[Federal Register Volume 80, Number 222 (Wednesday, November 18, 2015)]
[Rules and Regulations]
[Pages 71936-71940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29427]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2509
RIN 1210-AB74
Interpretive Bulletin Relating to State Savings Programs That
Sponsor or Facilitate Plans Covered by the Employee Retirement Income
Security Act of 1974
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Interpretive bulletin.
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SUMMARY: This document sets forth the views of the Department of Labor
(Department) concerning the application of the Employee Retirement
Income Security Act of 1974 (ERISA) to certain state laws designed to
expand the retirement savings options available to private sector
workers through ERISA-covered retirement plans. Concern over adverse
social and economic consequences of inadequate retirement savings
levels has prompted several states to adopt or consider legislation to
address this problem. The Department separately released a proposed
regulation describing safe-harbor conditions for states and employers
to avoid creation of ERISA-covered plans as a result of state laws that
require private sector employers to implement in their workplaces
state-administered payroll deduction IRA programs (auto-IRA laws). This
Interpretive Bulletin does not address such state auto-IRA laws.
DATES: This interpretive bulletin is effective on November 18, 2015.
FOR FURTHER INFORMATION CONTACT: Office of Regulations and
Interpretations, Employee Benefits Security Administration, (202) 693-
8500. This is not a toll-free number.
SUPPLEMENTARY INFORMATION: In order to provide a concise and ready
reference to its interpretations of ERISA, the Department publishes its
interpretive bulletins in the Rules and Regulations section of the
Federal Register. The Department is publishing in this issue of the
Federal Register, ERISA Interpretive Bulletin 2015-02, which interprets
ERISA section 3(2)(A), 29 U.S.C. 1002(2)(A), section 3(5), 29 U.S.C.
1002(5), and section 514, 29 U.S.C. 1144, as they apply to state laws
designed to expand workers' access to retirement savings programs. Some
states have adopted laws or are exploring approaches designed to expand
the retirement savings options available to their private sector
workers through ERISA-covered retirement plans. One of the challenges
the states face in expanding retirement savings opportunities for
private sector employees is uncertainty about ERISA preemption of such
efforts. ERISA generally would preempt a state law that required
employers to establish and maintain ERISA-covered employee benefit
pension plans. The Department also has a strong interest in promoting
retirement savings by employees. The Department recognizes that some
employers currently do not provide pension plans for their employees.
The
[[Page 71937]]
Department believes that it is important that employees of such
employers be encouraged to save for retirement, and it is in the
interest of the public that employers be encouraged to provide
opportunities for their employee retirement savings. The Department
therefore believes that states, employers, other plan sponsors,
workers, and other stakeholders would benefit from guidance on the
application of ERISA to these state initiatives.
List of Subjects in 29 CFR Part 2509
Employee benefit plans, Pensions.
For the reasons set forth in the preamble, the Department is
amending Subchapter A, Part 2509 of Title 29 of the Code of Federal
Regulations as follows:
Subchapter A--General
PART 2509--INTERPRETIVE BULLETINS RELATING TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974
0
1. The authority citation for part 2509 continues to read as follows:
Authority: 29 U.S.C. 1135. Secretary of Labor's Order No. 1-
2011, 77 FR 1088 (Jan. 9, 2012). Sections 2509.75-10 and 2509.75-2
issued under 29 U.S.C. 1052, 1053, 1054. Sec. 2509.75-5 also issued
under 29 U.S.C. 1002. Sec. 2509.95-1 also issued under sec. 625,
Public Law 109-280, 120 Stat. 780.
0
2. Add Sec. 2509.2015-02 to read as follows:
Sec. 2509.2015-02 Interpretive bulletin relating to state savings
programs that sponsor or facilitate plans covered by the Employee
Retirement Income Security Act of 1974.
(a) Scope. This document sets forth the views of the Department of
Labor (Department) concerning the application of the Employee
Retirement Income Security Act of 1974 (ERISA) to certain state laws
designed to expand the retirement savings options available to private
sector workers through ERISA-covered retirement plans. Concern over
adverse social and economic consequences of inadequate retirement
savings levels has prompted several states to adopt or consider
legislation to address this problem.\1\ An impediment to state adoption
of such measures is uncertainty about the effect of ERISA's broad
preemption of state laws that ``relate to'' private sector employee
benefit plans. In the Department's view, ERISA preemption principles
leave room for states to sponsor or facilitate ERISA-based retirement
savings options for private sector employees, provided employers
participate voluntarily and ERISA's requirements, liability provisions,
and remedies fully apply to the state programs.
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\1\ For information on the problem of inadequate retirement
savings, see the May 2015 Report of the United States Government
Accountability Office (GAO), RETIREMENT SECURITY--Most Households
Approaching Retirement Have Low Savings (GAO Report-15-419)
(available at www.gao.gov/assets/680/670153.pdf). Also see GAO's
September 2015 Report-15-566, RETIREMENT SECURITY--Federal Action
Could Help State Efforts to Expand Private Sector Coverage
(available at www.gao.gov/assets/680/672419.pdf).
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(b) In General. There are advantages to utilizing an ERISA plan
approach. Employers as well as employees can make contributions to
ERISA plans, contribution limits are higher than for other state
approaches that involve individual retirement plans (IRAs) that are not
intended to be ERISA-covered plans,\2\ and ERISA plan accounts have
stronger protection from creditors. Tax credits may also allow small
employers to offset part of the costs of starting certain types of
retirement plans.\3\ Utilizing ERISA plans also provides a well-
established uniform regulatory structure with important consumer
protections, including fiduciary obligations, automatic enrollment
rules, recordkeeping and disclosure requirements, legal accountability
provisions, and spousal protections.
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\2\ Some states are developing programs to encourage employees
to establish tax-favored IRAs funded by payroll deductions rather
than encouraging employers to adopt ERISA plans. Oregon, Illinois,
and California, for example, have adopted laws along these lines.
Oregon 2015 Session Laws, Ch. 557 (H.B. 2960) (June 2015); Illinois
Secure Choice Savings Program Act, 2014 Ill. Legis. Serv. P.A. 98-
1150 (S.B. 2758) (West); California Secure Choice Retirement Savings
Act, 2012 Cal. Legis. Serv. Ch. 734 (S.B. 1234) (West). These IRA-
based initiatives generally require specified employers to deduct
amounts from their employees' paychecks, unless the employee
affirmatively elects not to participate, in order that those amounts
may be remitted to state-administered IRAs for the employees. The
Department is addressing these state ``payroll deduction IRA''
initiatives separately through a proposed regulation that describes
safe-harbor conditions for employers to avoid creation of ERISA-
covered plans when they comply with state laws that require payroll
deduction IRA programs. This Interpretive Bulletin does not address
those laws.
\3\ For more information, see Choosing a Retirement Solution for
Your Small Business, a joint project of the U.S. Department of
Labor's Employee Benefits Security Administration (EBSA) and the
Internal Revenue Service. Available at www.irs.gov/pub/irs-pdf/p3998.pdf.
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The Department is not aware of judicial decisions or other ERISA
guidance directly addressing the application of ERISA to state programs
that facilitate or sponsor ERISA plans, and, therefore, believes that
the states, employers, other plan sponsors, workers, and other
stakeholders would benefit from guidance setting forth the general
views of the Department on the application of ERISA to these state
initiatives. The application of ERISA in an individual case would
present novel preemption questions and, if decided by a court, would
turn on the particular features of the state-sponsored program at
issue, but, as discussed below, the Department believes that neither
ERISA section 514 specifically, nor federal preemption generally, are
insurmountable obstacles to all state programs that promote retirement
saving among private sector workers through the use of ERISA-covered
plans.
Marketplace Approach
One state approach is reflected in the 2015 Washington State Small
Business Retirement Savings Marketplace Act.\4\ This law requires the
state to contract with a private sector entity to establish a program
that connects eligible employers with qualifying savings plans
available in the private sector market. Only products that the state
determines are suited to small employers, provide good quality, and
charge low fees would be included in the state's ``marketplace.''
