ERISA vs. Non-ERISA: How Do You Know?
If you’re a full-time employee, you might have heard of a law called ERISA.
ERISA refers to a federal labor law called the Employee Retirement Income Security Act of 1974. Congress passed ERISA to protect employees who receive pensions or insurance plans from their employers.
ERISA requires private sector employers to follow certain rules on how to manage their pension funds and insurance plans.
Furthermore, ERISA imposes fiduciary and monetary obligations on employers so that they act on behalf of the employees participating in the plan.
However, some employer-provided pension plans and insurance plans are “non-ERISA” plans, which means they are exempt from ERISA. An employer providing non-ERISA plans has fewer obligations to the participants of the plan and less involvement in the control of the plan.
Knowing whether your employer-provided plan is ERISA vs. non-ERISA is essential to understanding your rights and your employer’s responsibilities to you.
What Is an ERISA Plan?
Simply put, ERISA plans are employee benefit plans that comply with the requirements of the Employee Retirement Income Security Act. These requirements protect employees who participate in an employer-provided retirement or insurance plan. Here are several features of ERISA plans.
ERISA Plans Impose Fiduciary Responsibilities on Employers
Companies that manage ERISA plans are heavily involved in directing and administering the plans’ assets. To help prevent employers from abusing their power, ERISA requires employers to administer an ERISA plan prudently and to act solely for the benefit of the participants. Employers must also diversify the plan’s investments and pay only reasonable plan fees.
ERISA Plans Provide Free Information to Plan Participants
Employers offering an ERISA plan must provide prospective participants with written information about the management, features, and facts of the plan. Much of this information is in a document called the summary plan description (SPD).
ERISA plan administrators have to provide the SPD to all participants free of charge. Finally, the employer must notify all ERISA plan participants of revisions or changes to the SPD.
ERISA Plans Have a Grievance and Appeals Process
ERISA plans must also give participants the right to appeal any adverse decisions, including a denial of benefits. Furthermore, if a claim is denied under an ERISA plan, ERISA entitles the participant to know the specific reason for the denial as well as the part of the insurance policy that was relied on to support the denial.
What Is a Non-ERISA Plan?
As you might imagine, the requirements of ERISA don’t apply to non-ERISA plans. In addition, there are several key differences between ERISA and non-ERISA plans. For one, an employer providing non-ERISA plans does not contribute any money to those plans.
Furthermore, non-ERISA plan administrators cannot handle fund distributions, authorize transfers between multiple plans, or reserve the power to enforce any rights against the plan’s participants.
There are two main pathways that a benefit plan can be exempted from ERISA. The first method is meeting the requirements of the ERISA “Safe Harbor” provision. The second way requires that an employer qualify for one of several special exemptions.
To qualify for the Department of Labor’s ERISA safe harbor provision, the plan must meet several factors:
- Employee participation in the plan must be voluntary;
- The employee must be the only party that can enforce any rights related to the plan;
- The employer can only be involved in certain optional plan-related activities; and
- The employer cannot receive any compensation—besides reasonable reimbursement—for covering the plan’s expenses.
Even if the plan qualifies for the ERISA safe harbor provision, your employer must still fulfill regulatory requirements outside of ERISA.
29 USC §1003(b) creates several categories of plans which are exempt from the provisions of ERISA. If your employer-provided benefit plan falls into any one of the following categories, it may not be covered by ERISA.
Plans Provided by Governments
The first category of non-ERISA plans are “governmental plans.” 29 U.S.C. §1002(32) defines the term “governmental plans” as any plan established or maintained by any government organization. This includes, federal, state, local, and city governments.
Plans Provided by Religious Organizations
Another category of non-ERISA plans is “church plans.” This term includes plans provided by churches, mosques, synagogues, and other religious groups, If you are an employee of a religious organization, ERISA probably does not apply to your employer-provided plan. However, this is not always the case, as religious organizations can choose to submit their plans to ERISA’s requirements.
Plans That Allow Voluntary Contributions
Any plan that allows you to choose whether you will make contributions is almost certainly exempt from ERISA.
There are advantages and disadvantages to both ERISA and non-ERISA plans. An experienced ERISA attorney will understand all of the differences between ERISA and non-ERISA plans and can inform you of your rights.
Do I Need an Attorney If My Employer Has Violated ERISA?
If you are asking yourself this question, the answer is most certainly yes. The laws surrounding ERISA are very complex. On top of that, insurance companies and employers are far more familiar with the provisions of ERISA than the average employee. Moreover, these companies have strong incentivizes to deny and minimize benefits claims whenever possible.
If you decide to sue your employer in federal court over an ERISA-related violation, you will have to navigate the entire legal process by yourself. This means sending discovery requests to your employer and third-parties for information, dealing with judges and attorneys, and having to draft complicated legal motions on your own.
Having an attorney spares you the headache of dealing with these overwhelming details. An ERISA attorney will also have the knowledge and the skillset to fight for your rights effectively and maximize your chances of receiving compensation. Thus, the best thing you can do to enforce your rights is retain a licensed attorney who has experience with ERISA cases.
How Can the Peace Law Firm Help?
If you think your employer has violated your rights, reach out to John Peace and the Peace Law Firm immediately. Unlike most law firms, we have years of experience dealing with the complete gamut of ERISA claims.
We’re not afraid of employers or insurance companies, and we can help you get the compensation you deserve.
Finally, we handle all cases on a contingency basis. This means we won’t ask for legal fees unless you win your case.
Even if you’re not sure whether you should file an ERISA lawsuit, contact us today. All initial consultations are free, so you have nothing to lose by giving us a call. Let us help you fight for your rights.