ERISA, EBSA, and the Department of Labor

ERISA became law in the 1970’s and is an acronym for The Employee Retirement Income Security Act of 1974. We like to refer to it as Every Ridiculous Idea Since Adam. ERISA is a culmination of federal laws that apply to most private organizations that provide employer-sponsored benefit plans to employees.

ERISA sets notification requirements for health plans, ancillary benefits (such as STD and LTD, life insurance, and apprenticeship plans), and retirement plans (“pension” plans). The intention behind ERISA is to ensure that both employees and employers are protected. ERISA also establishes the plan fiduciary which is the liable party representing employees fairly and equitably in regard employee benefit plans. For the majority of companies the fiduciary is the EMPLOYER. Laws implemented by ERISA are there to make sure the employer is fairly representing its employees, typically through required disclosures and notifications. If the employer is compliant with ERISA, it can typically avoid employee benefit related legal issues.

ERISA itself does not require private employers to offer employee benefits, but serves to set important nationally recognized standards for private employers who choose to do so.

EBSA, the organization that enforces ERISA.

EBSA stands for the Employee Benefits Security Administration. EBSA is the agency within the United States Department of Labor (DOL) that oversees labor law enforcement.

Have any questions, concerns or outright complaints regarding ERISA laws?

You should start by contacting your localized branch of the Department of Labor. Many law firms specialize solely in ERISA, the interpretation of ERISA laws, and factors involving ERISA compliance standards should the need for a lawyer be necessary in dealing with your case requirements. One of our HR Consulting partner has 3 ERISA attorney partners that are available at discounted rates for those employers using the HR Consulting service.

Who must adhere to EBSA regulated ERISA laws?

ERISA laws apply to any non-government, non-church organization that offers employer-sponsored employee benefit plans, regardless of size.

If you offer employee benefits, compliance is critical to your company's livelihood.

Picture this, an employee suffers a loss due to perceived mismanagement of the employer benefits plan. That employee sues the plan fiduciary (aka, you, the employer) claiming the loss was due to negligence and mismanagement by the employer. That employee may then contact the DOL (independently or at the direction of their attorney) to request an investigation. This action causes a DOL audit which, if you are not compliant, can lead to fines that can be tens of thousands to hundreds of thousands of dollars depending on the infraction. Then the DOL may find something that encourages them to contact the IRS. These agencies are now in direct communication with one another and freely share information. Now, you are not only subject to the employee lawsuit, but you have the DOL and IRS knocking. That’s a big deal. Non-compliance is not an option. ERISA compliance must become a critical component of your company’s benefit strategy.

What are the standards and requirements of ERISA?

  • Conduct: Rules regulating employer conduct establish standards to which employers/fiduciaries must adhere.
  • Reporting and Accountability: Detailed reporting requirements and accountability to the federal government.
  • Disclosures: SPDs and Wrap Documents and required benefit notices.
  • Procedural Safeguards: A standardized policy put in place to define how claims should be filed, as well as standardization for the written appeals process should a claim be denied.
  • Financial and Best-Interest Protection: Assurance that protectionary protocols are put in place to both deliver benefits that work in the best interests of plan members while also ensuring that plan funds are appropriately protected. ERISA also prohibits and discriminatory practices in obtaining funds and collection of funding of plan benefits for eligible individuals.