By Alden J. Bianchi, Esq.
Edward A. Lenz, Esq.
Employers maintaining benefit plans, including health plans covered by the Affordable Care Act, must comply with certain notice and reporting rules established by the U.S. Internal Revenue Service and the U.S. Department of Labor under the tax code and the Employee Retirement Income Security Act, respectively.
Erisa requires that various documents be provided to plan participants and, in some circumstances, beneficiaries and other individuals, either automatically or upon request. When providing these materials, the Erisa plan administrator must use “measures reasonably calculated to ensure actual receipt of the material” and, for items required to be furnished automatically, a method “likely to result in full distribution.”
In 2002, DOL issued a “safe harbor” rule that permitted electronic delivery of most notices if certain conditions were met. Specifically, email communications are deemed to comply for employees with work-related computer access or the ability to effectively access electronic documents. For employees without work-related computer access or the ability to effectively access electronic documents, e.g., via text, employees must provide written consent prior to receiving documents electronically. While the safe harbor was welcome, with electronic communication capability still in a relatively early stage, employers often faced having to obtain consent and, if they couldn’t get it, notices had to be delivered by cumbersome and costly first-class mail.
Today, however, with the nearly universal use of cost-efficient electronic media, it appears that the DOL safe harbor rule with its attendant conditions has fallen into disuse. We understand from an informal poll of our advisers and several industry trade associations that employers are becoming increasingly comfortable with the position that electronic communications qualify as “measures reasonably calculated to ensure actual receipt” without obtaining their employees’ consent. The case for this approach is especially compelling if a staffing firm’s onboarding or assignment processes are handled exclusively or predominately by electronic means (e.g., email and text messaging).
Electronic communication clearly is the most cost-effective delivery method; but before staffing firms rely exclusively on electronic communication to deliver Erisa-mandated notices and documents they should determine whether they can satisfy the “measures reasonably calculated to ensure receipt” and “likely to result in full distribution” standards. We recommend, of course, that those determinations be made by staffing firms with the assistance of their trusted advisers.
Alden Bianchi is counsel in the Boston office of McDermott Will & Emery LLP specializing in Erisa, employee benefits, executive compensation, and related tax law.
Ed Lenz is senior counsel of ASA.
© 2024 American Staffing Association. All rights reserved. This article is provided as information not legal advice. Readers seeking legal or other advice regarding the matters discussed should consult with expert benefits counsel.
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