Last updated on May 5th, 2025

Labor Unions operate within a unique regulatory environment, and as such, must constantly monitor compliance in their financial processes. Compliance within labor unions is essential for maintaining the union’s financial and reputational integrity, as well as protecting the rights of both workers and employers. Compliance must be monitored at all levels of union operations, including among the contractors who employ union workers. One critical way to monitor compliance among union contractors is through payroll audits. Payroll audits ensure that contractors are correctly submitting union benefit contributions in compliance with Collective Bargaining Agreements (CBAs). It is important for unions to conduct regular internal payroll audits throughout the year in order to uphold the terms of CBAs, protect worker rights, minimize fraud risk, and avoid potentially serious penalties.

What happens during a union payroll audit?

During a union payroll audit, the auditor reviews a contractor’s payroll records for compliance with the terms of the union’s Collective Bargaining Agreement. Specifically, union payroll audits look to verify that contractors are reporting and remitting employee benefit contributions accurately. Payroll audits typically involve reviewing payroll records, verifying hours worked, checking for variable payments, and analyzing data for accuracy and compliance with the CBA. The goal is to protect the plan, trustees, and participants by verifying contributions are complete and accurate, and to prevent delinquencies and collections issues.

Who conducts union payroll audits and how often?

Payroll audits can be conducted by the union or benefit office. The union or benefit office can also obtain assistance from an outside vendor with experience in payroll audits, such as an accounting firm. Payroll audits can be conducted at various intervals, including annually, quarterly, and/or monthly. We recommend selecting a group of contractors each cycle to ensure that all are reviewed over a four-year period.

What are some common findings on union payroll audits?

Common findings include misreporting of hours and not properly submitting benefit contributions.

Why is it important for unions to carry out regular internal payroll audits?

Regular audits can lead to improved reporting accuracy, reduce delinquencies, prevent fraud, and help trustees identify problematic employers. They also provide feedback to plan administrators to ensure agreements are in place and contributions are made correctly. In addition, payroll audits help ensure compliance with ERISA (Employee Retirement Income Security Act) and other relevant regulations. They are required for ERISA audits. Frequent internal audits help the union avoid serious fines and penalties for noncompliance with Department of Labor regulations.

Looking for guidance?

One of the best ways to ensure compliance is by partnering with a reputable accounting firm like RBT CPAs. RBT CPAs’ experts are available to conduct payroll audits for your union and/or provide audit guidance. You can count on RBT CPAs’ accounting professionals to help maintain your union’s reputation for transparency and accountability. Our firm has been operating in the Hudson Valley and beyond for over 55 years, and we believe we succeed when our clients succeed. To learn more about our accounting, tax, audit, and advisory services, give us a call today.