Washington State employers would be free to use the marketplace or not
and would not be required to establish any savings plans for their
employees. Washington would merely set standards for arrangements
marketed through the marketplace. The marketplace arrangement would not
itself be an ERISA-covered plan, and the arrangements available to
employers through the marketplace could include ERISA-covered plans and
other non-ERISA savings arrangements. The state would not itself
establish or sponsor any savings arrangement. Rather, the employer
using the state marketplace would establish the savings arrangement,
whether it is an ERISA-covered employee pension benefit plan or a non-
ERISA savings program. ERISA's reporting and disclosure requirements,
protective standards and remedies would apply to the ERISA plans
established by employers using the marketplace. On the other hand, if
the plan or arrangement is of a type that would otherwise be exempt
from ERISA (such as a payroll deduction IRA arrangement that satisfies
the conditions of the existing safe harbor at 29 CFR 2510.3-2(d)), the
state's involvement as organizer or facilitator of the marketplace
would not by itself cause that arrangement to be covered by ERISA.
Similarly, if, as in Washington State, a marketplace includes a type of
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plan that is subject to special rules under ERISA, such as the SIMPLE-
IRA under section 101(h) of ERISA, the state's involvement as organizer
or facilitator of the marketplace would not by itself affect the
application of the special rules.
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\4\ 2015 Wash. Sess. Laws chap. 296 (SB 5826) (available at
http://app.leg.wa.gov/billinfo/summary.aspx?bill=5826&year=2015).
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Prototype Plan Approach
Another potential approach is a state sponsored ``prototype plan.''
At least one state, Massachusetts, has enacted a law to allow nonprofit
organizations with fewer than 20 employees to adopt a contributory
retirement plan developed and administered by the state.\5\ Banks,
insurance companies and other regulated financial institutions commonly
market prototype plans to employers as simple means for them to
establish and administer employee pension benefit plans.\6\ The
financial institutions develop standard form 401(k) or other tax-
favored retirement plans (such as SIMPLE-IRA plans) and secure IRS
approval. Typically, employers may choose features such as contribution
rates to meet their specific needs. Each employer that adopts the
prototype sponsors an ERISA plan for its employees. The individual
employers would assume the same fiduciary obligations associated with
sponsorship of any ERISA-covered plans. For example, the prototype plan
documents often specify that the employer is the plan's ``named
fiduciary'' and ``plan administrator'' responsible for complying with
ERISA, but they may allow the employer to delegate these
responsibilities to others. The plan documents for a state-administered
prototype plan could designate the state or a state designee to perform
these functions. Thus, the state or a designated third-party could
assume responsibility for most administrative and asset management
functions of an employer's prototype plan. The state could also
designate low-cost investment options and a third-party administrative
service provider for its prototype plans.
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\5\ The retirement plan will be overseen by the Massachusetts
State Treasurer's Office. Mass. Gen. Laws ch.29, Sec. 64E (2012).
In June 2014, the Massachusetts Treasurer's Office announced that
the IRS had issued a favorable ruling on the proposal, but noted
that additional approval from the IRS is still needed (see
www.massnonprofitnet.org/blog/nonprofitretirement/). See also GAO's
Report 2015 Report-15-566, RETIREMENT SECURITY--Federal Action Could
Help State Efforts to Expand Private Sector Coverage, which included
the following statement at footnote 93 regarding the Massachusetts
program: ``The Massachusetts official told us that each
participating employer would be considered to have created its own
plan, characterizing the state's effort as development of a volume
submitter 401(k) plan, which is a type of employee benefit plan that
is typically pre-approved by the Internal Revenue Service.'' (GAO
report is available at www.gao.gov/assets/680/672419.pdf).
\6\ See IRS Online Publication, Types of Pre-Approved Retirement
Plans at www.irs.gov/Retirement-Plans/Types-of-Pre-Approved-Retirement-Plans.
