NOTICE TO ALL EMPLOYER-PARTIES TO THE TRUSTS

COLLECTIONS PROGRAM

Effective October 1, 1989, the Board of Directors of the Pension Plan and the Board of Trustees of the Health Fund revised the program for the collection of employer contributions payable to the Trusts on behalf of writers who perform writing services covered under the terms of the various Collective Bargaining Agreements between entertainment industry employers and the Writers Guild of America, East, Inc. and the Writers Guild of America, west, Inc. (“WGA”).

On behalf of the Board of Directors/Trustees, the program is managed by the Audit and Delinquency Committee of the Trusts and is administered by the Administrative Office of the Trusts. The Boards consist of an equal number of labor representatives, appointed by the WGA, and management representatives, appointed by the Alliance of Motion Picture and Television Producers, Inc. (AMPTP), and the major television networks. The Committee members are selected from among these Directors/Trustees.

The term “collection of contributions” refers to the payment of all contributions to both Trusts as required by provisions of the Collective Bargaining Agreements. Included in the term are all such contributions, both those voluntarily paid by the signatory employers and those that must be pursued for collection by the Trusts.

The program consists of three parts:

1. EMPLOYER COMPLIANCE AUDIT PROGRAM
2. CONTRIBUTIONS PAYMENT PROGRAM
3. RECOVERY IN CASES OF IMPROPERLY PAID CONTRIBUTIONS

EMPLOYER COMPLIANCE AUDIT PROGRAM

According to the Employee Retirement Income Security Act of 1974 (ERISA) and the Trust Agreements of the Pension Plan and the Health Fund, the Directors/Trustees have the fiduciary obligation and the right to audit records of signatory employer-parties to the Trusts in order to determine whether contributions are being paid in compliance with those Agreements and the various Collective Bargaining Agreements. The Trusts have engaged an independent accounting firm to perform such audits of employer records.

It is the intention of the Trusts to audit all employer-parties on a regular basis. All reasonable efforts will be made to schedule the audits at a time convenient to the Trusts and the employers. The Administrative Office will notify each employer, in writing, when it has been selected for audit. A representative of the Trusts’ accounting firm will then contact the employer to schedule the audit.

After a signatory employer has been notified that an audit will take place, the following documents may be requested by the audit firm or Administrative Office:

Complete list of projects in development or production.
Copy of chart of accounts.
Copy of general ledgers with detail of writing fees.
Copies of contracts for writing services and option/purchase agreements.
Copies of option/purchase contracts with “professional writers” for the acquisition of literary material.

Each audit will generally cover a period of the four (4) consecutive years ending as of the date of commencement of the audit. (In certain instances this period may be extended.)

The purpose of the audit is to determine whether contributions have been paid in compliance with the applicable agreements, or whether contributions are due but unpaid. If an audit discloses that there are contributions due but unpaid, the Administrative Office will bill the audited employer for those unpaid contributions and applicable fees. A copy of the auditor’s report will accompany the billing so that the employer will be able to reconcile the findings.

If the audited employer is a writer’s loanout company, the billing will reflect unpaid contributions due on behalf of not only that writer-employee, but also all other writers employed by the loanout company who performed services covered under the terms of the agreements.

The billing of the audited employer will reflect unpaid contributions due on behalf of writers employed directly by the producer and writers hired through loanout corporations.

If the auditors determine that the employer has been delinquent in contributions, audit costs and other fees may be assessed.

AUDIT COSTS

If the ratio of delinquent contributions discovered to total contributions paid during the period audited, expressed as a percentage, is 10% or less, no audit costs are assessed to the delinquent employer. If this ratio exceeds 10%, or if the employer is determined by the Audit and Delinquency Committee to have reported on compensation that is not subject to contributions for the purpose of securing eligibility for health benefits for a person, the employer is assessed the full cost of the audit. The employer may appeal the assessment of audit costs to the Audit and Delinquency Committee.

