Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act (“ERISA”) is a federal law that sets standards for private employers when they choose to provide benefits like pension plans or health insurance to their employees. ERISA does not require any employer to provide such benefits, but if an employer decides to offer these benefits, the employer must adhere to ERISA’s requirements.

ERISA sets some standards for plan participation and benefit requirements, imposes fiduciary responsibility on employers, and establishes rules for the enforcement of employee rights. ERISA also includes standards for continuation of healthcare coverage under certain circumstances when employment is terminated (under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)) and standards for health plan portability and access rules (under the Health Insurance Portability and Accountability Act of 1996 (HIPAA)). Finally, ERISA preempts most state laws on employee benefits.

ERISA was designed primarily to protect the pension benefit of the traditional full-time, long-service, single-employer worker. With respect to workers employed under more flexible work arrangements, such as part-time workers, phased retirees, workers who leave and reenter the workforce periodically for personal reasons, or workers who change employers often, ERISA’s protections are fewer. Employers are not prohibited by ERISA from providing benefits to workers who do not fit the traditional mold, if the employer wishes to do so. Nonetheless, certain provisions of ERISA may impact the ability of such workers to benefit from ERISA’s provisions (e.g., the 1000-hours of service eligibility requirement for pensions, break-in-service rules that impact benefit accrual if a worker takes an extended leave, and requirements that workers remain at an employer for a certain number of years before becoming entitled to receive the benefits they accrued while working).

Further Information

Documents prepared by Workplace Flexibility 2010: