ERISA Law 101
UPDATED: February 20, 2013
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ERISA, the Employee Retirement Income Security Act, has been a source of confusion and frustration to many since it was signed into law – nearly 35 years ago. Originally enacted as an employee protection law, experts say that ERISA sometimes does just the opposite.
Attorney Ron Dean
We asked Ron Dean, a California attorney who has been engaged in employee benefits litigation primarily on behalf of participants for over 30 years, to explain ERISA’s history, modifications and which governmental agencies are involved. Here’s what he told us in a recent interview:
What is ERISA Law?
ERISA stands for Employee Retirement Income Security Act. It was signed by President Ford (remember him?) back on Labor Day in 1974. The original purpose of the Act was to address problems with corporate pension plans. When the Studebaker Motor Company went bankrupt many years before, it left the pension plan, and its workers, with no money and no remedy. Some say the real purpose was to address alleged mob interests in the Teamsters’ pension funds.
In any event, practically everything in the law talks about pension things and very little talks about disability, health, life or medical benefits. That’s because just as the law was entering its final draft, someone had the bright idea to add all employee benefits, not just pension benefits, to the bill. This had the effect of throwing out 200 years of developed law in those areas and substituting , well, practically nothing.
How has the Act been modified?
ERISA has been substantially amended at least 40 times since it was passed over 30 years ago. However, most of those changes deal with the pension provisions. There have been some changes in the medical coverage area (such as COBRA [the Consolidated Omnibus Budget Reconciliation Act of 1986] and HIPAA [the Health Insurance Portability and Accountability Act of 1996] providing for continued medical coverage after someone is no longer working for the company) and in the family law area providing for pension divisions and medical coverage for children following a divorce.
Which government agencies are involved?
Although the law originally gave the Departments of Labor and Treasury joint oversight for the administration of the law, in 1978 President Carter (remember him?) issued an order dividing the responsibilities between the two Departments.