The Previant Law Firm, S.C.

100+ Years Of Dedicated Service

Milwaukee Office: 310 West Wisconsin Avenue, Suite 100 MW, Milwaukee, WI 53203

Free Consultation
Se Habla Español
Greater Milwaukee:
414-203-0514

 

Fox Valley:
920-903-3000
Call on us. Lean on us. Count on us.
How Can We Help You? Contact The Previant Law Firm, S.C.

ERISA Funds Collection – Pre-Suit Collection Best Practices

Philip Thompson
Written by: Philip Thompson

ERISA benefits, such as health, pension, and retirement contributions are an integral and valuable part of employee compensation packages. These fringe benefits are vital to employees and can create hardship and frustration if these benefits go unfunded. Therefore, it is important to understand that these multi-employer funds have methods under ERISA and the LMRA by which they can enforce employees’ rights and collect on the contributions owed by employers. However, before attorneys representing these Funds pursue litigation, there are a few essential practice points to keep in mind.

First and foremost, it is imperative that any contribution delinquency is documented. Delinquencies can be established and evidenced through audits conducted on an employer’s payroll records or reports submitted by the employer to the specific funds. These audited delinquencies form the basis of any ERISA collection litigation. Without a way to present these numbers to a court in an understandable fashion, litigation attempts could face complications.

It is also important to have the signatory documents signed by the debtor company that establish the legal relationship with the union and binds the debtor to pay the fringe benefits to the multi-employer funds in question. While courts have allowed cases to move forward without these documents, ruling that a debtor company can acquiesce to the terms of an agreement through its own past actions, it is much simpler to provide the court a signed collective bargaining agreement or signatory page to establish the funding relationship. Operating Eng’rs Local 139 Health Benefit Fund v. Gustafson Constr. Corp., 258 F.3d 645 (7th Cir. 2001).

Another useful practice point is to facilitate open lines of communication with the delinquent company. Like in most other legal matters, a solution can often be reached before litigation commences, which often makes filing a lawsuit unnecessary. Therefore, it is usually a worthwhile habit for counsel to contact the debtor company to provide notice that the delinquency is owed and encourage the company to contact counsel to resolve the matter. Often times, a company is willing, and would rather, arrange a repayment plan allowing them to pay back the late contributions over time instead of facing a lawsuit and the additional costs of hiring an attorney to represent them.

Resolving the delinquency through a payment plan can also be beneficial for the funds involved. Because of the limitations that are put on ERISA repayment plans, these plans often payout before a case could reach a resolution through litigation, and  certainly before monies are collected after a judgment has been obtained against the debtor company. In addition, the costs of monitoring a payment plan are pennies on the dollar in comparison with proceeding through the lengthy trial and collection process. Further, proceeding with a repayment plan instead of litigation may help build goodwill between the debtor company, the funds and the attorneys involved. Because this relationship exists contractually, it is not unlikely that the two sides will encounter each other in a similar fashion in the future. Establishing a positive working relationship could save on costs and time in the event that a future delinquency does arise.

Finally, tracking a delinquent company’s work status is incredibly useful in recouping owed contributions. Locating where the company is working, through research and open communication with the various unions, may allow the Funds to arrange some sort of joint check arrangement with the supervising construction company for a specific project that the debtor company is working on. Having this knowledge and establishing a relationship with the supervising company will likely ensure the funds get paid before further trouble arises. This pointer also allows for the use of liens in order to recoup contributions owed to specific workers on a given project. These tips are also helpful post-judgment points, as contributions still have to be collected after a judgment is gained.

While ERISA can be a complex statute to work with, preparedness can make the litigation process much simpler for attorneys attempting to collect on behalf of ERISA funds. Often times, through preparation and action, expensive and drawn out litigation can be avoided.

There are no comments yet, add one below.

Leave a Comment
Contact Form

©2017 The Previant Law Firm, S.C.. All Rights Reserved. Log in