Understanding ERISA and What It Typically Governs
ERISA, an acronym that stands for the Employment Retirement Income Security Act of 1974, is one of the most convoluted areas of law. Simply stated, ERISA is the law that governs an employee’s benefits. For example, ERISA governs your rights under your pension (defined benefit plan), 401(k) (defined contribution plan), disability insurance, some severance benefits, parts of your healthcare benefits, certain executive compensation benefits, various stock option plans, and a plethora of other employee benefits.
While the law governs an employee’s benefits, it also sets standards that employers must follow when providing these benefits. For example, it governs what an employer must disclose to an employee about their benefits, when an employer can change their benefits, and when an employee is entitled to their benefits.
Some of the most common things ERISA governs are:
- It governs what happens to your pension when an employer goes bankrupt or cannot afford to make your pension payments.
- It demands employers, plan sponsors, and plan administrators hold themselves to the highest duty known under the law when dealing with an employee’s benefits. The standard comes from trust law, and is typically referred to as the “fiduciary duty standard of care.”
- It requires disclosure of plan documents, change of benefits, or change of policy terms.
- It sets standards for when an employee’s benefits “vest.”
Lawyers who do not regularly practice ERISA law will tell you — like tax law — it is not an area you dabble in. It is a difficult and complex area of the law, and it is important to hire an attorney who has experience in this specialty: ERISA DISABILITY. Feldman Williams PA has lawyers who focus their practices in this area and are prepared to handle your questions and cases. To submit an ERISA question, request representation for you case, or if you wish to have one of our lawyers review your plan documents or company’s ERISA issues, please click here.
COMMON QUESTIONS ABOUT ERISA
Do I need a local attorney to represent me in an ERISA case? Do I need to go to court?
Generally, the answer would be no. ERISA is a federal law. That means that your case will be filed in a federal district court. Federal district courts are the trial courts for our federal system, and they operate by an electronic filing system; therefore, you do not even mail in most of your court filings. Instead, you simply file them online. Further, many types of ERISA cases do not even allow for a jury trial (e.g. ERISA disability insurance cases). Instead, they are decided “on the papers.” The likelihood you will need to appear in court is relatively small; this is the case for your attorneys as well. In other words, almost all of the work is done from the attorney’s office, wherever that might be, allowing you to hire experts in the field regardless of their base-office location.
Feldman Williams, PLLC has four offices in Florida, but we are able to represent ERISA clients throughout the nation. We have been involved with cases in California, Massachusetts, Washington D.C., Illinois, and Texas, as well as many smaller cities in between. Please email us here to have your case reviewed. Emailing us to review a case or legal matter will not cause you to incur legal fees.
I am receiving long-term disability benefits, but I need an advance on my monthly payment. What can I do?
Often times, disability benefits will not be enough to cover a person’s unexpected financial needs. For example, a house about to be foreclosed on, a roof needs repairing, or a major medical expense arises. When these things happen, clients will often hire Feldman Williams to negotiate a “buyout” of their disability benefits. In other words, clients will attempt to take a reduced amount of their total benefits due over time in favor of a lump sum payment today. If you need to negotiate a buyout of your long-term disability benefits please email us here. Emailing us to review a case or legal matter will not cause you to incur legal fees.
Who Is an ERISA Fiduciary, and What Protections Do the ERISA Fiduciary Rules Provide?
Good question, although complicated. Generally, ERISA says a fiduciary is anyone who “exercises discretionary control or authority over a plan.” This may include someone who has access to plan funds or assets, who makes decisions on what an employee or plan participant gets from a plan, provides investment advice, or is responsible for the monitoring or investing of plan assets. Simply stated, there is a good chance multiple people will be considered a “fiduciary” under ERISA.
Because fiduciaries must act “solely in the interest of participants” for the “exclusive purpose of providing benefits,” the duties imposed on you as a fiduciary are nothing short of extraordinary. Avoiding conflicts of interest, diversifying a plan portfolio, following the plan documents, and staying current with your investment strategies are imposed upon a plan fiduciary.
Failure to follow these principles will lead to civil liability, including personal liability, and potentially criminal liability. Moreover, yes, ERISA does have criminal statutes contained in its framework.
If you believe a plan fiduciary has violated its duties, or you are a plan fiduciary being sued for an alleged breach of fiduciary duty, Feldman Williams, PLLC is interested in examining your case. Please feel free to email us the basic facts for a case review. Emailing us to review a case or legal matter will not cause you to incur legal fees.
What Is a Summary Plan Description (SPD)?
The key document to any ERISA benefit is the Summary Plan Description. This document is required to be a relatively short, plain-English statement of what your benefits are, when your benefits become vested, how you can participate in the plan, how your benefits are calculated, how to change your benefits, how you will be paid, what your payment options are, what your appeal rights are when you are denied benefits, who the plan administrator is, and how to find out more about the plan and its benefits.
This document is free. In fact, you must be given this document when you enroll in a plan. Additionally, the plan administrator should provide you a copy of it any time significant changes are made to plan. Each year you should also receive the plan’s annual summary report (this document discusses the plan’s financial health).
If an employer does not provide you with the plan documents 30 days after your written request, you may be entitled to $110.00 penalty for each day after the 30 th day. If you need help obtaining the Summary Plan Description, please contact us at Feldman Williams, PLLC.
I Was Denied Long-term Disability Benefits. What Do You Need to Review My Case?
Ideally, we would like your claim file; however, if you do not have it, do not worry. We can establish the basics of your case by reviewing your denial letter. Most likely, you applied for long-term disability benefits and you were denied by the insurance company. If this happens, you should have a “denial letter,” which discusses the reasons you were denied. Feldman Williams, PLLC can review your denial letter and claim file (if you have it) for free to determine if you have a case. Nevertheless, do not wait to get Feldman Williams, PLLC this information. Typically, you only have 180 days from the date of your denial letter to appeal your decision.
What documents you submit for your appeal are also critical. This is because a federal judge will pay particularly close attention and be somewhat limited by what he or she can review when looking at your case. What your appeal consists of, along with what is in your claim file, will make up the bulk of what evidence you can introduce during a lawsuit. In other words, if you do not submit a proper appeal, you are hurting your chances to be successful in a future lawsuit. Feldman Williams, PLLC can help you appeal your long-term disability benefits. If you would like help or you would like us to review your case email us.
Employee Stock Ownership Plans (ESOP)
An Employee Stock Ownership Plan (better known as an ESOP) is a tax-qualified, defined contribution plan regulated under ERISA and the Internal Revenue Code. The basics of an ESOP are that employees purchase shares in the company or are given shares as compensation. When an employee retirees or has another qualifying event, the shares are turned (presumably at a profit) and the employee can retire and pay his cost-of-living expenses from the earnings and value of selling the shares back.
The reasons why ESOPs are created and utilized are broad in range (e.g. provide the original owners an avenue to sell company stock to trusted employees, motivate employees, preferred lending, tax savings, and even raise capital for company expansion). However, sometimes companies and plan sponsors do not give employees their fair market value when they try to sell their shares back. When this happens, the company and plan sponsors may be in violation of their fiduciary duties under ERISA. If you feel you are not being offered the fair market value of your ESOP shares, please email Feldman Williams, PLLC
Other Questions? Ask Our Tampa ERISA Lawyer
Because ERISA is such a complex law, you may have other questions than what we discuss here. Contact one of our Tampa ERISA Lawyers for help. Our experienced attorneys at Feldman Williams, PLLC will provide you the information you need to know your rights.