How does ERISA protect workers dependent on employer benefits?

On Behalf of | Jul 8, 2021 | Pension, Benefits & Compensation |

Your employer provides you with all of your income and also subsidizes or provides crucial benefits to you. Whether they have a retirement plan or disability insurance program, those benefits may be subject to specific federal oversight. The Department of Labor’s Employee Benefits Security Administration (EBSA) oversees employer-provided benefits and enforces the rules.

The Employee Retirement Income Security Act (ERISA), is a federal law passed in 1974 that helps to protect those dependent on employer benefits for their retirement income, health coverage or disability insurance.

ERISA ensures transparency about the use of benefit funds

If your employer has an investment portfolio intended to fund your pension or other company-sponsored benefits, they typically need to provide you with information about the investment practices. Financial transparency helps workers understand risks that could diminish their pension or other benefits, such as the investment of funds.

ERISA creates a fiduciary duty for plan administrators

Employers do not always make decisions in the best interests of their employees. Instead, they make choices based on what will benefit themselves and the company. Such an approach could be dangerous for those dependent on company-provided benefits for their basic needs.

Under ERISA, those who manage and distribute plan benefits have a fiduciary duty not to the company providing benefits but to the participants and beneficiaries. Professionals tasked with investing or managing assets used to fund pensions and other employer benefits must make decisions, including plans to diversify holdings, that prioritize the best interests of those who benefit from the plan.

ERISA protects workers from unfair denial of benefits

Keeping costs low can often be more important to businesses than fulfilling their obligations to their former workers or the community. Left to their own devices, some companies would probably go to extreme lengths to deny workers necessary benefits.

Under ERISA, workers have a federally protected right to appeal denied benefits and to access information about a transparent appeal and review process. They can even sue if necessary to secure benefits.

If you have certain employer-sponsored benefits, learning more about them is important so that you know what to do if you ever need to claim those benefits.



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