ERISA: How It Affects Employees and Employers

ERISA, the Employee Retirement Income Security Act, affects employees and employers in many ways – some of them good, some of them bad. 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 both in a recent interview.

The Good

According to Dean, ERISA does provide some peace of mind for employees, but not much. He told us, “If your pension plan doesn’t have enough money in it and your employer goes bankrupt, a corporation, called the Pension Benefit Guarantee Corporation (PBGC) and funded by the federal government, will step in to pay at least a part of the benefits you were promised. Currently, the PBGC is about $22 billion in the hole, so don’t get too excited.”

The Bad (and well, sometimes ugly…)

When we asked Dean about some of the negative aspects of ERISA, he summed up his answer by saying, “Where do I even begin?” He explained:

  • First, the courts did away with jury trials in ERISA cases and let the judge decide the case. Since many judges over the years have been appointed from a pool of corporate interests, this is not a good thing.
  • Then it was decided that all these cases should be in federal court instead of state court. Fewer lawyers who represent employees instead of employers are familiar with federal court.
  • Then they did away with “trials” and now most cases are decided just on the evidence that was given to the insurance company during the claims process, even before a lawsuit was filed.
  • Then they decided that efficiency was more important than fairness, so instead of getting a level playing field in court, you would only win your case if you showed the denial of your benefits was not just wrong or unfair, but you had to show it was ridiculously wrong or ridiculously unfair.
  • Then they decided that, even if you win, you couldn’t recover any damages you suffered as a result of the wrongful denial.
  • Finally, they did away with “punitive” damages – so no matter how unreasonable the denial, no matter how greedy the insurance company gets, all you can get are the benefits and sometimes a portion of the attorney fees you’ve paid.

As you can see, ERISA has become less employee-friendly over the years. So, if you’ve been denied valid benefits that are subject to ERISA, contact an attorney whose practice focuses in this area of the law. Consultations are free, without obligation and are strictly confidential. To contact a qualified attorney to discuss your situation, please click here.