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Leave contracts to the experts: Have attorney draft documents detailing benefits

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in Employee Benefits Program,Employment Law

Make sure an attorney reviews any contracts dealing with employee benefits and the like. A good lawyer will make sure the agreement does what you want it to do and doesn’t have language that may need court interpretation.

Recent case: Bunge Oils agreed to supplement union employee wages with regular contributions to a union health and welfare fund. The agreement said that Bunge would “make contributions to the trust at the rates charged by the trust” subject to a maximum specified elsewhere in the contract. Those rates climbed every year.

Bunge continued paying a rate less than the maximum. When the agreement expired, the union sued, alleging Bunge should have contributed at the higher rate.

But Bunge successfully argued that the union never “charged” it the higher rate.

The court agreed with Bunge—the higher amounts were only due if the union billed at that rate. It had not. (South Central UCF Unions v. Bunge Oil, No. 3:09-CV-1924, ND TX, 2011)

Final note: Basic contract law says that words should be interpreted to have their ordinary meaning. “Charge” means “to bill.” Thus, unless the union billed for the higher amount, Bunge was only required to pay the lower amount it had paid in previous years.

Having your attorney review contractual language helps catch problems like this. It’s especially important if your company writes up the agreement—because any ambiguities will be interpreted against you and in favor of the other side.

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