An Overview of ERISA Penalties
The Employee Retirement Income Security Act (ERISA) is a federal labor law that establishes minimum standards for private sector pensions. It also covers other private sector employee benefits, such as life insurance plans and disability insurance plans.
In addition to setting minimum levels of protection, ERISA imposes several obligations on employers. These obligations include:
- Mandating that employers administer plans prudently and for the benefit of the participants;
- Filing certain reports for public transparency; and
- Granting participants an appeal process to resolve disputes.
If your employer has violated ERISA, they can be subject to both criminal and civil penalties.
There are a multitude of civil penalties for companies that violate your rights under ERISA. However, determining which civil penalty applies to your case can be difficult. Various parts of ERISA define different kinds of violations and assign different civil penalties according to the kind of violation involved.
For example, ERISA § 502(i) states that the Department of Labor (DOL) may impose a penalty of 5% of the amount involved in a prohibited transaction with a health or pension plan. If the prohibited transaction is not corrected within 90 days, the DOL can impose a penalty equal to the full amount of the prohibited transaction.
Another example stems from ERISA § 502(c)(2). This section imposes a fine on companies that fail to properly file an annual report. For each day that the report is late, the DOL can charge the offending company $2,259. However, this amount changes from year to year because the Federal Civil Penalties Inflation Act of 2015 stipulates that ERISA penalties must increase every year based on the official rate of inflation.
While the two examples above are based on specific figures, the civil penalties for some other ERISA violations will vary based on the circumstances. An experienced ERISA attorney will be familiar with the full spectrum of ERISA penalties and can help you calculate the potential value of your case.
ERISA also allows for criminal penalties under certain circumstances. Originally, criminal ERISA penalties were fairly minor. However, following the Enron and WorldCom scandals, Congress passed the Sarbanes-Oxley Act to help provide better protection to investors and the general public. To further this goal, Sarbanes-Oxley significantly increased ERISA's criminal penalties.
Now individuals who willfully violate ERISA’s disclosure and reporting requirements can be fined up to $100,000 and imprisoned for up to ten years. Also, anyone who makes false statements of fact relating to documents that are required by ERISA can face up to five years in prison.
How Can the Peace Law Firm Help?
Navigating the world of ERISA penalties isn’t easy. If you think your employer has violated your rights under ERISA, John Peace and the Peace Law Firm can fight for you. We can help you understand which ERISA penalties apply to your case.
We’re not afraid of employers or insurance companies, and we can help you get the treatment you deserve. Most importantly, we put our clients first and treat them like real people, not just numbers.
Even if you’re still 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.