ERISA Tips: ERISA Violations
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The Department of Labor’s Employee Benefits Security Administration (EBSA) exists to serve benefit plans and participants — a function that includes enforcing ERISA and the regulations that implement it, which can entail investigating criminal violations regarding employee benefit plans.
Following is a brief outline of civil and criminal violations that can take place. ERISA Civil Violations
Civil violations of ERISA applicable to both pension and welfare plans include:
- failing to operate the plan prudently and for the exclusive benefit of participants;
- using plan assets to benefit certain related parties to the plan, including the plan administrator, the plan sponsor, and parties related to these individuals;
- failing to properly value plan assets at their current fair market value, or to hold plan assets in trust;
- failing to follow the terms of the plan, unless inconsistent with ERISA;
- failing to properly select and monitor service providers;
- taking any adverse action against an individual for exercising his or her rights under the plan (e.g., being fired, fined or otherwise being discriminated against); and
ERISA Criminal Violations
- failure to comply with ERISA Part 7 and the Affordable Care Act (welfare plans only).
ERISA sections that concern criminal violations include:
- Section 411, Prohibition Against Certain Persons Holding Certain Positions;
- Section 511, Coercive Interference. Persons convicted of violations enumerated in section 411 are subject to a bar from holding plan positions or providing services to plans for up to 13 years;
- Section 519, Prohibition on False Statements and Representations. Persons shall not make false statements in connection with the marketing or sale of a Multiple Employer Welfare Arrangements (MEWA).
Decisions to seek criminal action turn on a number of factors, including:
- the egregiousness and magnitude of the violation;
- the desirability and likelihood of incarceration both as a deterrent and as a punishment; and
- whether the case involves a prior ERISA violator.
More information about EBSA enforcement activities is available here