Written By Larry Beebe
Bond Beebe
P: 301.272.6025 E: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

A Court ruled that a formula approach could be used to calculate an employer’s liability for employer contributions when the employer refused to allow a payroll audit.

The employer signed a Collective Bargaining Agreement (CBA) which incorporated a trust agreement.  The trust agreement provided the plan with the authority to conduct a payroll audit.  The employer stopped making contributions and the plan sought a payroll audit which the employer refused to allow.  The plan’s auditor calculated a deficiency based on a formula approach.  This formula approach was specified in the trust agreement when an employer refused to allow an audit.  The Court found that the plan’s actions were justified by the trust agreement and upheld the employer’s liability for unpaid contributions as assessed (LaBarbara et al v. Ovan Construction, No. 06-CV-2867 E.D.N.Y. March 31, 2010).

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