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Who Is Exempt From ERISA?

On Behalf of Christian Ayers
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The Employee Retirement Income Security Act (ERISA) was codified into law in 1974 with the aim of preventing employers from misusing employees’ benefits accounts and providing legal recourse to any employee affected by their employer’s intentional fiduciary malfeasance. ERISA broadly applies to almost every private sector employer in the country, from small, limited liability companies to large corporations. ERISA pertains to most employee retirement accounts that include employer contributions as well as most welfare disability plans that can take effect after a workplace injury.

If you are employed in the United States and offered any type of benefits through your employment, it is very likely that those benefits are subject to the rules of ERISA. Employers that are not exempt from ERISA must provide detailed documentation to covered employees regarding the terms and conditions of their ERISA plans. Additionally, employers may not take any adverse actions against employees for asserting their rights under ERISA.

Who is exempt from ERISA?

Determining ERISA Exemption

Some employers and employer-provided benefits plans are exempt from the rules of ERISA. Generally, these exempt plans include group health plans that have been established or maintained by government entities. All federal and state government workers have alternative benefits-related rights that apply to their retirement and other employer-provided benefits. Other examples of ERISA-exempt plans include any such plans maintained solely for an employer to maintain compliance with applicable disability, unemployment, or workers’ compensation laws.

If a specific benefit plan is exempt from ERISA, the employer does not need to follow certain rules and regulations in their management of the plan. However, this does not mean they may engage in fiduciary malfeasance in their handling of these plans. ERISA exemption is difficult to ascertain in some cases, and if you are unsure whether a specific benefit plan is subject to the rules of ERISA, it’s best to consult an attorney as soon as possible with your concerns.

Resolving ERISA Disputes

If you believe you have experienced any violation of your rights under ERISA, you have an avenue of legal recourse through which you can hold your employer accountable for their actions. Some of the most commonly reported ERISA violations in the US include failure or refusal to honor benefits plans, failure to contribute funds to plans per the terms of those plans, failure to notify employees of changes to their plans, and general breach of fiduciary duty.

Penalties for employers that willfully violate ERISA can be severe. They will not only owe compensatory damages to affected employees but may face punitive damages as well. Additionally, they will face heavy fines in the hundreds of thousands or even millions of dollars, depending on the size of the organization and the severity of the breach.

Ayers, Whitlow & Dressler can provide the responsive legal representation you need to resolve any such violation of your rights under ERISA. Our team has helped many past clients navigate their administrative appeals through the insurance companies responsible for specific benefits plans, and we take time to develop individualized legal strategies for all clients we represent. Once you complete the administrative appeal process, this should lead to a settlement, but if necessary our team can represent you in tough litigation against an intransigent employer that refuses to honor their legal obligations under ERISA.


Q: What Does It Mean to Be Exempt From ERISA?

A: ERISA only applies to certain types of employer-provided benefits plans, but it does not apply to every type of benefit plan offered by US employers. ERISA exempt means that a specific plan is not subject to the terms and conditions of ERISA. When you are provided with documentation related to any employer-provided benefits plan, it should clearly state whether ERISA applies.

Q: Are All Employers Subject to ERISA?

A: Almost every private sector employer in the United States is subject to the rules of ERISA, regardless of the size of the organization. Corporations, limited liability companies, partnerships, and even sole proprietorships must maintain ERISA compliance if they offer any type of benefits to their employees.

Q: What Are the Penalties for ERISA Violations?

A: If an employer willfully violates the rules of ERISA or falls out of compliance, they face fines and additional penalties assigned based on the severity of the offense. In extreme cases, employers could face jail time and other criminal penalties. Fines for ERISA violations can be $100,000 per violation or even more than $500,000 for severe violations. At the very least, an employer will be required to remit any funds owed to affected employees.

Q: Why Should I Hire an ERISA Attorney?

A: If your employer has breached their legal duties under ERISA or if they have willfully violated their fiduciary duties to you in any way, an ERISA attorney is the best asset to have on your side when it comes to ensuring the employer’s accountability. Before filing a civil suit for an ERISA violation, you typically must file an administrative appeal through the appropriate insurance company. Dealing with insurance companies is often difficult, and your attorney can streamline this process on your behalf in many ways.

Q: Are All Benefits Plans Subject to ERISA?

A: ERISA applies to most employer-provided benefits plans, especially those pertaining to retirement account funding and disability benefits. 401(k)s, pension plans, and welfare disability plans are just a few examples. It’s possible for an employer to provide certain types of employee benefits that are covered by ERISA while offering additional benefits plans that are not subject to the rules of ERISA.

The attorneys at Ayers, Whitlow & Dressler have successfully helped many past clients with their employment cases, including those pertaining to employee retirement and disability benefits. If you believe your employer has violated ERISA in any way, or if you are unsure whether your employer is exempt from ERISA, we can help clarify your situation. Contact us today for more information about the legal services we offer for ERISA cases.