Wednesday, June 26, 2013

Annuitization of 401(k)s: DOL Safe Harbor Addresses Fiduciary Concerns

Employee Benefit Adviser:
By Jerry Kalish
June 24, 2013
This is another of my continuing articles on 401(k) In-Plan lifetime income products.
But let’s ditch the productization label, and refer to what’s happening with lifetime income concerns as the “annuitization of 401(k) plans.”
Here’s one of the basic concerns employers have with 401(k) annuities – fiduciary responsibility for the selection of an annuity provider or contract for benefit distributions.
The seal of the United States Department of Labor
The seal of the United States Department of Labor (Photo credit: Wikipedia)
Fortunately, the Department of Labor finalized its Regulation On Selection Of Annuity Providers--Safe Harbor For Individual Account Plans. In brief, the DOL says that a fiduciary can satisfy its responsibilities by:
  1. Engaging in an objective, thorough and analytical search for the purpose of identifying and selecting providers from which to purchase annuities;
  2. Appropriately considering information sufficient to assess the ability of the annuity provider to make all future payments under the annuity contract;
  3. Appropriately considering the cost (including fees and commissions) of the annuity contract in relation to the benefits and administrative services to be provided under such contract;
  4. Appropriately concluding that, at the time of the selection, the annuity provider is financially able to make all future payments under the annuity contract and the cost of the annuity contract is reasonable in relation to the benefits and services to be provided under the contract; and
  5. The seal of the United States Department of Labor
    The seal of the United States Department of Labor (Photo credit: Wikipedia)
  6. If necessary, consulting with an appropriate expert or experts for purposes of compliance with the provisions of this process.
But remember, the so-called “Safe Harbor” does not by itself protect a fiduciary from its responsibility for selecting an annuity provider or contract. A Safe Harbor, in general, only reduces or eliminates a party’s liability if the party performed its actions in good faith or in compliance with defined standards.
So from a practical standpoint: a Prudent Fiduciary should consider hiring a Prudent Expert.
Jerry Kalish is President of National Benefit Services, Inc., a Chicago-based TPA firm. He has been publishing the firm’s Retirement Plan Blog since 2006. He can be reached at
This article is for information purposes and should not be considered tax or legal advice. Plan sponsors and participants should consult with qualified tax and legal advisors for the application of the law and regulations to their specific situations.

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Friday, June 14, 2013

How to Create a Culture of Organizational Wellbeing

How to Create a Culture of Organizational Wellbeing

When executives do this right, they help their organizations thrive

Gallup Business Journal:
by Jennifer Robison
Individual wellbeing, employee engagement, and a culture of wellbeing link to important organizational outcomes, such as productivity, health, and employee retention. These factors complement and affect one another in ways that leaders, managers, and organizations can influence.
Managers should be aware of their own engagement and wellbeing.
So says a recent Gallup study that explored relationships among individual wellbeingemployee engagement, and a wellbeing culture over time. ... "We wanted to understand how the elements of wellbeing, engagement, and culture complement and influence each other," says Jim Harter, Ph.D., Gallup's chief scientist of workplace management and wellbeing.
The Three Types of Employees
The study also revealed:
  • Individual wellbeing had an effect on future employee engagement and changes in employee engagement. "If people had higher wellbeing in year one, they would tend to have higher engagement in year two and a more positive change in engagement in year two," Harter says. "People that have high individual wellbeing are more likely to see their workplace as positive, productive, and engaging. Conversely, if they are struggling or suffering, it rubs off on the workplace and the team."
  • Employee engagement in year one affected future wellbeing culture and wellbeing culture change. "When you have an engaging team, you're more likely to have an open and trusting culture," Harter says. "That encourages people to talk openly about wellbeing in ways that positively influence each other's wellbeing."
  • These positive changes in individual wellbeing and employee engagement fed further improvements in wellbeing and engagement, completing a healthy organizational cycle.
How managers can promote wellbeing and employee engagement
So here's how managers can keep engagement alive in year one and year two (and in years three, four, and beyond):
  • Be aware of their own engagement and wellbeing. As the research shows, there's a strong connection between wellbeing and engagement, and that applies to managers as well as their employees. For example, employees may not be aware of all the wellbeing opportunities a company offers, but a manager who discusses and promotes them can encourage his employees to get involved in wellbeing activities. This reflects a powerful cascade effect from managers to employees, Harter says: "When managers care about their wellbeing, their team members take a greater interest in their own wellbeing."
  • Give employees a platform to recognize the actions they're taking to improve their wellbeing and engagement. "A lot of studies are showing that change happens because of our social environment," Harter says. "Norms are shared in a way that's contagious, and companies and managers can help set those norms. But the team will carry them forward."
Employees who are engaged and thriving also have greater agility and resilience. "When people are engaged and have thriving wellbeing, their life situations don't weigh them down and keep them from performing," Harter says. "They see changes as opportunities, not problems." That's a constructive perspective, and managers who promote it by encouraging wellbeing and engagement will help their companies reap the benefits in year one and beyond.

The Five Essential Elements of Wellbeing

For more than 50 years, Gallup scientists have been exploring the demands of a life well-lived. More recently, in partnership with leading economists, psychologists, and other acclaimed scientists, Gallup has uncovered the common elements of wellbeing that transcend countries and cultures. This research revealed the universal elements of wellbeing that differentiate a thriving life from one spent suffering. They represent five broad categories that are essential to most people:
Jennifer Robison is a Senior Editor of the Gallup Business Journal.