Please refer to the section entitled, “Contributions Payment Program” which follows, for a detailed description of delinquency charges and referral of delinquencies to the Collections Attorney.

CONTRIBUTIONS PAYMENT PROGRAM

General

The Collective Bargaining Agreements define the covered services for which contributions are due and the basis for the computation of those contributions. The parties to the Collective Bargaining Agreements establish the terms of those Agreements and are responsible for their interpretation. The Boards of Directors/Trustees of the Plan and the Fund are responsible for the collection of contributions in accordance with those agreements.

Consequences of Delinquency

I. Delinquency Charges - Interest

Please be aware that federal law [ERISA Section 515] requires that contributions must be made in accordance with the terms of the plan, and that [ERISA Section 502(g)(2)] provides for mandatory interest on unpaid contributions at the rate established by the plan.

Interest is calculated and accumulates at the rate of 10% per annum (approximately .83% per month), with certain limitations on continuing interest in those cases in which delinquent contributions are paid before suit is filed. (No limitation applies to those cases in which suit is filed).

Weekly employers are required to remit contributions, along with a completed Report of Contributions (either transmitted electronically or on paper) not more than ten (10) business days after the close of the payroll week during which the writer is paid or due compensation. Contributions are deemed to be delinquent if they have not been received within thirty (30) calendar days from the "due" date. If the payment is not made by the end of the thirty (30) day grace period, interest will be charged from the end of the week in which the writer was paid or due contributions.

Monthly employers are required to remit contributions, along with a completed Report of Contributions (either transmitted electronically or on paper) not more than ten (10) business days after the close of the month during which the writer is paid or due compensation. Contributions are deemed to be delinquent if they have not been received within ten (10) calendar days from the "due" date. If the payment is not made by the end of the ten (10) day grace period, interest will be charged from the end of the month in which the writer was paid or due contributions.

The Administrative Office will help you determine if you are a “weekly” or “monthly” employer.

In addition to interest charges on delinquent contributions, if the Trusts bill for a delinquency and the delinquent contributions are not paid within 60 days of the date of the Trusts’ initial billing letter, a sum will be charged as liquidated damages which consists of the lesser of continuing interest from the date of the original billing letter or 20% of the delinquency.

II. Referral to Collections Attorney

The Trusts have retained an attorney to pursue the collection of delinquent contributions, interest, liquidated damages and audit costs. The Administrative Office will notify a delinquent employer of the date on which the delinquency will be referred to the attorney.

In addition to the delinquent contributions, interest, liquidated damages and audit costs, the attorney may, by direction of the Board of Directors/Trustees, pursue the collection of attorney fees and costs incurred in actions against delinquent employers.

RECOVERY IN CASES OF IMPROPER CONTRIBUTIONS OR REQUIREMENT FOR TRUSTS ATTORNEY TO SECURE AUDIT ENTRY

I. Improper Contributions

If an employer contributes on behalf of an individual who did not perform covered writing services, contributes on greater amounts than the individual was paid, or contributes on amounts over the reportable ceiling of a project, it may result in the individual gaining eligibility for benefits to which he or she was not entitled. In such cases, the employer and the individual are jointly liable to the Health Fund for the greater of the insurance premiums the Health Fund paid on behalf of the individual, or the amount of the benefits that were paid to or on behalf of the individual. The Health Fund shall also recover from the employer or the individual, or both, the Health Fund’s costs of collecting these amounts, including attorney fees, interest, and audit fees.

II. Audit Entry

If an employer fails, upon request, to provide its books and records to the Trusts for an audit, the Trusts may sue the employer for Audit Entry in order to obtain an injunction to permit the audit to take place. The Trusts are entitled to recover all costs incurred in relation to this action, including their attorney fees.

PLEASE CONTACT THE ADMINISTRATIVE OFFICES OF THE TRUSTS IF YOU HAVE ANY QUESTIONS REGARDING THE COLLECTIONS PROGRAM.

REVISED 2/20/07