Alabama ERISA Lawyers | ERISA Benefits Attorney
What is ERISA?
ERISA is a federal law that covers essentially all employee benefit plans provided by an employer to its employees. This typically includes insurance and retirement benefits, but the most important first ERISA question is: Was the benefit offered by your or your spouse’s employer? By design, ERISA was meant to protect the employees, but it has become a law that protects the employer and insurance company. It is complex in nature and requires an attorney who regularly handles employee benefits litigation.
Most people are familiar with the phrases “bad faith insurance denial” or “breach of contract” in terms of talking about the claims that an individual would assert against an insurance company for not providing insurance benefits. Those terms refer to state law claims. For example, in Alabama, the claims would normally be governed by Alabama law.
Back in 1974, Congress enacted a law that was originally intended to protect employee benefits from unscrupulous employers who may want to take away pensions, employee stock ownership plans, or other promised health benefits. That law is the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA.
ERISA is a federal statute enacted by Congress that “preempts” your state law claims in cases where your benefits are provided by your employer.
As an example, if you had a group disability policy provided as part of your employee benefits package, your insurance rights would be governed by ERISA, and ERISA would preempt all your state law claims that would typically apply otherwise. This preemption means you would have to sue under the federal statute and assert an ERISA claim against that insurance carrier, and you normally cannot sue under any of the numerous state laws that would apply to the same conduct.
Due to its complexity, few plaintiff lawyers are well-versed in employee benefits litigation (ERISA). In these cases, there is an escalated urgency during the time before a claims adjuster formulates a decision. For this reason alone, you should seek legal counsel from an experienced ERISA attorney at first indication your benefits will be terminated or a claim denied.
Who Is Subject to ERISA?
The Employee Retirement Income Security Act of 1972 (“ERISA”) was enacted to provide employees protection from employers who may seek to tamper with or otherwise damage their own employees’ benefits. Originally, ERISA was designed just to protect pension accounts, but at the last minute was broadened by Congress to cover all “employee benefits.” The original reason for ERISA came from an employer (one of several) using their stronger bargaining power (employers can fire you, after all) to tell employees to give up the money in the employee pension accounts.
At its heart, ERISA tries to make up for this difference in bargaining power between employers and employees. ERISA was designed as a way for employees to know their health care, retirement plans, and insurance coverage obtained through their employment would provide the crucial safety net in their time of need and couldn’t be arbitrarily taken away. If your health insurance, pension or 401(k), deferred compensation plans, disability, or life insurance comes from your status as an employee? ERISA likely applies.
Forget most of your understanding of your state’s various laws. ERISA “preempts” those laws, and ERISA governs your rights to those benefits. The only exceptions to this preemption? If your employer is a state governmental entity or a church. These two exceptions come from the Constitution itself—think separation of powers and church and state. We don’t want the federal government to have power over state employee benefits practice, and we do not want governments to have control over clergy benefits.Here is a tip. If you are not certain whether ERISA applies, ask this question: Do I need a federal statute to help protect the account / insurance product at issue from my employer’s interference? If the answer is no because my employer has no connection to or control over that account / product, then ERISA probably does not apply.
Probably not. As we mentioned before, ERISA applies to your pension and employee benefits that you have as a result of your status as an employee. “Individual” Retirement Accounts are likely outside of that employment relationship.
Maybe. It depends on who your employer is. If it is a governmental entity, then no. If it is a private charitable entity? Then likely, yes.
Yes. Employer-sponsored 401k plans are subject to ERISA.
No. If your employer is a governmental entity, then ERISA would not apply. However, if you find yourself participating in a 457b plan because of your status as a contractor for government agencies, the answer can be less clear.
Yes. Assuming you have a private employer.
Just the Facts
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