Collection Counsel’s Responsibilities
Collection counsel is responsible for working with employers who have not complied with trust fund collection procedures. In addition to working directly with the plan administrator to facilitate collection of delinquent or late contributions, collection counsel also ensures employer compliance with fund payroll audit policies and procedures. For example, the payroll auditor will refer employers to counsel for refusing audit entry or withholding documents required to conduct testing. In most cases, collection counsel is able to get an employer to comply; however, an employer may continue to refuse, requiring formal legal action. Finally, the plan administrator can refer an employer to counsel for failure to pay amounts due resulting from a payroll audit.
Payroll Auditor’s Responsibilities
The payroll auditor is responsible for testing the employer’s records to determine whether it has properly remitted contributions to the trust. Procedures vary among trusts but generally the plan administrator submits documentation to the payroll auditor, including employer work history reports, collective bargaining agreements and other information to facilitate the testing process. Both the plan administrator and payroll auditor refer employers refusing to comply with fund policies to counsel for assistance with audit access or obtaining required records. The payroll auditor sends completed payroll audits to the plan administrator.
Plan Administrator’s Responsibilities
The plan administrator’s role in the payroll audit process begins with furnishing employer information to the payroll auditor and finishes with receiving the final report and, if necessary, managing the collection of discrepancies found during the payroll audit. The plan administrator is the custodian of the trust records and provides contribution histories, collective bargaining agreements and other pertinent agreements, and additional information needed to effectively and efficiently test contributing employers. The plan administrator receives the final payroll audit report and if necessary works directly with the employer to resolve issues noted in the report. If the report notes underpayments, the plan administrator will apply fund collection procedures. As with monthly contribution delinquencies, the plan administrator will refer employers not complying with fund collection procedures to collection counsel.
Communicating with Trustees
Plan trustees are ultimately responsible for collection of contributions. Trustees should expect plan professionals to communicate the status of all collection efforts, including monthly delinquencies and the status of the payroll audit program, during regularly scheduled trustee meetings. Effective payroll audit programs include considerable coordination among the professionals to keep trustees updated clearly and concisely. Below are examples of the types of information each professional provides to the payroll audit program:
Employers referred to collection counsel
Completed reports sent to the plan administrator
Status of ongoing testing
Coordination of plan professionals is critical to the success of a fund’s payroll audit program. Collection counsel, the plan administrator, and the payroll auditor should work as a team to see that the fund’s payroll audit program effectively ensures employers are properly contributing to the fund and that discrepancies identified through payroll audits are processed, collected, and applied to participant accounts as efficiently as possible. By understanding the basic responsibilities of each of the parties, trustees can more effectively manage their payroll audit program.
Rachelle Hislop is a payroll compliance senior manager in Lindquist LLP's San Ramon office. She has more than 20 years of experience in the employee benefit plan sector, including payroll compliance testing and plan administration. She currently manages payroll compliance programs for 18 trust funds. Rachelle is a graduate of the University of California, Berkeley.