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Multiple Employer Plan (MEP) Approach
A third approach, (referenced, for example, in the ``Report of the
Governor's Task Force to Ensure Retirement Security for All
Marylanders''),\7\ involves a state establishing and obtaining IRS tax
qualification for a ``multiple employer'' 401(k)-type plan, defined
benefit plan, or other tax-favored retirement savings program. The
Department anticipates that such an approach would generally involve
permitting employers that meet specified eligibility criteria to join
the state multiple employer plan. The plan documents would provide that
the plan is subject to Title I of ERISA and is intended to comply with
Internal Revenue Code tax qualification requirements. The plan would
have a separate trust holding contributions made by the participating
employers, the employer's employees, or both. The state, or a
designated governmental agency or instrumentality, would be the plan
sponsor under ERISA section 3(16)(B) and the named fiduciary and plan
administrator responsible (either directly or through one or more
contract agents, which could be private-sector providers) for
administering the plan, selecting service providers, communicating with
employees, paying benefits, and providing other plan services. A state
could take advantage of economies of scale to lower administrative and
other costs.
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\7\ Governor's Task Force to Ensure Retirement Security for All
Marylanders, 1,000,000 of Our Neighbors at Risk: Improving
Retirement Security for Marylanders (February 2015) (available at
www.dllr.state.md.us/retsecurity/).
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As a state-sponsored multiple employer plan (``state MEP''), this
type of arrangement could also reduce overall administrative costs for
participating employers in large part because the Department would
consider this arrangement as a single ERISA plan. Consequently, only a
single Form 5500 Annual Return/Report would be filed for the whole
arrangement. In order to participate in the plan, employers simply
would be required to execute a participation agreement. Under a state
MEP, each employer that chose to participate would not be considered to
have established its own ERISA plan, and the state could design its
defined contribution MEP so that the participating employers could have
limited fiduciary responsibilities (the duty to prudently select the
arrangement and to monitor its operation would continue to apply). The
continuing involvement by participating employers in the ongoing
operation and administration of a 401(k)-type individual account MEP,
however, generally could be limited to enrolling employees in the state
plan and forwarding voluntary employee and employer contributions to
the plan. When an employer joins a carefully structured MEP, the
employer is not the ``sponsor'' of the plan under ERISA, and also would
not act as a plan administrator or named fiduciary. Those fiduciary
roles, and attendant fiduciary responsibilities, would be assigned to
other parties responsible for administration and management of the
state MEP.\8\ Adoption of a defined benefit plan structure would
involve additional funding and other employer obligations.\9\
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\8\ A state developing a state sponsored MEP could submit an
advisory opinion request to the Department under ERISA Procedure 76-
1 to confirm that the MEP at least in form has assigned those
fiduciary functions to persons other than the participating
employers. ERISA Procedure 76-1 is available at www.dol.gov/ebsa/regs/aos/ao_requests.html.
\9\ State laws authorizing defined benefit plans for private
sector employers (as prototypes or as multiple employer plans) might
create plans covered by Title IV of ERISA and subject to the
jurisdiction of the Pension Benefit Guaranty Corporation (PBGC).
Subject to some exceptions, the PBGC protects the retirement incomes
of workers in private-sector defined benefit pension plans. A
defined benefit plan provides a specified monthly benefit at
retirement, often based on a combination of salary and years of
service. PBGC was created by ERISA to encourage the continuation and
maintenance of private-sector defined benefit pension plans, provide
timely and uninterrupted payment of pension benefits, and keep
pension insurance premiums at a minimum. More information is
available on the PBGC's Web site at www.pbgc.gov.
