ERISA LAWS DETAILS

THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)

 

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

ERISA requires plans to provide participants with plan information including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty.

There have been a number of amendments to ERISA, expanding the protections available to health benefit plan participants and beneficiaries. One important amendment, the Consolidated Omnibus Budget Reconciliation Act (COBRA), provides some workers and their families with the right to continue their health coverage for a limited time after certain events, such as the loss of a job. Another amendment to ERISA is the Health Insurance Portability and Accountability Act (HIPAA) which provides important new protections for working Americans and their families who have preexisting medical conditions or might otherwise suffer discrimination in health coverage based on factors that relate to an individual’s health. Other important amendments include the Newborns’ and Mothers’ Health Protection Act, the Mental Health Parity Act, and the Women’s Health and Cancer Rights Act.

In general, ERISA does not cover group health plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment, or disability laws.

A pension plan is governed by ERISA if it is a plan, fund, or program established or maintained by an employer (or an employee organization, or both) that, either explicitly or because of surrounding circumstances, (1) provides retirement income to employees or (2) results in a deferral of income by employees until after termination of covered employment or beyond.

As a fiduciary, an employer must discharge his or her duties with respect to a pension plan solely in the interest of the plan’s participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries. In other words, an employer who is a fiduciary must administer pension plans and invest plan assets solely for the benefit of the plan’s participants and beneficiaries, and not for any other reason, including any other business purpose or the company’s bottom line. 

An employer who is a fiduciary has a duty of loyalty to plan participants and beneficiaries. An employer-fiduciary also must not conceal any breaches of responsibility by any other fiduciaries of the plan. 

An employer who is a fiduciary also has a duty of prudence. This means that the employer-fiduciary must act with care, skill, prudence, and diligence with respect to a pension plan; must diversify investments; and must act in accordance with the provisions of the plan itself. This includes ensuring that the plan is properly funded and has sufficient assets to satisfy its accumulated benefit obligations.

An employer who is a fiduciary has a duty not to engage in self-dealing. Transactions between a plan and a party in interest are prohibited, and an employer that sponsors a plan is a party in interest. In the absence of a specific exemption, transactions between the employer and the plan constitute breaches of the employer’s fiduciary duty.

An employer who is a plan administrator also has a duty to inform. This means that such an employer must provide employees adequate, accurate, and understandable information about the plan’s provisions, benefits, and source of funding, including any changes to this information.

Providing misleading or incomplete information violates this obligation. As part of the employer’s duty to inform, every plan participant has the following rights:

● The right to obtain a copy of the plan document from the plan administrator.

● The right to receive a summary plan description (SPD) upon joining the plan and at specified intervals thereafter. The SPD is a description of the plan’s terms that is (or should be) in language that is understandable.

● The right to obtain a copy of the plan’s most recent annual statement (Form 5500).

You must request these documents from the plan administrator in writing, and the plan administrator has 30 days from the receipt of your request to respond.

 

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ERISA LAWS
ERISA sets minimum standards for participation, vesting, benefit accrual and funding of employee retirement accounts so funds placed in those plans will be there when they retire.

ERISA FAQS
Click here for answers to frequently asked and answered Employee Retirement Income Security Act of 1974 (ERISA) Law questions.

FAMILY LEAVE ACT
The Family and Medical Leave Act (FMLA) provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also requires that group health benefits be maintained during the leave. Click here for info on the FMLA.

THE CIVIL RIGHTS ACT OF 1964
Makes it unlawful to refuse to hire, fire or segregate any person from the privileges of employment, because of the individual's race, color, religion, sex, or national origin. 
    
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