Set liquidated damage rates which provide a reasonable recovery to the plans for the damage sustained based upon delinquent payments.

This means that you must attempt to review the harm to the plans based upon delinquent payments and the danger of non-payment which is created by discovery of an existing delinquency.  Look at your costs for things such as:  additional notices, delinquency reports, the value of the use of the money which you have lost, professional fees incurred solely because of the delinquencies (such as additional actuarial work), etc.

If you consider a request for a waiver of liquidated damages, you might want to take an approach by which you actually forbear collection of the amount, conditioned upon timely future payments.

There are cases in which waivers of liquidated damages are appropriate.  However, you may wish to consider a policy by which you simply forbear collection of the requested waiver based upon specific factors.  That way, if the employer becomes delinquent again, you have the right to collect the amounts which were the subject of the earlier request.

Routine Payroll Audit Procedure

Routine audits of contractors are generally initiated by the Funds' administrative office.  That office attempts to audit all contractors within the first year of the execution of the contrator's first collective bargaining agreement which requires contributions to the Funds.  After that, the administrative office attempts to conduct routine audits approximately every three (3) years.  The sequence of such audits is random.  Any failure by the Administrative office to conduct audits within these time periods shall not operate to relieve any contractor of its obligation to submit to an audit at a later time, or its obligation to remit amounts which are due.

For the sake of economy for all Funds, the routine payroll audits are generally scheduled geographically and, where applicable in order to preserve Fund assets, routine audits are coordinated with routine audits which are performed for other Funds.

The Funds' administrative office attempts to conduct all routine audits at a time and place which is convenient to both the contractor and the auditor.  Contractors are generally notified in writing by the Funds' administrative office that an auditor has been authorized and instructed to conduct a payroll audit on behalf of the Funds.  The Trustees have specifically authorized the administrative office to make oral audit requests.  Contractors are further provided with the name of the auditor, the general time period in which the auditor would like to perform the audit and the precise records to be produced, including the time period for which the contractor is responsible for providing records.

The auditor will generally contact the contractor approximately three (3) business days before the scheduled audit in order to confirm the appointment and to determine who will act as the auditor's contact person in the contractor's office.  If the contractor is fully cooperative, the auditor conducts the audit at the time and place agreed upon utilizing the records requested. 

Non-routine Payroll Audit Procedure

Non-routine payroll audits of contractors are initiated by one or more of the following:

1.    Upon the request of a designated representative of the Union;

2.    Upon request of a Trustee;

3.    Upon request of legal counsel after the matter has been referred to

       counsel, or after the administrative office has discussed the matter

       with counsel;

4.    Upon receipt of notice that the contractor is involved in some form

       of bankruptcy proceeding.

Contractor Cooperation in the Audit Process

If the contractor fails to fully cooperate in the audit process, the administrative office shall either confer with counsel for the Joint Delinquency Committee and/or bring the fact to the attention of the Joint Delinquency Committee.  A contractor fails to fully cooperate in the audit process when it fails to fulfill its obligation pursuant to any provision of ERISA, any portion of any Trust Agreement of any of the Funds or any portion of any applicable collective bargaining agreement.  Such situation include, but are not limited to, the following:

1.    The contractor's failure to schedule an audit in a prompt manner;

2.    The contractor's failure to supply all records requested by the

       administrative office;

3.    The contractor's failure to answer questions relating to the work

       performed by specific employees, including questions regarding

       trade jurisdiction;

4.    The contractor's failure to answer all other questions which relate

       to the auditor's ability to prepare an audit report;

5.    The contractor's failure to provide additional and follow up

       materials necessary to complete the audit report, and

6.    The contractor's failure to respond to inquiries from the

       administrative office in a timely manner.

In situations in which a contractor fails or refuses to allow the payroll audit, counsel for the Joint Delinquency Committee shall generally send to the contractor a letter setting forth the basis for the requested audit and the authority upon which the request is predicated.  If the contractor fails to respond to this letter by fully and promptly cooperating in the audit process, or if time limitations are placed upon the audit process, counsel for the Joint Delinquency Committee shall seek to obtain an immediate audit of the contractor's books and payroll records for the appropriate time period either by initiating an unfair labor practice charge at the National Labor Relations Board or by filing an action in the United States District Court.  Any contractor who fails or refuses to allow a payroll audit shall be included on the Employer Delinquency List.