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For a person (other than an employee organization) to sponsor an
employee benefit plan under Title I of ERISA, such person must either
act directly as the employer of the covered employees or ``indirectly
in the interest of an employer'' in relation to a plan.\10\ ERISA
sections 3(2), 3(5). A person will be considered to act ``indirectly in
the interest of an employer, in relation to a plan,'' if such person is
tied to the contributing employers or their employees by genuine
economic or representational interests unrelated to the provision of
benefits.\11\ In the
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Department's view, a state has a unique representational interest in
the health and welfare of its citizens that connects it to the in-state
employers that choose to participate in the state MEP and their
employees, such that the state should be considered to act indirectly
in the interest of the participating employers.\12\ Having this unique
nexus distinguishes the state MEP from other business enterprises that
underwrite benefits or provide administrative services to several
unrelated employers.\13\
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\10\ Different rules may apply under the Internal Revenue Code
for purposes of determining the plan sponsor of a tax-qualified
retirement plan.
\11\ See, e.g., Advisory Opinion 2012-04A. See also MDPhysicians
& Associates, Inc. v. State Bd. Ins., 957 F.2d 178,185 (5th Cir.),
cert. denied, 506 U.S. 861 (1992) (``the entity that maintains the
plan and the individuals that benefit from the plan [must be] tied
by a common economic or representation interest, unrelated to the
provision of benefits.'' (quoting Wisconsin Educ. Assoc. Ins. Trust
v. Iowa State Bd., 804 F.2d 1059, 1063 (8th Cir. 1986)).
\12\ The Department has also recognized other circumstances when
a person sponsoring a plan is acting as an ``employer'' indirectly
rather than as an entity that underwrites benefits or provides
administrative services. See Advisory Opinion 89-06A (Department
would consider a member of a controlled group which establishes a
benefit plan for its employees and/or the employees of other members
of the controlled group to be an employer within the meaning of
section 3(5) of ERISA); Advisory Opinion 95-29A (employee leasing
company may act either directly or indirectly in the interest of an
employer in establishing and maintaining employee benefit plan).
\13\ See Advisory Opinion 2012-04A (holding that a group of
employers can collectively act as the ``employer'' in sponsoring a
multiple employer plan only if the employers group was formed for
purposes other than the provision of benefits, the employers have a
basic level of commonality (such as the participating employers all
being in the same industry), and the employers participating in the
plan in fact act as the ``employer'' by controlling the plan).
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(c) ERISA Preemption. The Department is aware that a concern for
states adopting an ERISA plan approach is whether or not those state
laws will be held preempted. ERISA preemption analysis begins with the
``presumption that Congress does not intend to supplant state law.''
New York State Conference of Blue Cross & Blue Shield Plans v.
Travelers Ins. Co., 514 U.S. 645, 654 (1995). The question turns on
Congress's intent ``to avoid a multiplicity of regulation in order to
permit nationally uniform administration of employee benefit plans.''
Id. at 654, 657. See also Fort Halifax Packing Co. v. Coyne, 482 U.S.
1, 11 (1987) (goal of ERISA preemption is to ``ensure . . . that the
administrative practices of a benefit plan will be governed by only a
single set of regulations.'').
Section 514 of ERISA provides that Title I ``shall supersede any
and all State laws insofar as they . . . relate to any employee benefit
plan'' covered by the statute. The U.S. Supreme Court has held that
``[a] law `relates to' an employee benefit plan, in the normal sense of
the phrase, if it has a connection with or reference to such a plan.''
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983) (footnote
omitted); see, e.g., Travelers, 514 U.S. at 656. A law has a
``reference to'' ERISA plans if the law ``acts immediately and
exclusively upon ERISA plans'' or ``the existence of ERISA plans is
essential to the law's operation.'' California Div. of Labor Standards
Enforcement v. Dillingham Constr., N.A., 519 U.S. 316, 325-326 (1997).
In determining whether a state law has a ``connection with ERISA
plans,'' the U.S. Supreme Court ``look[s] both to `the objectives of
the ERISA statute as a guide to the scope of the state laws that
Congress understood would survive,' as well as to the nature of the
effect of the state law on ERISA plans,'' to ``determine whether [the]
state law has the forbidden connection'' with ERISA plans. Egelhoff v.
