Forcing Audit of Receivership

[Guest dkl2214]

I was hoping someone might have some insight on this. Under ERISA, trustees of a plan have the right to audit an employer that they suspect of shaving contributions owed to the Fund. Unfortunately, the company (employer) has gone into receivership (bankruptcy proceedings). Does the plan (fund) still have the right to demand an audit of their books while the receivership is pending? Also, if the employer has been cheating on hours, is there any way to contest the receivership or seek personal liability? Any information would be appreciated!

[Bill Ecklund]

I was hoping someone might have some insight on this. Under ERISA, trustees of a plan have the right to audit an employer that they suspect of shaving contributions owed to the Fund. Unfortunately, the company (employer) has gone into receivership (bankruptcy proceedings). Does the plan (fund) still have the right to demand an audit of their books while the receivership is pending? Also, if the employer has been cheating on hours, is there any way to contest the receivership or seek personal liability? Any information would be appreciated!

This is a somewhat off the cuff response. The Trustees of a plan do have a right to audit an employer’s books even though that employer is in bankruptcy. If the employer has been under reporting hours, then a claim has to be filed with the bankruptcy court for the under reporting. You cannot contest the bankruptcy action, only file a claim. Personal liability depends upon a number of things. One is whether or not the trust agreement treats employer contributions on the date that they are due as plan assets. If the employer has been withholding employee contributions but not paying those over, that can create personal liability as well as criminal liability. If the employer has been under reporting hours and not paying over employee contributions, you should contact the Employee Benefit Security Administration Division of the Department of Labor and talk with an investigator about that.

[Guest dkl2214]

Thank you for your response. I am going to do some more research on this tomorrow. Your response was helpful because I'll have to look into the liability aspects and filing a lien with the bankruptcy court.