Pay Employee Benefits On Time – Or Else

Paying unionized employee benefits – retirement, health care, training and legal fund costs – is routine business for most co-op and condo boards and their managing agents. But deviation from the routine can be disastrous. Residents of a condominium on the East Side of Manhattan were stunned recently when they were hit with a $300,000 bill for unpaid union benefits, plus interest and penalties.

The board was unaware that the managing agent had failed to keep up with payments – and then failed to show up for an arbitration hearing.

“While boards rely on their managing agents and other professionals, boards should nonetheless review the financial information and make sure their professionals are doing their jobs,” says Bonnie Reid Berkow, a partner in the law firm Wagner Berkow, which represents the East Side condo. “The board wasn’t given information to ascertain how much, if anything, was unpaid with regard to the union.”

To complicate matters, those nuts and bolts have undergone a major retooling. Before March 2013, the Service Employees International Union (SEIU) Local 32BJ, which represents residential building workers, including superintendents, doormen, handymen and porters, supplied this employee benefit data via snail mail for each building. Today, more than 5,000 employers track and pay employee benefits totaling nearly $115 million a month – all electronically.

Not everyone is thrilled with the change to paperless billing and payments. Take Irene Hryniewicki Sblano, payroll manager at Tudor Realty, who oversees the payroll for approximately 100 buildings, including 90 with unionized employees. Sblano found it easier to track each employee’s costs on paper, study the union receipts and compare names on the payroll sheet to benefits. “I had everything in front of my eyes,” she explains. “I don’t find this (new system) easier.” However, she’s resigned to adapting to the new way of doing things. “The union makes the rules,” she says.

Staying updated on unionized employee benefits demands constant vigilance – as unit-owners at the East Side condo learned the hard way. If an employee is terminated or a new employee is hired, the building must notify the union. And if a payroll manager or co-op or condo board is late with a monthly payment, interest is added to what is owed.

Summertime presents thorny problems because relief employees are hired to replace vacationing staffers. If replacement workers work for more than five months, they become eligible for full union benefits. (Non-replacement unionized employee must work more than two days a week to become eligible for full union benefits.)

Rachel Cohen, a spokesperson for 32BJ, defends the union’s electronic notification system, insisting that it’s working well for nearly all contributors. She says the contributions are allocated into 10 separate union funds that cover benefits to more than 100,000 members and their families. Moreover, employers – including co-op and condo board members – can enroll in training sessions and refresher classes on the website, and stay updated on governmental regulations. Employers can get training in one of three ways: in one-on-one sessions, group sessions, or on-line.

“Additionally, the fund has a dedicated employer call center to assist employers with any issues or problems they may have using our system,” Cohen notes. “The online process is much faster to complete than the previous paper-based system.”

In fact, since the system was installed, she says, employer delinquencies or failures to make payments have diminished by 10 percent.

That’s small consolation to the East Side condo building that fell into a $300,000 hole. But at least the board learned a lesson. “The board was very upset,” says Berkow, the board’s lawyer. “Now they make sure they’re getting accurate information from the 32BJ website.”