ERISA, the acronym for the federal Employee Retirement Income Security Act of 1974, protects employers who sponsor benefit plans (both pension and welfare plans) for their employees, by limiting the state law rights and remedies of an employee dissatisfied with the handling of his or her claim for benefits under the employers plan. Under ERISA, an aggrieved employee who is determined to have had his or her benefits improperly denied is entitled only to the denied benefits and, perhaps, attorney fees that he or she incurred to prove that the denial was improper. Damages for pain, suffering and mental anguish, treble damages and punitive damages are NOT recoverable.
The U.S. Department of Labor regulates ERISA Plans. An employer cannot avoid complying with their regulations simply by not having a written plan. Their regulations treat as a plan any benefit program that has defined benefits and beneficiaries and a method for financing the benefits. In short, once a non-subscriber to the Texas Workers Compensation Act purchases an insurance policy that provides funds for benefits for the companys employees, that company has, like it or not, an ERISA plan and is subject to DOL and their penalties for noncompliance with those regulations. The issue, then, is not whether a non-subscriber will have an ERISA Plan, but how will it design its ERISA Plan to provide itself maximum legal protection.
The ERISA Plan that accompanies the Non-Subscriber Policy is, in essence, the agreement that exists between the insured/employer and its employees, while the Non-subscriber Policy is the agreement between the insured and the insurance carrier.
The Arbitration Agreement provided with the Policy is designed to protect the insured/employer by subjecting the claims of its employees to binding arbitration, preventing employees from pursuing a lawsuit against the employer. Although the Non-Subscriber Policy only provides liability coverage for on-the-job injuries, the ERISA Plan's Mandatory Arbitration Agreement covers all types of disputes between the employee and employer, including discrimination, harassment, retaliation and wrongful discharge claims. For those employees who are not notified of the ERISA Plan with Mandatory Arbitration, the liability for their on-the-job injury claims is still covered by the Policy's liability coverage.