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Employer Obligations Under ERISA: Common Violations

Posted on in Employment

employment lawyer, San Jose employment law attorneys, employer obligations, ERISA, employer compliance violationsThe Employee Retirement Income Security Act (or ERISA) is an important compilation of federal laws designed to protect the retirement income security of workers employed in the private sector who have health and pension plans through their employers. The employer obligations contained in ERISA concerning these health and pension plans set minimum standards that most private sector employers in the United States must abide.

While a local employment lawyer can provide private employers with thorough ERISA compliance assistance, employers bound by the ERISA should be aware of common compliance violations outlined below.

Common Compliance Violations

Both knowingly and accidentally, employers can violate their obligations under ERISA in a number of different ways. Some of the most common big picture violations include improperly denying benefits, breaching a fiduciary duty owed to plan beneficiaries, and interfering with the beneficiary rights.

However, an insightful article from Compliance Bug points out that there are several compliance violations that ERISA bound employers commonly commit when they rely too heavily on a group benefits insurance broker to ensure compliance with ERISA. These common mistakes include:

  1. Inconsistent Group Benefit Plans: Most ERISA group benefit plans are required to have an up-to-date Summary Plan Description (SPD) and Plan Document; however, violations can occur when these documents are not properly updated to reflect changes in benefits and eligibility after insurance coverage is renewed. If these documents are inconsistent with a group participant’s insurance coverage that employee may be entitled to sue for the benefits that they, based on the inconsistent documents, believed they were entitled to.

  1. Mistakenly Believing that Your Broker Produced an SPD: The paperwork associated with ERISA compliance can be complicated and Compliance Bug points out that brokers often mistakenly tell their clients that the benefits that their participants have been provided with is the Summary Plan Description required under ERISA. Employers who are obligated under ERISA to provide participants with a Summary Plan Description and fail to do so can face incredibly steep fines from the Department of Labor.

  1. Improperly Setting up Voluntary Benefits: Under ERISA there is a safe harbor exemption for voluntary benefits that meet certain criteria. For example, such a benefit will generally be exempt if (1) the plan is voluntary, (2) there are no employer contributions, (3) there is no employer endorsement, and (4) the employer does not receive more than reasonable compensation for collecting/remitting premiums. However, if the voluntary benefits do not meet these requirements (and possibly others as well) then they are not exempt benefits un ERISA.

Let Us Assist You with Your Case

Mismanaging retirement accounts is one area of employment law that can have especially devastating implications for those involved. It is also one area of the law that is extremely complicated, especially when dealing with employer compliance violations. Therefore, if you are a California employer who has been accused of violating ERISA, or an employee who believes that an employer has mismanaged your retirement accounts, be sure to consult with an experienced ERISA lawyer without delay. 

At Jachimowicz Law Group, one of our experienced San Jose employment law attorneys would be happy to discuss your case and your legal options with you during a free initial consultation.

Source:

https://www.compliancebug.com/4-ways-you-are-at-risk-for-erisa-violations/

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