A Quick Guide for Prevailing Wage and Hourly Workers
ERISA, or the Employment Recruitment Income Security Act of 1974, is a federal law that sets the minimum standards for most voluntarily established pension and health retirement plans in the private industry. Knowing more about ERISA will protect you as an American worker and employer.
Here are 5 of the most frequently asked questions about ERISA.
1. What is the purpose of ERISA?
The ERISA was enacted to protect the assets of Americans who put their funds into retirement plans. The minimum standards set by the act ensures that retired American workers can access the funds they generated and set aside during their working lives.
Confusion over standards related to health, general and prevailing wage retirement plan packages can lead to retirees forfeiting the funds they should have been able to access. ERISA clarifies the requirements and obligations involved in retirement plans in the retirement industry.
2. What can you expect from health and retirement plan providers under ERISA?
Under ERISA, plans are required to provide information about the retirement plan. This information should include plan features and funding, and it should also be updated regularly and automatically as well.
You can expect accountability of plan fiduciaries under ERISA. The law defines a fiduciary as anyone who has discretionary authority or control over the management or assets of the plan.
3. Does ERISA cover all retirement plan options?
ERISA applies only to private (non-government) employers that offer health insurance coverage and other benefit plans to their employees. This includes prevailing wage contractors and excludes government agencies.
ERISA does not require employers to offer plans. It only sets standards on plans employers choose to provide.
The act covers defined benefit plans, defined contribution plans, Simplified Employee Pension Plan (SEP) and other types of plans.
4. What are the main provisions under ERISA?
ERISA does the following:
- Establishes minimum standards for participation, vesting, accruing benefits, and funding, given a retirement plan
- Requires detailed reporting and accountability of plan fiduciaries
- Requires plans to provide certain disclosures, such as updated and complete information regarding plan features, funding and other details
- Gives participants right to sue for benefits and in the event of breaches of duty
- Guarantees payment of certain benefits if the defined plan is terminated
As an example, ERISA specifies that to participate in a retirement plan maintained by your employer, there is a certain amount of time you need to work for that employer before you have a non-forfeitable interest in the benefit. Other minimum standards can include how long you can stay away from your job before your benefit is affected.
If the worker fulfills and meets all obligations as a participant, and yet he/she does not receive the set specific benefit amount at retirement, then there is grounds for breach of fiduciary duty.
5. Who administers ERISA?
The act is administered and enforced by the Employee Benefits Security Administration (EBSA) of the US Department of Labor. Complaints, concerns and questions should be raised to your local DOL office.
Learn More about Prevailing Wage Benefits and Plans with ARCHER JORDAN
The laws governing prevailing wage and benefit plans can be complicated. As a third party administrator providing fringe benefits to government contractors and hourly hires, ARCHER JORDAN has the experience and expertise to help your company.
Whatever type of plan you are offering your employees, we can help you ensure compliance with existing laws like ERISA. Contact us today!