Washington D.C. Employment Law Update : Washington D.C. Employment Lawyer & Attorney : Littler Mendelson Law Firm : Virginia, Tyson's Corner

In tomorrow’s edition of the Federal Register, the Employee Benefits Security Administration (EBSA) will publish a final rule (pdf) that outlines procedures relating to the assessment of civil penalties against sponsors of multiemployer pension plans for certain violations of section 305 of the Employee Retirement Income Security Act (ERISA). The Pension Protection Act of 2006 (PPA) added section 305 to ERISA, which sets forth additional rules for multiemployer defined benefit pension plans that are in endangered or critical status. The PPA gave the Secretary of Labor authority to assess civil penalties not exceeding $1,100 per day against any plan sponsor of a multiemployer plan that fails to follow these additional rules and procedures. According to the EBSA, the final rule sets forth how the maximum penalty amounts are computed, identifies the circumstances under which a penalty may be assessed, outlines certain procedural rules for the Department of Labor (DOL) and filing by a plan sponsor, and provides a plan sponsor with a means to contest an assessment by the DOL.

The rule takes effect on March 29, 2010.

Photo credit:  MBPHOTO, INC.
 

• Email This
• Print
• Trackbacks
• Share Link

On February 24, the Internal Revenue Service (IRS) published in the Federal Register its final rule regarding automatic contributions to 401(k) plans and similar types of defined contribution plans. Such automatic enrollment features were established by the Pension Protection Act (Pub. L. No. 109-280), which amended the tax code to facilitate automatic enrollment for 401(k) plans, Section 403(b) tax-deferred annuity plans, Section 457(b) governmental plans, and similar arrangements. These regulations affect administrators of, employers maintaining, participants in, and beneficiaries of section 401(k) plans and other eligible plans that include an automatic contribution setup. Among other things, the regulations clarify minimum percentage requirements for qualified automatic contribution arrangements (QACA), expand uniformity requirements, and establish a notice timing requirement.

The final regulations relating to qualified automatic contribution arrangements apply to plan years beginning on or after January 1, 2008. The regulations relating to eligible automatic contribution arrangements apply for plan years beginning on or after January 1, 2010.

• Email This
• Print
• Trackbacks
• Share Link

Discrimination in the Workplace

The DOL issued guidance clarifying how faith-based organizations can avail themselves of the protections of the Religious Freedom Restoration Act to avoid religious discrimination hiring laws enforced by the DOL. Also in religious discrimination news, the Department of Health and Human Services issued a final rule that aims to protect health care workers from discrimination if they harbor religious or moral objections to participating in reproductive health care services such as abortion and the provision of birth control.

• Email This
• Print
• Trackbacks
• Share Link

On January 2, 2009, the Department of Labor (DOL) published a final regulation in the Federal Register that outlines the procedures for assessing civil penalties up to $1,000 per day against employee benefit administrators or sponsors who fail to disclose certain documents to participants, beneficiaries, employee representatives, and other employees as required by the Employee Retirement Income Security Act (ERISA), as amended by the Pension Protection Act of 2006 (PPA).

• Email This
• Print
• Trackbacks (1)
• Share Link

On Dec. 11, the Senate approved a bipartisan bill that is designed to ease the financial crisis for certain employees and businesses by, among other things, modifying pension distribution requirements. The Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327), introduced in and passed by the House of Representatives on December 10th, also makes technical corrections to the Pension Protection Act of 2006 (PPA).  The President is expected to sign the bill.

In essence, the bill would temporarily ease funding and distribution rules governing single and multi-employer pension plans and modify asset depreciation requirements, ostensibly to free up cash for payroll and other business expenses in light of the faltering economy. Some of the key bill provisions include:

• For single-employer pension plans:
  • Permits temporary adjustment to contribution, distribution, and projected earnings provisions of the PPA;
  • Gives these plans three years to phase in PPA pension funding target percentages.
• For multi-employer pension plans:
  • Permits a freeze of plan funding status to provide time for economic recovery before declaration of critical or endangered status;
  • Allows the election of a three-year extension of current amortization rules to help offset this year’s asset losses.
• For taxpayers:
  • Eliminates minimum distributions for 2009 to provide time for IRAs and other benefit accounts to recover asset losses.

Although it is generally unusual for Congress to introduce new legislation so close to the end of a session, the current financial catastrophe has changed the rules of the game. Business interests have been actively lobbying Congress in recent weeks to pass some type of pension relief measure. Although these may be welcome changes, they will have little impact on economic recovery, and merely delay recognition of the impact of the severe investment losses suffered by retirement plans, particularly for the millions of participants in 401(k) plans and IRAs who have seen substantial erosion in their expected retirement assets. Regardless, defined benefit plan sponsors are still required to fund their defined benefit plans and are liable for any shortfall on plan termination and the Pension Benefit Guaranty Corporation still must provide back-up termination insurance to these plans.
 

• Email This
• Print
• Trackbacks (1)
• Share Link