ERISA


Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act sets uniform minimum standards for establishing employee benefit programs in a fair and financially sound manner.  ERISA does not require employers to provide benefits outside those required by other laws, such as workers' compensation, unemployment insurance, or disability insurance.  However, once a plan is established, ERISA imposes high standards of fiduciary duty on plan administrators.  These duties include the requirement that all decisions concerning the plan are made solely in the best interests of the plan participants, that the decision-maker exercise the diligence and care of a "prudent person" given all circumstances, and that the only purpose of the plan is to provide benefits to the participants. These duties obligate the plan administrator to fully inform and provide complete information to plan participants.  (See Krohn v. Huron Memorial Hospital, 173 F.3d 542 (6th Circuit, 1999)).

Typically, ERISA coverage includes pension plans, 401(k) plans, health benefits, life insurance, and other employment benefits.  Federal courts very broadly construe the statute to encompass most non-monetary employer-provided benefits.  Causes of action to enforce rights for ERISA benefits must be brought in federal courts.  If an ERISA action is brought in a state court, it will be removed to federal court.

Employers must provide any benefits they promise.  Employers must provide participants with a summary plan description.  This document must explain, in understandable terms, the participant's rights, benefits and responsibilities under the plan.  Administrators are also required to file annual reports that include financial information and other information concerning the operation of the plan.


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