ERISA has disclosure and reporting requirements:
disclosure to participants and U.S. Department of Labor
annual reports to IRS - strict reporting requirements - severe tax penalties for non-compliance
Pension benefit plan - must be funded - two main types:
retirement pensions
deferred income plans
Welfare benefit plan - no funding requirements - examples of "welfare benefits":
medical/hospitalization benefits
vacation and sick leave pay
disability/death benefits
unemployment benefits
training/apprenticeship/scholarship programs
prepaid legal services
severance pay
normally fits under welfare benefit plan as long as payments are not contingent upon retirement, total pay does not exceed twice the annual pay, and payments are completed within 24 months of termination
exception: severance pay that is a one-time offer not routinely included in an employer's benefit plan; this type of payment is more akin to "wages in lieu of notice" (see below)
Not included in welfare benefits: "payroll practices", on-site facilities, holiday gifts, sales to employees, and some group insurance programs
Payroll practices include:
shift premiums or differentials
holiday and weekend premiums
maternity leave pay paid out of general funds
"payday" or wage payment laws - every state has a statute governing at least some aspects of the wage payment procedure - most laws impose a deadline for final pay, limitations on what an employer may deduct from wages and whether authorization for such deductions has to be in writing, and rules on how often particular types of employees must be paid
severance pay: this is a post-termination payment that the employer has somehow previously obligated itself to give - it is usually, but not always, based upon a set formula such as length of prior service – it has no effect on unemployment benefits
wages in lieu of notice: this type of post-termination payment is something that the employer has never previously obligated itself to give - just like the name implies, it is given to make up for the lack of advance notice of termination - such a payment is usually not based upon length of service, but rather upon whatever arbitrary amount the employer deems appropriate at the time – this type of payment delays unemployment benefits for the period covered thereby
DOL has a new eLaws advisor (tutorial/Q & A) on its EBSA site: http://www.dol.gov/elaws/ebsa/fiduciary/introduction.htm. For information on enforcement of ERISA, see http://www.dol.gov/ebsa/erisa_enforcement.html.