Egelhoff, 532 U.S. 141, 147 (2001) (quoting Dillingham, 519 U.S. at
325). In various decisions, the Court has concluded that ERISA preempts
state laws that: (1) Mandate employee benefit structures or their
administration; (2) provide alternative enforcement mechanisms; or (3)
bind employers or plan fiduciaries to particular choices or preclude
uniform administrative practice, thereby functioning as a regulation of
an ERISA plan itself.\14\
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\14\ Travelers, 514 U.S. at 658 (1995); Ingersoll-Rand Co. v.
McClendon, 498 U.S. 133, 142 (1990); Egelhoff v. Egelhoff, 532 U.S.
141, 148 (2001); Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 14
(1987).
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In the Department's view, state laws of the sort outlined above
interact with ERISA in such a way that section 514 preemption
principles and purposes would not appear to come into play in the way
they have in past preemption cases. Although the approaches described
above involve ERISA plans, they do not appear to undermine ERISA's
exclusive regulation of ERISA-covered plans. The approaches do not
mandate employee benefit structures or their administration, provide
alternative regulatory or enforcement mechanisms, bind employers or
plan fiduciaries to particular choices, or preclude uniform
administrative practice in any way that would regulate ERISA plans.
Moreover, the approaches appear to contemplate a state acting as a
participant in a market rather than as a regulator. The U.S. Supreme
Court has found that, when a state or municipality acts as a
participant in the market and does so in a narrow and focused manner
consistent with the behavior of other market participants, such action
does not constitute state regulation. Compare Building and Construction
Trades Council v. Associated Builders and Contractors of Massachusetts/
Rhode Island, Inc., 507 U.S. 218 (1993); Wisconsin Department of
Industry, Labor and Human Relations v. Gould, 475 U.S. 282 (1986); see
also American Trucking Associations, Inc. v. City of Los Angeles, 133
S. Ct. 2096, 2102 (2013) (Section 14501(c)(1) of the Federal Aviation
Administration Authorization Act, which preempts a state ``law,
regulation, or other provision having the force and effect of law
related to a price, route, or service of any motor carrier,'' 49 U.S.C.
14501(c)(1), ``draws a rough line between a government's exercise of
regulatory authority and its own contract-based participation in a
market''); Associated General Contractors of America v. Metropolitan
Water District of Southern California, 159 F.3d 1178, 1182-84 (9th Cir.
1998) (recognizing a similar distinction between state regulation and
state market participation). By merely offering employers particular
ERISA-covered plan options \15\ (or non-ERISA plan options), these
approaches (whether used separately or together as part of a multi-
faceted state initiative) do not dictate how an employer's plan is
designed or operated or make offering a plan more costly for employers
or employees. Nor do they make it impossible for employers operating
across state lines to offer uniform benefits to their employees.\16\
Rather than impair federal regulation of employee benefit plans, the
state laws would leave the plans wholly subject to ERISA's regulatory
requirements and protections.
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\15\ In the Department's view, a state law that required
employers to participate in a state prototype plan or state
sponsored multiple employer plan unless they affirmatively opted out
would effectively compel the employer to decide whether to sponsor
an ERISA plan in a way that would be preempted by ERISA.
\16\ The Court in Travelers approved a New York statute that
gave employers a strong incentive to provide health care benefits
through Blue Cross and Blue Shield as opposed to other providers.
The Court noted that the law did not ``mandate'' employee benefit
plans or their administration, or produce such acute economic
effects, either directly or indirectly, by intent or otherwise ``as
to force an ERISA plan to adopt a certain scheme of substantive
coverage or effectively restrict its choice of insurers.''
Travelers, 514 U.S. at 668. See also De Buono v. NYSA-ILA Medical
and Clinical Services Fund, 520 U.S. 806, 816 (1997).
