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Why do the Funds require payroll audits? |
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The purpose of the audit program is to verify the accuracy of the reports and contributions submitted to the Funds and to determine that contributions have been properly remitted for all covered work. Covered work is any work performed which falls within the trade jurisdiction covered by a collective bargaining agreement. The Trustees must comply with the reporting requirements established by the Internal Revenue Service and the Department of Labor. The Trustees must also provide regular reports and notices to plan participants and their beneficiaries. The Trustees of the Funds are charged with the responsibility of collecting contributions belonging to the Funds. These audits are just one part of a collection policy that helps the Trustees fulfill their fiduciary responsibility. |
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Does an employer have an obligation to maintain payroll records sufficient to conduct an audit? |
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Federal law requires all employers who must remit contributions to the Funds to maintain records which are sufficient to allow the Funds to verify the accuracy of all contributions and to determine all amounts which may be owed to the Funds. Employers are also required to maintain records identifying work on individual jobs.
If an employer fails to maintain adequate records, it may be presumed that each employee who performs any covered work for the employer worked forty hours per week during the period of employment.
If any employee works at the trade and performs other work, the employer must maintain records which are sufficient to identify the number of hours worked at each trade. If the employer fails to maintain such records it may be presumed that all work was performed at the trade.
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Is an employer required to provide access to payroll records for employees who are not members of a union? |
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Fringe benefit contributions are required on behalf of all employees who perform work covered by a collective bargaining agreement. Unless the agreement specifically excludes certain employees, employers must remit on behalf of any and all individuals who perform covered work including apprentices, trainees, temporary employees, probationary employees, students, part time employees and employees who also perform work at other trades. If the person who performs the covered work is a relative of the owner, a corporate officer or a shareholder, then contributions must be remitted. If the person who performs the covered work is not a member of the union, then contributions still must be remitted. If any individual performs covered work for the company in any of the branches of the trade, contributions must be made for each hour of work. There are no exceptions. |
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What happens to Fringe Benefit Contributions an employer pays on behalf of employees who are not union members? |
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Individuals receive credit for all contributions remitted on their behalf, regardless of union affiliation. The administrator of the Funds does not even maintain a record of union membership. Employees will be eligible for benefits when sufficient hours for health care eligibility and/or pension vesting are paid. |
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What happens if an employer refuses to allow an audit? |
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If an employer refuses to allow an audit or refuses to provide all payroll records, the Trustees of the Funds will likely refer the matter to legal counsel. Federal Law and/or the Funds' Trust Agreements allow the Funds to recover all costs incurred by the Funds in performing an audit and collecting delinquent fringe benefit contributions. If an employer refuses to cooperate in any way during the payroll audit process, the employer may be required to pay attorney fees, court costs and interest in addition to any unpaid contributions or assessment found to be due. An employer may be required to pay the attorney fees and costs even if the audit discloses no discrepancies. |
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Is there a probationary period during which no contributions are required? |
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Contributions must be paid from the first hour each employee performs covered work. Even if the agreement has a provision that states that an employee does not have to become a member of the union until after a probationary period, generally speaking, an employer must still remit contributions during that period of time. There is no probationary period for fringe benefit contributions unless it is specifically stated in the collective bargaining agreement. |
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What happens if an employer remits contributions for people who did not work enough hours to be eligible for benefits with the Funds? |
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Some employees who have contributions remitted on their behalf never have enough hours or years of service to become eligible for benefits from the Funds. In those cases, any amounts paid will remain in the Funds for the benefit of the other eligible participants and their beneficiaries.
Keep in mind that even if an employee works only a short time, the employee may go on to work for another employer who also contributes to the Funds. In those cases the hours or years of service from all employers will be combined to calculate eligibility. Some employees may work at other trades that have reciprocal agreements with these Funds. In those cases, the combined hours will also be used for the purpose of calculating eligibility.
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What about contributions on behalf of owners? (Sole proprietors or partners) |
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Under the Internal Revenue Code, the Pension Funds are prohibited from allowing sole proprietors or partners to accrue pension benefits based upon work performed for a company they own. Therefore, the Trustees of most Pension Funds do not require owners of unincorporated business to contribute to the Pension Fund on their own behalf. |
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What happens if an employer pays benefits to employees in their paychecks or provides other benefits? |
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Paying extra money to employees or providing alternative benefits does not relieve the employer of obligations to remit contributions to the Funds. Even if an employer pays the employee an amount equal to the fringe benefit contributions, the employer remains obligated to the Funds and may end up paying twice. |
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As an employer, what if I have a verbal agreement with a local union not to pay contributions for some employees? |
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Employers are required to remit fringe benefit contributions precisely as required by the terms of the collective bargaining agreement in effect in the geographical area in which the work is performed. Arrangements with anyone differing from the terms of the bargaining agreement are illegal and unenforceable. A business agent represents the union, but is not an authorized representative of the Funds. Even if the business agent is a Trustee, he cannot change or modify the collective bargaining agreement or any other written agreement that requires contributions to the Funds. |
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What happens if an employee asks an employer to pay benefits to a home local or another area? |
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Employers are required to remit fringe benefit contributions precisely as required by the terms of the collective bargaining agreement in effect in the geographical area in which the work is performed. If an employer remits fringe benefit contributions to the Funds of an employee's home local union, the employer remains obligated to remit to the appropriate Funds and may end up paying twice. |
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I have other questions, what is the best source for information regarding these Funds? |
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If you have further questions, contact the Fund Office or local union. |
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For more information, please email TIC at 