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PSCA Executive Reports

December 20, 2018

DOL Guidance on ERISA Preemption

On December 4, DOL issued an advisory opinion reiterating its stance that ERISA preempts state laws requiring written consent from employees before executing automatic enrollment in ERISA disability and other welfare plans. In 2008, DOL issued Advisory Opinion 2008-02A, which concluded that ERISA preempted state laws that attempt to govern automatic enrollment in group health plans. Citing that advisory opinion, DOL wrote in this letter that such preemption also extended to disability and other welfare benefit plans. The letter concludes that a state law is preempted by ERISA to the extent that it “limit[s], prohibit[s], or regulate[s]” an employer’s automatic enrollment features.

In 2012, the ERISA Advisory Council recommended the DOL: “Issue guidance for plan sponsors and plan administrators on the following subjects: (a) permissibility of auto-enrollment for employee contributory LTD plans”. In its report, the ERISA Advisory Council noted: “…The Council recommends that DOL issue regulatory or sub-regulatory guidance for plan sponsors and plan administrators to clarify that automatic enrollment under a LTD plan is appropriate under ERISA. The Council believes that such clarification will encourage employers to adopt automatic enrollment features for employee- contributory LTD plans, thus increasing employee disability coverage. While automatic enrollment processes are permitted under current law and regulatory guidance issued by the DOL, testimony from witnesses confirmed that such knowledge is not widespread nor widely understood, and certainly not as widely deployed in welfare benefit plans as it occurs in certain tax-qualified profit sharing plans. …” 

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