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St. Charles, IL Chicago, IL Office Davenport, IA Office Minneapolis, MN Office Milwaukee, WI Office
St. Charles, IL Chicago, IL Office Davenport, IA Office Minneapolis, MN Office Milwaukee, WI Office

Common Business Records Are the Key to Handling Most Aggressive Union Audit Findings

In the current environment, aggressive union audits have become the rule rather than the exception. The distressed condition of many union pension funds and dwindling union membership (resulting in fewer benefit contributions) are the chief reasons driving this trend. Employers are usually shocked, stressed, and frustrated with the result of an aggressive audit; findings claiming they owe hundreds of thousands of dollars. However, on many instances there is a simple solution to dealing with this problem; creating and maintaining time and payroll records.

I know what you're thinking. How can time and payroll records save my company from an overly-aggressive audit? To answer that question, you need to understand a union's/funds' rationale for issuing overly-aggressive audit findings, the lay of the legal landscape, and how failing to maintain these common business records puts your company at a tremendous disadvantage when trying to defend against overly-aggressive audit findings.

Overly-aggressive audit findings are commonly based on allegations that a company underreported and/or failed to report hours for which contributions are owed. For some unfortunate employers, such findings may also include allegations of unpaid wages. In general, the law governing audit findings allows the union's/funds' auditor to make assumptions as to how many hours were actually worked when an employer's time and payroll records are inadequate. In other words, an employer leaves itself open to over-aggressive assumptions of un-contributed hours when it lacks adequate time and payroll records. Further, the law shifts the burden from the union/funds (who normally have the burden to show that additional hours were worked for which the employer failed to make contributions) to the employer. The employer is left to prove that the auditor's assumptions are unreasonable. The lack of time and payroll records makes this an extremely tough burden to meet and puts the employer at a huge disadvantage.

KEY TAKEAWAY: Keep track of every hour worked by your employees through a reliable timekeeping process. This can be as simple as having employees fill out and sign timesheets each week. Also, keep adequate payroll. If you pay an individual in cash, make sure you document that you paid the individual in cash and include the information that you would normally include on a check stub. Taking proactive steps to prepare and maintain simple time and payroll documentation can save your company from overly-aggressive audits.

Questions? Contact Attorney Ryan Young in our Chicago office at (312) 629-9300 or by email at ryyoung@wesselssherman.com

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