When an employee is provided benefits at their place of employment, they likely do not consider whether they are the benefits they are required to receive. Additionally, employees may not be aware of their rights and options when it comes to enforcing the terms of their benefits. Thus, it is important that employees are aware of the standards for these plans, what happens when compliance is not met by an employer and what rights an employee has in these matters.
Under the Employee Retirement Income Security Act, certain requirements are imposed on employers that administer their own pensions, retirement plans or health insurance plane. This results in having certain obligations, such as providing plan participants with information such as features of the plan and how the plan is financed, establishing a fiduciary duty for those who manage the assets covered by a plan and setting up procedures for grievances regarding a plan as well as an appeal process for grievances.
Failing to meet these obligations could result in an ERISA violation. Common violations include improperly denying benefits to current or former employees, the breach of fiduciary duty and interference with rights of employees covered by the plan.
Penalties for employers
If a violation is proven, an employer could be punished one of two ways. The first way is when a complaint is filed against the employer by an employee covered by a plan or a beneficiary of a plan. In order for this to occur, however, the individual would first need to exhaust administrative procedures prior to filing an action.
The second way an employer could be punished is through an action that is initiated by the Employee Benefits Security Administration, which is part of the Department of Labor and is tasked with the enforcement of federal laws that are related to retirement plans and health insurance policies. An employer who is punished for a ERISA violation could face civil penalties, such as fines, making changes to procedures or practices of making a payment to a plan member or beneficiary, or criminal penalties, which could result in fines and even imprisonment.
Navigating an ERISA violation can be complex, as an employee may not be fully aware that a violation occurred or the options available to them to address the violation. Thus, it is beneficial for employees to take the time to gain information about their rights and what could be done if he or she encounters issues regarding their benefit plans.