A corporation or labor organization’s payroll deduction system can be used to collect contributions to its own SSF and any affiliated SSF.
A connected organization collecting contributions to an SSF through a payroll deduction system will be a collecting agent.
Written authorization required
In a payroll deduction plan, an employee authorizes the periodic deduction of SSF contributions from his or her paycheck. A written authorization for the deductions must be obtained before making the deductions.(See “No reverse checkoff.”)
The SSF is advised to retain a copy of the written authorization for three years from the date of the report disclosing the employee’s last deduction. Other evidence of authorization, such as records of the transmittal of funds from employers or collecting agents in the form of spreadsheets, wire transfer records or other written electronic records will satisfy the recordkeeping requirement for payroll deduction authorization. The employee may revoke the authorization at any time.
Electronic signatures may be used by employees to authorize the deduction of contributions from their pay, and the connected organization or the SSF may confirm the employees’ request via email subject to the following conditions:
- An employee must be able to use the electronic signature or a written signature to revoke or modify the amount of the authorization at any time; and
- A record of the electronic signature, including verification that the signature came from a particular employee, must be maintained in a retrievable form available to the Commission in the event of an audit or investigation.
No reverse checkoff
When collecting SSF contributions, a connected organization may not use a reverse checkoff plan—i.e., a collection system whereby the contributions are automatically deducted from an individual’s paycheck without his or her prior approval. Such a system results in an involuntary contribution, even if the individual can subsequently request a refund of the amount deducted.
Combined dues and solicitation payments
Under a payroll deduction or checkoff plan, an individual may simultaneously authorize deductions of membership dues or fees and SSF contributions.
Labor organization SSFs
The SSF of a labor organization representing a corporation’s employees may use the corporation’s payroll deduction system if the corporation uses such a system to collect SSF contributions for the corporation’s SSF. Upon written request by a labor organization, a corporation and its subsidiaries must provide the labor organization with the same method used by the corporation for soliciting and collecting contributions for its own SSF or for a trade association’s SSF.
Trade association SSFs
A trade association may use payroll deduction to collect contributions from the association’s own executive and administrative personnel. The SSF of a trade association may use a member corporation’s payroll deduction system, so long as the corporation has given its prior approval for solicitations by that trade association.