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Of course, a state must implement these approaches without
establishing standards inconsistent with ERISA or providing its own
regulatory or judicial remedies for conduct governed exclusively by
ERISA. ERISA's system of rules and remedies would apply to these
arrangements. A contractor retained by a state using the marketplace
approach would be subject
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to the same ERISA standards and remedies that apply to any company
offering the same services to employers. Similarly, a prototype plan or
multiple employer plan program that a state offers to employers would
have to comply with the same ERISA requirements and would have to be
subject to the same remedies as any private party offering such
products and services.\17\
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\17\ State laws relating to sovereign immunity for state
governments and their employees would have to be evaluated carefully
to ensure they do not conflict with ERISA's remedial provisions.
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Even if the state laws enacted to establish programs of the sort
described above ``reference'' employee benefit plans in a literal
sense, they should not be seen as laws that ``relate to'' ERISA plans
in the sense ERISA section 514(a) uses that statutory term because they
are completely voluntary from the employer's perspective, the state
program would be entirely subject to ERISA, and state law would not
impose any outside regulatory requirements beyond ERISA. They do not
require employers to establish ERISA-covered plans, forbid any type of
plan or restrict employers' choices with respect to benefit structures
or their administration. These laws would merely offer a program that
employers could accept or reject. See Dillingham, 519 U.S. at 325-28.
In addition, none of the state approaches described above resemble
the state laws that the Court held preempted in its pre-Travelers
``reference to'' cases. Those laws targeted ERISA plans as a class with
affirmative requirements or special exemptions. See, e.g., District of
Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 128, 129-133
(1992) (workers' compensation law that required employee benefits ``set
by reference to [ERISA] plans'') (citation omitted); Ingersoll-Rand Co.
v. McClendon, 498 U.S. 133, 135-136, 140 (1990) (common law claim for
wrongful discharge to prevent attainment of ERISA benefits); Mackey v.
Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 828 & n.2, 829-
830 (1988) (exemption from garnishment statute for ERISA plans). In the
case of the state actions outlined above, any restriction on private
economic activity arises, not from state regulatory actions, but from
the application of ERISA requirements to the plans, service providers,
and investment products, that the state, as any other private sector
participant in the market, selects in deciding what it is willing to
offer.
Finally, it is worth noting that even if the state laws
implementing these approaches ``relate to'' ERISA plans in some sense
of that term, it is only because they create or authorize arrangements
that are fully governed by ERISA's requirements. By embracing ERISA in
this way, the state would not on that basis be running afoul of section
514(a) because ERISA fully applies to the arrangement and there is
nothing in the state law for ERISA to ``supersede.'' In this regard,
section 514(a) of ERISA, in relevant part, provides that Title I of
ERISA ``shall supersede any and all state laws insofar as they may now
or hereafter relate to any employee benefit plan . . . .'' To the
extent that the state makes plan design decisions in fashioning its
prototype plan or state sponsored plan, or otherwise adopts rules
necessary to run the plan, those actions would be the same as any other
prototype plan provider or employer sponsor of any ERISA-covered plan,
and the arrangement would be fully and equally subject to ERISA.
This conclusion is supported by the Department's position regarding
state governmental participation in ERISA plans in another context.
Pursuant to section 4(b)(1) of ERISA, the provisions of Title I of
ERISA do not apply to a plan that a state government establishes for
its own employees, which ERISA section 3(32) defines as a
``governmental plan.'' The Department has long held the view, however,
that if a plan covering governmental employees fails to qualify as a
governmental plan, it would still be subject to Title I of ERISA.\18\
In these circumstances, the failure to qualify as a governmental plan
does not prohibit a governmental employer from providing benefits
through, and making contributions to, an ERISA-covered employee benefit
plan.\19\ Thus, the effect of ERISA is not to prohibit the state from
offering benefits, but rather to make those benefits subject to ERISA.
Here too, ERISA does not supersede state law to the extent it merely
creates an arrangement that is fully governed by ERISA.
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\18\ See, e.g., Advisory Opinion 2004-04A.
\19\ See Information Letter to Michael T. Scaraggi and James M.
Steinberg from John J. Canary (April 12, 2004).
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, U.S.
Department of Labor.
[FR Doc. 2015-29427 Filed 11-16-15; 4:15 pm]
BILLING CODE 4510-29-P