What Does ERISA Prohibit?

The Employee Retirement Income Security Act (ERISA) exists to provide legal protection for employees and their employer-provided healthcare and retirement benefits. When you have any type of benefits plan through your employer, it is likely covered by ERISA. In North Carolina, ERISA applies to almost every employer in the state, and it is important to know what ERISA permits and what it prohibits.

What Does ERISA Allow?

ERISA sets strict rules for employers who provide various types of benefits plans to their employees. Employers who provide any ERISA-covered benefits plans to their employees have a fiduciary duty to honor the terms of the plan, and ERISA provides avenues of legal recourse for employees who are negatively affected by their employer’s failure to abide by the rules of the plan.

ERISA allows an employee to bring a claim against an employer and/or an insurance company for many reasons, such as:

• Seeking compensation for benefits legally owed under an ERISA-covered plan. For example, if an employer has refused to pay owed benefits or reduced benefits, the employee has legal recourse to recover what they are legally owed, plus penalties in many cases.
• Holding an employer accountable for breach of fiduciary duty. For example, if an employer misappropriates funds intended for an employee benefits plan, it is a clear violation of ERISA.
• Filing a claim for illegal retaliation. Employer retaliation occurs whenever an employer takes any adverse action against an employee in response to the employee’s legally protected action, such as filing a claim for disability benefits in good faith following a serious injury at work.

If you believe an employer has violated ERISA, it is vital to speak with an ERISA attorney as soon as possible.

Prohibitions Under ERISA

ERISA aims to protect employees, and as such, the law includes clear terms describing “parties in interest” who are prohibited from doing business with the plan. These parties include the employer, an employee union, any fiduciary of the plan, a service provider, and any other statutorily defined officers, owners, or relatives of any such parties in interest.

The parties in interest may not engage in certain prohibited transactions, which may include:

• The sale, lease, or exchange between the plan and any party in interest.
• The lending of money or the extension of any line of credit from the plan to any party in interest.
• Furnishing services, facilities, or goods from the plan to any party in interest.
• The use of any plan assets for a fiduciary’s own interests.
• Any fiduciary acting on both sides of any plan-related transaction.
• Any party receiving any funds to their personal account from any party doing business with the plan.

Unfortunately, some of these prohibited activities can be difficult to trace, and parties that knowingly engage in violations of ERISA usually take steps to conceal their actions.

Injured Employees Need to Understand All the Implications of ERISA Violations

ERISA cases are inherently complex in many ways, and when employees are negatively impacted by ERISA violations, they are typically aware of their missing benefits but are unaware of the greater implications of the incident. An experienced North Carolina ERISA attorney is an essential asset if you are owed benefits through any ERISA-covered plan and believe that your employer or any other party in interest has breached the terms of the plan.

FAQs

Q: What Are Common ERISA Violations?

A: An ERISA violation case may pertain to any breach of fiduciary duty regarding an employer-provided plan covered by ERISA. Failure to provide notices of changes to an ERISA plan, denial of benefits, reduction of benefits, retaliation, and denial of coverage are just a few common examples of ERISA violations that can lead to complex legal battles between employers and affected employees.

Q: How Do You Know If a Plan Is Covered By ERISA?

A: Almost every private employer is subject to ERISA, so if you have any employer-provided benefits plan in place, it is likely covered by ERISA. ERISA plans require the filing of a Form 5500 each year, and these filings are publicly viewable. If this form has been filed for the plan, it is a solid indication that it is covered by ERISA.

Q: Is ERISA a Federal or State Law?

A: ERISA is a federal law enacted in 1974 in an effort to ensure that employers are held to appropriate standards when it comes to their handling of employee benefits plans. ERISA not only sets strict regulations and expectations for employers who provide these plans but also provides various avenues of legal recourse for employees who are adversely affected by ERISA violations.

Q: What Does ERISA Prohibit?

A: ERISA aims to prevent any employer misappropriation of funds from employee benefits programs; ERISA also prohibits the sale, lease, or exchange between the plan and any party in interest, lending money or extending credit between the plan and a party in interest, and it prevents fiduciaries from using any assets in an ERISA plan for their own interest. Fiduciaries are also prohibited from acting on both sides of any transaction involving an ERISA plan.

Q: Why Should I Hire an ERISA Attorney?

A: Many employees are adversely affected by ERISA violations without realizing it, and many who do notice the adverse effects of these incidents are not fully aware of their options for legal recourse that may help them resolve these problems. Hiring an experienced ERISA attorney to assist you ensures that you can exercise the full extent of your rights after an ERISA violation, and you will be more likely to maximize your recovery with their help.

The attorneys at Ayers, Whitlow & Dressler have years of professional experience helping employees resolve ERISA violations. Regardless of what your individual situation entails, the right attorney can be an invaluable asset for you to resolve the situation as fully as possible, so contact us today and schedule your free consultation with our team to learn how a North Carolina ERISA attorney can assist with your recovery efforts.