Prevailing Wage Fringe Benefit Savings Calculator
When you work with DirectAdvisors, we will help you find savings opportunities that meet prevailing wage requirements for government contractors while offering valuable retirement, health and welfare fringe benefits to your employees.
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What is a “Plan” Subject to ERISA? A Pre-Fiduciary Fable
(Because you need an ERISA employee benefit plan in order to have fiduciary duties)
Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987)
Once Upon a Time…
An employer (Fort Halifax Packing Company) closed its Maine poultry packaging and processing plant and laid off most of the employees who worked there. The company did not have a severance plan, so the employees got nothing, nada, zip.
When this happened, Maine had a state law that required employers to provide a lump-sum severance payment to employees if there was a plant closing. Because the terminated employees got no severance pay at all, the Director of Maine’s Bureau of Labor Standards filed suit against Fort Halifax to enforce the state’s plant closing requirement.
Because ERISA trumps most state laws that relate to employee benefit plans, both pension and welfare, the question was whether Maine’s law required employers to provide a benefit that would be subject to ERISA.
ERISA applies to employee benefit plans that are established or maintained by an employer or an employee organization (ex. union). The Court focused its attention on the word “plan” in this definition.
A primary purpose of ERISA preemption is to prevent employers from having to follow the rules of multiple states in administering benefit plans. A “plan” requires that there be an administrative scheme, it said. The Maine statute did not do that. All it required an employer to do was determine whether the terminated employee was eligible – had 3 years of service at the closed plant and did not accept employment at the new location – and calculate the lump-sum payment – one week’s pay for each year of employment. That wasn’t enough to make it a “plan.” The state severance requirement was not preempted by ERISA.
The Moral of the Story
Not every benefit listed as an employee pension or employee welfare benefit in ERISA is actually an employee benefit plan subject to ERISA. Those where the employer only has minimal administrative duties will not rise to the level of employee benefit plan.
What We Offer You
DirectAdvisors provides independent ERISA Fiduciary Investment Advisory Services and plan consulting services for 401(k) and 403(b) retirement plans. We were once third-party administrators; we use that experience to be the intermediary between you and your third-party service providers. 100% of our advisory and consulting practice revenue comes from retirement plan services. Unlike other practices that make retirement plan service a part of what they do, it is ALL that we do! And it’s what we have been doing here in Albany, New York, since 2001.
Think of us as the quarterback to your retirement plan. We help you to manage all of the pieces so you don’t have to. Retirement plans (401(k), 403(b), Defined Benefit Cash Balance) have lots of moving parts: plan documents, custodians, recordkeepers, third-party administrators, investment decisions, employee counseling, etc. As experts with decades of experience, we will save you time and money and make the right choices the first time.