Workplace Wise - Iowa Employment Law Attorneys

Thursday, January 30, 2014

Back to Basics: Fixing Common ERISA Mistakes

By Cynthia Boyle Lande

This time of the year many people are working on New Year’s resolutions to break bad habits, learn a new skill, or spend more time with close friends and family.  With year-end deadlines met and the holidays over, now is also a good time for employers to review their benefit plans and make sure they are in compliance with applicable ERISA requirements. (Remember, ERISA often applies to health and welfare benefit plans, not just retirement plans.) We have prepared this summary of some of the most common ERISA mistakes we see to help you with this review.

Following Plan Terms

One of the most common ERISA plan mistakes is a failure to follow the terms of the governing Plan Document. It is easy for plan sponsors to operate a plan based on a combination of memory and intuition and forget that ERISA requires the plan to be operated in accordance with the terms of the Plan Document. Examples of common failures relating to following the terms of a governing Plan Document include the following:

  •  Definition of Compensation: Employers have some flexibility in determining what constitutes employee compensation for purposes of things like matching contributions and elective employer contributions. Compensation may or may not include bonuses, commissions, or other amounts separate from an employee’s base pay. Notwithstanding the fact that employers have discretion to determine what is or is not part of compensation, they must ensure that their actual practices for defining compensation comply with the definition under their Plan Document.
  •  Eligibility Requirements: While ERISA (and, in the case of group health plans, the Affordable Care Act) limit employers’ ability to impose employee eligibility requirements, employers often choose to exclude certain employees from their benefit plans. Employers must ensure that in addition to complying with ERISA and the ACA these eligibility restrictions comply with the terms of the applicable Plan Document.
  •   Hardship Distributions and Plan Loans: Retirement plans may make hardship distributions and loans to participants, but only in limited circumstances. Failure to follow ERISA and IRS requirements relating to these distributions and loans can have negative consequences for the plan and the participant receiving the distribution or loan. Additionally, plan sponsors can only make these distributions and loans as authorized under the terms of the applicable Plan Document.
 Maintaining Plan Document and Summary Plan Description.

One of the other most common ERISA mistakes is a failure to maintain Plan Documents and other required documentation.  ERISA plans, including most health and welfare benefit plans, are required to maintain a Plan Document and Summary Plan Description (or SPD). Failure to maintain these documents or to provide them to a participant when requested can result in substantial statutory penalties. 

Additionally, plan sponsors are required to regularly update the Plan Document and SPD based on changes in the law or plan terms. Failure to make these changes can similarly result in significant statutory penalties. Updating the Plan Document and SPD can also help ensure that the plan sponsor is following current ERISA and other requirements.

As with other significant business actions, plan sponsors should make sure that the Plan Document, SPD, and amendments are properly adopted, typically in the form of board or manager resolutions. On audit the Department of Labor or Internal Revenue Service will often expect the plan sponsor to be able to provide originals of these resolutions showing that the Plan Document, SPD, and amendments were properly adopted. 

The best approach for dealing with these common ERISA mistakes is to ensure that they never happen. In the event that they do, it is best to correct the mistakes, in accordance with correction procedures approved by the Department of Labor and IRS, as quickly as possible. If you find yourself identifying with any of these common mistakes, or if you have any question about how the general requirements described in this post apply to your plan, you should contact your BrownWinick employment practice group attorney. 

Tuesday, January 21, 2014

Is OSHA's Proposed Rule On Improving Tracking of Workplace Injuries and Illness Really an Improvement?

By Brent D. Soderstrum
On November 8, 2013, the Occupational Safety and Health Administration (OSHA) proposed a new rule entitled "Improving Tracking of Workplace Injuries and Illness."  Under this proposal:

1.    Certain establishments with at least 250 employees will be required to electronically submit their OSHA Form 300 on a quarterly basis to OSHA.

2.    Certain establishments with at least 20 employees will be required to electronically submit their OSHA summary form 300A on an annual basis to OSHA.

3.    Upon request from OSHA, certain employers will be required to submit specific information about cases from their OSHA 301 incident report.

4.   Data from the 300A and 300, except the employee's name, will be available to the public via the Internet.

The biggest concern about the proposed rule is that data that was previously available only to an OSHA inspector in reviewing an employer's OSHA 300 and 300A logs would now be available to the public for viewing on the Internet.  This will no doubt cause many employers to be much more careful with their recordkeeping, resulting in selective recording of injuries and illnesses.  The public posting of this information will also likely lead to employers being targeted by outside groups who characterize these employers as having bad safety records. 

Posting this information serves the public little good; it can be easily misinterpreted and lead to unfair conclusions or judgments about an employer or a particular industry.  I am afraid that this will lead to many employers doing everything within their power to not report workplace injuries because it will then become public information.  The injury and illness data that is going to be made public by the proposed rule will not include information that explains how the injury occurred, such as whether an employee acted in an unsafe manner or failed to follow an employer's safety rules.  This incomplete information that OSHA intends to make public may allow competitors, plaintiff attorneys, unions, and others to distort the information and wrongly label employers as unsafe or bad actors.

If anything concerns you regarding this proposed rule, OSHA will be accepting written comments regarding the proposed rule through March 8, 2014.