Employee Retirement Income Security Act (ERISA)
What happens when employers take away or deny your benefits?
A significant perk of employment for many—besides the obvious paycheck—is the benefits package. This is often particularly true for pregnant women and caregivers who are, or will be, facing significant health-related expenses.
What protections do you have when an employer starts to screw around with your benefits? ERISA is the primary federal statute that regulates employer benefit plans. Some state laws apply that often have more favorable damages—for instance, punitive damages and in some cases treble damages, which are not available under ERISA. For that reason, most employers want to litigate cases under ERISA rather than state law claims. If you think your employer may have discriminated against you in denying benefits coverage, or if you think your company is just plain wrong about how it made a decision with regard to benefits, arrange a consultation with an attorney who handles these claims.
When you do, look for an attorney who represents employees, ideally one with experience handling cases involving benefits. Many attorneys who do this work will specifically clarify that they handle ERISA cases. Note that ERISA is an extraordinarily complicated law. The pool of attorneys who handle these cases is small, and even smaller for those who represent employees. This means you might have to do a bit of digging and may need to look outside your immediate area, especially if you do not live in or near a big city. A good place to start is the attorney-finder function of the NELA, which you can find at http://www.nela.org.
But it is important that you at least be able to spot the issues, particularly because ERISA cases are easy to miss. It’s is also important that you spot them because you may be able to use ERISA to your advantage even if you find the initial reason you sought a lawyer—e.g., wrongful termination or some type of discrimination—is, because of some loophole in the law, not a viable claim.
Here is a short list of the categories of issues you should look for:
- Denial of benefits because you or someone your plan covers is about to incur significant medical expenses.
- Any kind of differential treatment (e.g., higher plan costs) charged to you or someone on your plan as compared to other members of the plan. This is not always illegal, but it should be a red flag.
- Differential coverage of any benefits related to pregnancy, including refusal to cover contraceptives.
- Improper management of investment accounts. Do you think there is something strange about the way the company, or its administrator, is handling your retirement account? Are a lot of your funds invested in a company owned by the brother-in-law of the company president? This could be an ERISA violation. However, just because investment accounts are performing poorly does not mean that your plan is violating ERISA. But if there is a question, it is worth having an attorney take a look.
- Failure to provide notice of your rights by providing you with plan documents (e.g., not providing you information about your right to continued health-care coverage [under COBRA] if you lose your job).
- Retaliation against you for raising issues about your benefits.
As with most issues involving ERISA, there are no bright-line rules. For instance, it may be legal in some jurisdictions and under some plans to deny expenses for childbirth under preexisting condition exclusions. In some instances, it is not legal. This legal landscape is continuing to change with the passage of the Affordable Care Act. Still, if you find yourself affected by one of these issues, recognize that it may be an illegal act and consult an attorney.
Here’s a quick tip that you should use if you are facing trouble with your employer and have a benefits package: ask for your “plan documents.” You can do this while you still work for the company or after you have been fired. The plan documents are the paperwork that explains your benefits. Your employer is required by ERISA to provide them to you upon request. You can win some damages, including attorney’s fees, if your company fails to provide them within sixty days after your request.
How do you request them? Put the request in writing; e-mail is fine. You will need to send the request to the plan administrator. This may or may not be an employee of your company. Companies sometimes hire a third-party administrator to handle benefits. I know of one pregnancy discrimination case that was financed, in part, when the company had to settle an ERISA claim involving the failure to provide plan documents.