Home » What is ERISA and How Does it Apply to Pennsylvania Residents?

What is ERISA and How Does it Apply to Pennsylvania Residents?

If you have retirement or disability accounts through an employer, you might have heard of the Employee Retirement Income Security Act, also known as ERISA. This federal law was created in 1974 and applies to how employers must manage various accounts related to employee retirement. ERISA is highly complex and may be considered a body of law unto itself.

ERISA is federal law and applies to all employers, including those in Pennsylvania. Generally, employees do not have to worry about complying with ERISA, as the law governs how employers manage pensions, retirement accounts, long-term disability benefits, and other accounts for the benefit of employees. This law helps to keep your accounts and benefits secure and prevents employers from abusing or mismanaging funds. Violations may range from minor mistakes to serious abuses of authority, and penalties may similarly vary. If you believe your retirement accounts or disability benefits have been mismanaged, speak to an attorney.

Call Young, Marr, Mallis & Associates at (215) 515-2954 and get a free review of your case from our Pennsylvania disability benefits lawyers.

What is ERISA and What Does it Do for People in Pennsylvania?

The Employee Retirement Income Security Act (ERISA) is a federal law enacted in 1974 to protect various accounts and benefits maintained by employers for the benefit of employees. This law applies to all employers who maintain these accounts, including those in Pennsylvania. This means ERISA protects Pennsylvania employees from potential mismanagement of retirement accounts, pensions, and even long-term disability benefits.

The law designates employers as fiduciaries of these accounts and holdings, meaning they are responsible for maintaining the accounts in ways that help them grow and ultimately benefit employees. Without ERISA protection, employers could mismanage accounts or exploit funds for their own gain to the detriment of employees. If they do, our Philadelphia disability benefits lawyers will hold them responsible and hopefully get back any funds that were lost.

If you have a retirement plan like a 401K or a pension or receive long-term disability benefits through your employer, your account is likely covered by ERISA. However, certain types of accounts might not be covered, and you should check with an attorney to see if ERISA helps you.

How ERISA Helps People in Pennsylvania with Retirement or Benefits Plans

Essentially, ERISA makes employers who offer retirement programs or benefits packages, including disability benefits, operate those programs honestly and transparently. It also creates a cause of action for those whose funds have been mismanaged, meaning you may sue your employer for mismanaging your disability benefits.

ERISA is rather broad and may cover a wide variety of accounts held by Pennsylvania employers for the benefit of employees. According to 29 U.S.C. § 1003(a), ERISA applies to any employee benefit plan if the plan is established or maintained by any employer engaged in commerce, any employee organization representing workers engaged in commerce, or both. This is a very wide net, and many accounts are covered. For those receiving long-term disability benefits through their employer, they should be protected by ERISA. This is extremely important, as your disability benefits might be the only thing helping you make ends meet while you cannot work.

ERISA also creates a significant fiduciary duty for employers. A fiduciary has a legal obligation to act in the interests of or on behalf of someone else, often putting their needs above the fiduciary’s. Put another way, your employer is responsible for managing your account, taking care of funds, and working to keep the accounts healthy and well-funded.

According to § 1104(a), fiduciaries must perform their duties in the interest of participants (i.e., employees) with the necessary care, prudence, skills, and diligence under the circumstances. These duties may also involve diversifying investments to minimize or mitigate potential losses.

What Happens in Cases of ERISA Violations in Pennsylvania?

ERISA violations can have a huge impact on employees. When employers violate ERISA, they put employee funds, accounts, and assets at risk. If your employer does something to violate ERISA, your long-term disability benefits might suddenly dry up or otherwise be put in jeopardy. Talk to an attorney immediately if you suspect your accounts or benefits have been abused or mismanaged.

Examples of ERISA Violations

Many employees do not know when their retirement accounts or disability benefits are put at risk by negligent employers because it is very difficult to fully understand the laws of ERISA. Remember, this is a complex body of law, and you might need an attorney to help you determine if something is truly wrong.

A common example of an ERISA violation is a lack of notice. ERISA requires employers to be very transparent with employees about what happens to their accounts and benefits. If your employer plans to invest funds to grow these accounts and make sure there is enough money to keep funding disability benefits, employees must be informed. You should contact your employer if you have not received any information about your accounts or benefits. Depending on what they say, you might want to call a lawyer.

Another potential violation is being wrongfully denied disability benefits by your employer. If you are injured and unable to work for the foreseeable future, you might be eligible for long-term disability benefits through your employer. Speak to a lawyer if you are denied. The denial could be a mistake on the part of your employer. If they do not correct the mistake, they may be in violation of ERISA.

You should also be concerned about potential breaches of the fiduciary duty. Remember, a big part of ERISA is ensuring employers handle employee accounts and benefits carefully. If you believe your employer is dipping into funds or making unwise investments with these accounts, talk to a lawyer.

Enforcement of ERISA

ERISA violations may be met with civil penalties, criminal punishments, or both, depending on the situation. Many ERISA violations are accidental. Even employers have a hard time fully understanding the implications of ERISA and their fiduciary duties. In such cases, civil penalties like fines may be imposed in proportion to whatever losses might have occurred. If your accounts lost money, the money should be paid back to you. If you lost disability benefits, those benefits should be restored.

Criminal penalties may be imposed in cases where employers knew what they were doing was wrong or illegal. For example, if an employer falsifies information about retirement accounts or disability benefits, they may be criminally charged.