If the contractor indicates that it is willing to allow a payroll audit, but refuses to fully cooperate in the audit process, the administrative office shall generally notify counsel for the Joint Delinquency Committee.  The administrative office shall either refer the matter to counsel for the purpose of obtaining the necessary records or discuss the matter at the next Joint Delinquency Committee Meeting.

Billing Procedure

At the conclusion of the audit process, where amounts are found to be due and owing, the administrative office prepares an audit billing and provides it to the contractor.  The contractor generally is advised that it has twenty-one (21) days in which to challenge the audit results.  This time period may be shortened where appropriate.  If the contractor fails to challenge the audit billing, the audit results shall be considered final and the Funds are authorized to include the contractor's name in the Employer Delinquency or Failure to Report List.

If the contractor fails to challenge the audit billing, the matter shall either be referred to counsel as a routine collection matter or shall be discussed at the next JDC Meeting.  If the contractor challenges the audit billing, the administrative office shall generally attempt, as quickly as possible, to resolve the objection.  The administrative office may confer with counsel as part of this process.  If the administrative office is unable to resolve the dispute with the contractor, the matter shall either be referred to counsel as a routine collection matter or shall be discussed at the next JDC Meeting.  If circumstances require, the administrative office may immediately refer the matter to counsel without attempting to resolve the contractor's objections.

AUDIT ASSESSMENTS AND INTEREST

The Joint Delinquency Committee is authorized to establish audit assessment rates and interest rates in an effort to reimburse the Funds for the harm caused by the failure of contractors to have remitted contributions at the time a payroll audit is conducted.  If delinquencies are disclosed during the course of the audit, the auditor shall include in the billing liquidated damages in the form of audit assessments.  Currently, the audit assessment policy is as follows:

For audits performed by or on behalf of the Funds on or after January 1, 1994, there will be an amount added to the contributions found due and owing, which will be calculated as follows:

a)    10% of the amount found due for contributions arising from work performed within the jurisdiction of the collective bargaining agreement within 12 months of said audit;

b)    15% of the amount found due for contributions arising from work performed within the jurisdiction of the collective bargaining agreement within 13 to 24 months of audit;

c)    20% of the amount found due for contributions arising from work performed within the jurisdiction of the collective bargaining agreement more than 24 months prior to said audit.

All unpaid amounts due to the Funds for contributions assessments attorney fees and/or costs, on or after January 1, 1994, shall accrue interest at the rate of 12% per year.  The interest will be compounded daily and shall be calculated from the date said sum(s) originally became overdue.  Interest shall generally be waived in situations where an employer pays all other amounts due to the Funds within 30 days after being billed by the Fund Office.  Decisions regarding the waiver of interest are solely within the discretion of the Trustees.  The interest rate h as been set in an effort to reimburse the Funds for the harm caused by the failure of a contractor to pay to the Funds amounts which are due.

TRUST INVESTIGATOR

A Trust Investigator may be employed through the Joint Delinquency Committee.  A general statement of the duties of the Trust Investigator and the restrictions upon his authority has been adopted by the Committee and is set out below.  Because of the nature of the Trust Investigator's role, the statement is not intended to be exhaustive, only to provide a general outline of regular and recurring duties:

1.    Act as field investigative and collection agent;

2.    Subject to instructions from the Committee and advice of legal counsel, collect any and all outstanding indebtedness due to the Funds from contractors.  The Trust Investigator is prohibited from accepting cash contributions.

3.    Assist contractors in understanding fringe benefit obligations and making fringe benefit report.

4.    Investigate contractors delinquent in contributions and report delinquencies to the Union, the administrative office and the Joint Delinquency Committee.

5.    Collect under payments from contractors shown on variance reports supplied by the administrative office.

6.    Gather information required and, under procedures established by legal counsel, do all preliminary work necessary to impose liens, make bond claims.

7.    When authorized by the Committee, file and pursue a claim against a contractor in small claims court.

8.    Upon request of the administrative office of the Funds, investigate and collect data in situations of close or disputed eligibility matters.

9.    Keep such records and files in respect to continuing problem contractors as will aid in operating an effective collection program.

10.    Spot check contractor's jobs in the field and review contribution reports submitted to determine whether or not contractors are reporting correctly on carpenter employees.