If you’re a business owner, you’ve likely heard of ERISA, the Employee Retirement Income Security Act, which passed in 1974. ERISA is probably one of several acronyms you hear about all the time but likely don’t pay too close attention to. When a business provides Employee Benefit plans to its employees — this means medical, dental, vision — they’re doing so under the protection and guidance of the ERISA act.
What that means is the rules of ERISA need to be adhered to. Whether you like it or not, as an employer, you are a fiduciary. One of the rules under ERISA is fiduciaries are required to have a specific document that outlines employees’ rights. It’s called an ERISA wrap document and it takes all of your benefit plans and wraps them into one document.
What’s the big deal?
Many people think it’s not a big deal. Frankly, most employers don’t do it. But what can become a big deal is the fines you can face for not having an ERISA Wrap document. You might be thinking, “the fines aren’t that bad or “oh, it won’t be that much”. We’re here to give you a little wake up call and share what the fines can be.
Fines for not having an ERISA Wrap Document can cost $110/day, per employee until the document is produced under audit. Let that sink in for a moment. If you’re hit with these fines, they’ll add up very quickly.
You might think, “I’ll never get audited so I don’t mind taking the risk”. But in reality, here’s what can happen: An employee is terminated and they feel they were wrongfully treated or wrongfully terminated. So, said employee hires an attorney and they file a lawsuit. One of the first thing the attorney will do is call the EDD. Then EDD will be obligated to call the employer. And the first thing the EDD will ask for is the ERISA plan document, because they know most employers don’t have it.
The Good News
Fortunately, the cost to prepare these document is very reasonable. If you don’t have your ERISA Wrap documents prepared, reach out to us, we’re happy to talk you through it and help you get one. This simple step will greatly limit your exposure.
Don’t put yourself at risk. ERISA Wrap docs are easy and affordable to set up. We can help you with them today. Email us at firstname.lastname@example.org for more information