Additional Regulatory Agencies

Labor Laws

A number of laws, from both statutory and case law, give the Department of Labor authority to monitor and regulate employee benefit plans.

Among them is the National Labor Relations Act, which promotes collective bargaining between employers and employees' representatives. The Taft-Hartley Act contains specific provisions similar to ERISA and the IRC relating to plan structure and content. The landmark case of Inland Steel Company v. the National Labor Relations Board prohibits an employer from refusing to bargain with employees upon a properly presented demand to bargain regarding employee benefit plans.

Equal Employment Opportunity Commission (EEOC)

The EEOC's interest in employee benefit plans stems from various acts that prohibit discriminatory plan practices. The Civil Rights Act of 1964, Title VII, is interpreted by the EEOC as defining discrimination between men and women with regard to fringe benefits as an unlawful employment practice. The Equal Pay Act of 1963 makes employer discrimination between the sexes in the payment of wages for equal work unlawful. Benefits under employee benefit plans are a form of wages and must be free from discrimination, held one EEOC decision. The Age Discrimination in Employment Act of 1967 and its 1975 and 1979 amendments clearly prohibit discrimination on the basis of age. The so-called Betts changes enacted in 1990 and relating to early retirement programs, make clear the significant role of the EEOC in regulating retirement plans. In 1999 and 2000, new attention was paid to the EEOC as discussion turned to the application of age discrimination regulations to cash balance defined benefit retirement plans. This issue is now in the courts, with the largest case pending against IBM. The EEOC has also drawn attention with its actions related to employer provision of retiree health coverage to pre- and post-age 64 retirees, finding that the provision of different benefits to different age groups does not constitute age discrimination under the act.

Securities and Exchange Commission (SEC)

Under the Securities Act of 1933, information concerning securities publicly offered and sold in interstate commerce or through the mail is required to be disclosed to the SEC. At first blush, the act does not seem to apply to employee benefit plans. However, a security is defined by the act as including participation in any profit-sharing agreement. The Securities Act of 1934 affects the administration of plans by imposing disclosure and registration requirements as well as antifraud provisions. The SEC has not actively enforced requirements, but the scope of legal SEC jurisdiction has been debated and litigated.

The Investment Company Act of 1940 regulates reporting and disclosure, structure, content, and administration of investment companies. A pension benefit plan could be subject to this act if it fits the definition of an investment company. An investment company, as defined by the act, is one engaged in the business of holding, trading, investing, or owning securities.

The SEC has expanded its interest in pension plan proxy voting and corporate governance on an ongoing basis. And, the agency has become active in savings and investing education for the general public.

The SEC, following the enactment of the Sarbanes Oxley Act, has provided new guidance proposals on mutual funds, corporate governance, and other issues that affect benefit plan service firms and fiduciaries.

Other Acts and Agencies

The Small Business Administration (SBA) receives complaints from small businesses regarding the relationship of small business to agencies of the federal government.

Banking laws also apply. The National Bank Act permits national banks to act as trustees in a fiduciary capacity in which state banks or trust companies are permitted to act under the laws of the state where the national bank is located. This affects private employee benefit plans because banks act as fiduciaries. The Federal Reserve Act and the Federal Reserve System can affect pension and welfare plans, because plans may either be borrowers or lenders. Because there is regulation of interest payable on deposits in banks that are members of the Federal Reserve System, IRA and Keogh plans are affected in terms of possible rates of return. The Federal Deposit Insurance Act also affects these plans if they are not covered by the PBGC since funds held by an insured bank, in its capacity as fiduciary, will be insured up to $100,000 per participant.

The Commerce Department is concerned with ERISA's impact on the health of the economy. The Department of Health and Human Services (HHS) tries to keep track of individuals with deferred vested benefit plans and administers Social Security and other public programs that have a substantial impact on private plan design. HHS is also involved with implementation of the health care continuation provisions of the Health Insurance Portability and Accountability Act (HIPAA). In addition, HHS is charged with issuance of health care data confidentiality regulations that affect employee benefit plans.