The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for employee benefit plans maintained by private-sector employers. The Department of Labor (DOL), through its Employee Benefits Security Administration (EBSA), enforces most of ERISA’s provisions. Violating ERISA can have serious and costly consequences for employers that sponsor welfare benefit plans, either through DOL enforcement actions and penalty assessments or through participant lawsuits.
If an employee benefit plan is exempt from ERISA, the plan’s sponsor does not have to comply with certain requirements that are designed to protect plan participants and ensure plan solvency. On the other hand, an ERISA exemption also means that the plan sponsor does not enjoy certain protections afforded to employers under the law. Most significantly, employers that sponsor ERISA plans are generally protected against lawsuits for punitive and other types of damages under state laws with respect to their benefit plans.
EMPLOYERS SUBJECT TO ERISA
- Private-sector employers (regardless of size) that maintain welfare benefit plans for their employees
- Government and church employers are exempt
PLANS SUBJECT TO ERISA
- Employee welfare benefit plans established by private-sector employers
- Covers both fully insured and self-insured welfare benefit plans
- Exemptions apply to certain payroll practices and voluntary plans