IMA Compliance Alert

DOL Letters Provide Helpful Insights for Employers

On December 4, 2018, the DOL provided a letter clarifying their belief that ERISA would preempt any state wage withholding laws in relation to ERISA plans.

They provided an example from prior guidance the DOL had issued in 2008 concluding that a Kentucky law mandating you can only withhold pay for benefits with express written permission would appear to ban automatic enrollment, but ERISA would preempt such a law in relation to ERISA plans so that automatic enrollment is actually okay without the employee’s express written consent.

Not all benefits are covered by ERISA (such as dependent day care assistance plans or self-funded short-term disability plans), so employers need to be careful to abide by wage withholding laws for plans which do not benefit from ERISA preemption.

Also, some employers are not subject to ERISA (such as governmental plans, including public schools and higher education, and church plans, often including health care and private education), so these groups would need to pay attention to these wage withholding laws as well since there is no ERISA preemption for these plans.

Another letter provided March 14, 2019, addressed FMLA and leaves of absence.  The DOL makes it clear that since FMLA binds an insurer to providing full-time benefits to someone not working full-time, FMLA administration must be precise.

• Employer locations not subject to FMLA can voluntarily provide leave of absence provisions similar to FMLA but cannot designate such leaves as FMLA.
• Employers and employees do not have the ability to delay the start of FMLA or to extend FMLA past the 12 or 26 weeks of protection FMLA provides.  This means paid leave time can run concurrently with FMLA but cannot delay or extend FMLA.

It is imperative to document the employer’s policy on eligibility during non-FMLA leave periods and have the insurer’s approval of that language. Click here to read more.

Please let your IMA Benefits team know if you have any questions; we will continue to monitor regulator guidance and offer meaningful, practical, timely information.