What welfare benefit plans are not subject to ERISA?

The following welfare benefit arrangements are not subject to the general fiduciary provisions of ERISA:  

1.    Payroll practices that are established by an employer and that provide for payment by an employer to employees on account of overtime pay, shift premiums, holiday premiums or weekend premiums, sick pay, vacation pay, jury duty pay, and pay while on leave for military service;  

2.    The maintenance of on-premises facilities such as recreation, dining, or medical/first aid for the treatment of work-related injuries or illness occurring during normal work hours, or other facilities (excluding day care centers) for use by employees;

3.    Programs for the provision of holiday gifts such as turkeys or hams;

4.    Sales to employees of articles or commodities (whether or not they are offered at below-market prices) of the kind the employer offers for sale in the regular course of business;

5.    Hiring halls maintained by one or more employers, employee organizations, or both;

6.    Remembrance funds under which contributions are made to provide remembrances such as flowers, small gifts, or obituary notices on occasion of the illness, hospitalization, or death of an employee;

7.    Strike funds maintained by an employee organization to provide payment to its members during strikes and for related purposes;

8.    Industry advancement programs that have no employee participants and do not provide benefits, regardless of whether the program serves as a conduit through which funds or other assets are channeled to employee benefit plans subject to ERISA; and  

9.    Unfunded scholarship programs, including tuition and education reimbursement programs, under which payments are made solely from the general assets of an employer or employee organization

Private Pension And Welfare Plans | Regulatory Environment of Employee Benefit Plans

Pre-ERISA

Before the enactment of the Employee Retirement Income Security Act (ERISA) on Labor Day 1974, only three principal statutes governed private pension plans: the Internal Revenue Code (IRC), the Federal Welfare and Pension Plans Disclosure Act of 1958 (WPPDA), and the Taft-Hartley Act, more formally known as the Labor Management Relations Act of 1947. The latter regulated collectively bargained multi-employer pension plans.

Amendments to the Internal Revenue Code enacted in 1942 established standards for the design and operation of pension plans. The principal purposes were to prevent plans from discriminating or disproportionately benefiting one group of employees over another and to prevent plans from taking excessive or unjustified tax deductions. Until 1974, the Internal Revenue Service was not concerned with the actuarial soundness of plans.

The Federal Welfare and Pension Plans Disclosure Act was enacted to protect plan assets against fraudulent behavior by the plan administrator. The act mandated that, upon request, participants concerned with plan malpractice would be provided with information concerning the plan. If misuse or fraud were suspected, it was up to the participant to bring charges against the administrator. A significant amendment to the WPPDA was enacted in 1962. That amendment authorized the Department of Justice to bring appropriate legal action to protect plan participants' interests and authorized the Department of Labor to interpret and enforce the act. For the first time, the burden of plan asset protection was placed upon the government, rather than on the individual participants.

Employee Retirement Income Security Act of 1974 (ERISA)

The shift to government protection of participants' rights enacted in 1962 would carry through to ERISA. It reflected a concern for workers, which was confirmed by President John Kennedy in 1962 with the appointment of the Committee on Corporate Pension Funds and Other Retirement and Welfare Programs. That committee issued its report in 1965, concluding that private pension plans should continue as a major element in the nation's total retirement security program. The report advocated many changes in the breadth of private plan regulation.

The report received widespread attention and led to the introduction of a number of legislative proposals. Congress concluded that most plans were operated for the benefit of participants on a sound basis, but some were not. To solve this problem, Congress enacted ERISA to govern every aspect of private pension and welfare plans and require employers that sponsor plans to operate them in compliance with ERISA standards.