ignated (c). Subsec. (e). Pub. L. 91–172, § 101(j)(11), (14), redesig- nated subsec. (h) as (e), modified heading to read: ‘‘Spe- cial rules’’, substituted ‘‘subsection (b)(1)’’ for ‘‘sub- section (c)(1)’’ in text preceding par. (1) and in par. (3), and in text preceding par. (1) struck out ‘‘acquired by a trust described in section 401(a) or section 501(c)(17)’’. Former subsec. (e), covering the disallowance of certain charitable deductions, was struck out. Subsec. (f). Pub. L. 91–172, § 101(j)(12), (14), redesig- nated subsec. (i) as (f) and substituted ‘‘Subsection (b)(1)’’ for ‘‘Subsection (c)(1)’’ and ‘‘subsection (e)’’ for ‘‘subsection (h)’’. Former subsec. (f), defining ‘‘gift or bequest’’, was struck out. Subsec. (g). Pub. L. 91–172, § 101(j)(13), (14), redesig- nated subsec. (j) as (g) and substituted ‘‘subsection (b)’’ for ‘‘subsection (c)’’ in par. (1). Former subsec. (g) re- designated (d). Subsecs. (h) to (j). Pub. L. 91–172, § 101(j)(14), redesig- nated subsecs. (h), (i), and (j) as (e), (f), and (g), respec- tively. Former subsecs. (e) and (f) were struck out and former subsec. (g) was redesignated (d). 1962—Subsec. (j). Pub. L. 87–792 added subsec. (j). 1960—Subsec. (a)(1). Pub. L. 86–667, § 2(a)(1), denied ex- emption to an organization described in section 501(c)(17) if it has engaged in a prohibited transaction after Dec. 31, 1959. Subsecs. (a)(2), (b), (d). Pub. L. 86–667, § 2(a)(2), (b), (c), included organizations described in section 501(c)(17). Subsec. (h). Pub. L. 86–667, § 2(d), included trusts de- scribed in section 501(c)(17). 1958—Subsec. (h). Pub. L. 85–866, § 30(a), added subsec. (h). Subsec. (i). Pub. L. 85–866, § 30(b), added subsec. (i). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1974 AMENDMENT Amendment by Pub. L. 93–406 effective Jan. 1, 1975, but with provision for an election to be exercised by an organization so as to constitute a savings clause with reference to the amendment, see section 2003(c) of Pub. L. 93–406, set out as an Effective Date; Savings Provi- sions note under section 4975 of this title. EFFECTIVE DATE OF 1969 AMENDMENT Amendment by section 101(j)(7)–(14) of Pub. L. 91–172 effective Jan. 1, 1970, see section 101(k)(1) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title. Amendment by section 121(b)(6)(B) of Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title. EFFECTIVE DATE OF 1962 AMENDMENT Amendment by Pub. L. 87–792 applicable to taxable years beginning after Dec. 31, 1962, see section 8 of Pub. L. 87–792, set out as a note under section 22 of this title. EFFECTIVE DATE OF 1960 AMENDMENT Amendment by Pub. L. 86–667 applicable to taxable years beginning after Dec. 31, 1959, and in the case of loans, the amendments to this section made by Pub. L. Page 1686 TITLE 26—INTERNAL REVENUE CODE § 504 86–667 are applicable only to loans made, renewed, or continued after Dec. 31, 1959, see section 6 of Pub. L. 86–667, set out as a note under section 501 of this title. EFFECTIVE DATE OF 1958 AMENDMENT Pub. L. 85–866, title I, § 30(c), Sept. 2, 1958, 72 Stat. 1631, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendment made by subsection (a) [amending this section] shall apply with respect to taxable years end- ing after March 15, 1956. The amendment made by sub- section (b) [amending this section] shall apply with re- spect to taxable years ending after the date of the en- actment of this Act [Sept. 2, 1958], but only with re- spect to periods after such date. ‘‘(2) EXCEPTIONS.—Nothing in subsection (a) [amend- ing this section] shall be construed to make any trans- action a prohibited transaction which, under announce- ments of the Internal Revenue Service made with re- spect to section 503(c)(1) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] before the date of the en- actment of this Act [Sept. 2, 1958], would not constitute a prohibited transaction. In the case of any bond, de- benture, note, or certificate or other evidence of in- debtedness acquired before the date of the enactment of this Act [Sept. 2, 1958], by a trust described in section 401(a) of such Code which is held on such date, para- graphs (2) and (3) of section 503(h) of such Code shall be treated as satisfied if such requirements would have been satisfied if such obligation had been acquired on such date of enactment [Sept. 2, 1958].’’ SAVINGS PROVISION For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liabil- ity for tax for periods ending after Nov. 5, 1990, see sec- tion 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title. § 504. Status after organization ceases to qualify for exemption under section 501(c)(3) be- cause of substantial lobbying or because of political activities (a) General rule An organization which— (1) was exempt (or was determined by the Secretary to be exempt) from taxation under section 501(a) by reason of being an organiza- tion described in section 501(c)(3), and (2) is not an organization described in sec- tion 501(c)(3)— (A) by reason of carrying on propaganda, or otherwise attempting, to influence legis- lation, or (B) by reason of participating in, or inter- vening in, any political campaign on behalf of (or in opposition to) any candidate for public office, shall not at any time thereafter be treated as an organization described in section 501(c)(4). (b) Regulations to prevent avoidance The Secretary shall prescribe such regulations as may be necessary or appropriate to prevent the avoidance of subsection (a), including regu- lations relating to a direct or indirect transfer of all or part of the assets of an organization to an organization controlled (directly or indi- rectly) by the same person or persons who con- trol the transferor organization. (c) Churches, etc. Subsection (a) shall not apply to any organiza- tion which is a disqualified organization within the meaning of section 501(h)(5) (relating to churches, etc.) for the taxable year immediately preceding the first taxable year for which such organization is described in paragraph (2) of sub- section (a). (Added Pub. L. 94–455, title XIII, § 1307(a)(2), Oct. 4, 1976, 90 Stat. 1721; amended Pub. L. 100–203, title X, § 10711(b)(1), (2)(A), Dec. 22, 1987, 101 Stat. 1330–464.) Editorial Notes PRIOR PROVISIONS A prior section 504, acts Aug. 16, 1954, ch. 736, 68A Stat. 168; Oct. 22, 1968, Pub. L. 90–630, § 6(a), 82 Stat. 1330, related to denial of exemption, prior to repeal by Pub. L. 91–172, title I, § 101(j)(15), Dec. 30, 1969, 83 Stat. 527. For effective date of repeal, see section 101(k)(2)(B) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title. AMENDMENTS 1987—Pub. L. 100–203, § 10711(b)(2)(A), substituted ‘‘substantial lobbying or because of political activi- ties’’ for ‘‘substantial lobbying’’ in section catchline. Subsec. (a)(2). Pub. L. 100–203, § 10711(b)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: ‘‘is not an organization described in section 501(c)(3) by reason of carrying on propaganda, or other- wise attempting, to influence legislation,’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100–203 applicable with re- spect to activities after Dec. 22, 1987, see section 10711(c) of Pub. L. 100–203, set out as a note under sec- tion 170 of this title. CONSTRUCTION OF AMENDMENT Pub. L. 94–455, title XIII, § 1307(a)(3), Oct. 4, 1976, 90 Stat. 1722, provided that: ‘‘It is the intent of Congress that enactment of this section [amending section 501 and enacting section 504 of this title] is not to be re- garded in any way as an approval or disapproval of the decision of the Court of Appeals for the Tenth Circuit in Christian Echoes National Ministry, Inc. versus United States, 470 F.2d 849 (1972), or of the reasoning in any of the opinions leading to that decision.’’ § 505. Additional requirements for organizations described in paragraph (9) or (17) of section 501(c) (a) Certain requirements must be met in the case of organizations described in section 501(c)(9) (1) Voluntary employees’ beneficiary associa- tions, etc. An organization described in section 501(c)(9) which is part of a plan shall not be exempt from tax under section 501(a) unless such plan meets the requirements of subsection (b) of this section. (2) Exception for collective bargaining agree- ments Paragraph (1) shall not apply to any organi- zation which is part of a plan maintained pur- suant to an agreement between employee rep- resentatives and 1 or more employers if the