Blog > Why ERISA Compliance Matters
According to the 2015 Workplace Class Action Litigation Report, published by Seyfarth Shaw (a well respected law firm headquartered in Chicago) summarizing nationwide workplace class-action litigation, settlements in claims brought under the Employee Income Retirement Security Act (ERISA) topped more than $1.3 billion.
The report notes that there were a total of 7,163 ERISA claims filed, but the more astounding number was the total settlement figure for ERISA class-action claims – the massive $1.3 billion. As a basis for comparison, the class-action settlements for wage and hour and employee discrimination cases were a combined $443 million during the same period.
These numbers should serve as a reminder that the DOL is serious about ERISA compliance. Now is the time to plan & complete your 2016 filings and reports in order to eliminate potential penalties and the time wasted in pulling together documentation for a 5500 filing, distribution of plan documents or a potential Audit, at the last minute.
Many employers are unaware of the responsibilities and requirements that ERISA places on them. Every employer who offers employee health & pension benefits should be aware of ERISA since fiduciary responsibility often rests with the owner in small and medium-sized businesses. ERISA requires employers that offer employee benefit plans to manage their plans with the best interests of their employees and their dependents in mind. The three basic fiduciary duties are: loyalty, exclusive benefit, and duty of care. A plan sponsor may wrongly assume that the fiduciary duties are the responsibility of and are handled by service providers to the plan.
ERISA imposes several requirements for health and welfare and retirement plans to keep participants and their beneficiaries informed about plan provisions and any plan changes. These requirements include plan documents, summary plan descriptions, reporting and filing requirements, and claims procedures. Employers must have a plan and ensure that the plan’s funds are appropriately protected. Companies must also make sure that every eligible employee receives his or her benefits.
ERISA compliance also requires plans to adhere to several amendments to the regulations including, but not limited to, the Health Insurance Portability and Accountability Act (HIPAA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA).
As was previously pointed out, the Department of Labor can impose civil or criminal penalties for companies that do not comply with ERISA rules.
With the start of a new year, it is time to start your ERISA compliance for 2016.< Back to posts