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The Chairman's Blog: Americans Can’t Handle the Truth

The Chairman's Blog: Gallup:

David Stockman’s new book, The Great Deformation: The Corruption of Capitalism in America, is getting a lot of attention these days....

united states currency eye- IMG_7364_web
united states currency eye- IMG_7364_web (Photo credit: kevindean)
Stockman, President Ronald Reagan’s first budget director, confronts us head-on with blunt truths we simply can’t handle. He argues that our current economy -- and recent prosperity -- aren’t real. Instead, they’ve been fueled by a series of artificial bubbles created by runaway deficit spending and reckless money-printing at the Federal Reserve. This is all going to lead to an epic crash, Stockman predicts, and next time around, there won’t be any bailouts.

I hate to say it, but most of us would rather the president and our representatives in Congress don’t cause us any pain. ... We elect our officials to create no discomfort for us, and they deliver.

Inspired by Stockman’s blunt assessment, I’d like to focus on three areas where all of us -- the White House, Congress, and citizens, too -- need a heavy dose of truth-telling: the unemployment rate, the unsustainability of healthcare, and the reality of America’s economic growth.
English: United States mean duration of unempl...
English: United States mean duration of unemployment 1948-2010. Data source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average (Mean) Duration of Unemployment [UEMPMEAN] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed August 14, 2010. (Photo credit: Wikipedia)

The unemployment rate in the U.S. is stagnant at best. Yes, the U.S. Department of Labor says the rate has dropped from 7.8% to 7.6%, but it’s actually frozen when you apply a more accurate measure. In simple terms, the Bureau of Labor Statistics’ survey of 60,000 households per month doesn’t count you as “unemployed” unless you looked for a job in the past four weeks.

I think it’s better to turn the number upside down and ask, “What percentage of the population does have a good job?” According to Gallup’s monthly payroll to population (P2P) survey of 30,000 adults, the employment situation has failed to improve recently and has remained relatively little changed year-over-year. Workers haven’t found the full-time jobs they’ve been seeking, and the labor force and unadjusted unemployment rates are flat.

Healthcare costs are out of control. We must confront this problem now... At $2.5 trillion annually, the U.S. healthcare tab is ... nearly two times the whole Russian economy. It’s also roughly twice the size of the whole Indian economy, and India has a billion-plus population.

The fact is, healthcare is breaking America faster than Social Security and other pension benefits. And healthcare is growing at an average of 6% per year, which means the new costs over the next decade will be a staggering $10 trillion over and above where we currently are.

Components of economic growth (Saari 2006)
Components of economic growth (Saari 2006) (Photo credit: Wikipedia)
We need authentic economic growth. While I agree with Stockman that the current booming stock market is an illusion driven by money-printing and deficit spending -- ... many of his solutions are more political in nature: ... I have a more straightforward fix: Restore and encourage the spirit of American free enterprise. ...

Chart of economic growth; from spreadsheet
Chart of economic growth; from spreadsheet (Photo credit: Wikipedia)
Whatever anyone in the White House or on Wall Street says, don’t forget that our economy is currently growing at a pathetic 1%, where we need a minimum of 2.5% GDP growth just to tread water, in my view. ... I think we need GDP growth of about 4.5% to get the economy humming again. We’re not going to get there with more deficit spending and with the Federal Reserve handing out more free money to investors.

What will get us to authentic economic growth and job creation is for federal, state, and local governments to do everything in their power to help America’s 6 million small businesses succeed. That means restoring their confidence in the future -- 30% of small-business owners are worried they may not be in business in 12 months, according to a Wells Fargo/Gallup Small Business Index survey -- and removing any barriers they may face. What most people probably don’t know is that small businesses -- not large enterprises -- create most of the good jobs in America.

Maybe Stockman’s political reforms are the right way to go, but whatever the case, I think that restoring the spirit of robust, free-market capitalism will cure most of our ills and put the country on a sustainable path for the future.

But first, we need to start telling ourselves the truth about what really drives prosperity and what’s just an illusion. David Stockman has done us all a favor by getting us to confront reality. Of course, I actually do recommend his book.
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The Chairman's Blog: The Fear Factor: How Scared Are People?

Scared child
Scared child (Photo credit: Wikipedia)
The Chairman's Blog: Gallup:
By Jim Clifton, Gallup Chairman and CEO, and Deepak Chopra, M.D.

Over the past decade the word “fear” has become all too familiar. After 9/11, critics of the war on terror called it fear-mongering. After the financial crash in 2008, living in a climate of fear became the lot of millions of people who lost their jobs, retirement accounts, and homes. But what about the most basic fear, which undermines society itself, the fear of bodily harm, either through crime or terrorism?

English: Photographs of the Rally to Restore S...
English: Photographs of the Rally to Restore Sanity and/or Fear. (Photo credit: Wikipedia)
Walking the streets in countries around the world carries a real risk. The incidence of kidnapping has skyrocketed in Mexico and South America. Recently, the shocking rate of rape in India has come to light. Religious factions in the Islamic world wreak havoc and death for ordinary citizens.

In the face of such violence, the prevalence of fear can have a profound effect on the health, wellbeing, and economic development; if a society is in a constant state of fear, it won’t produce anything good.

... Gallup’s World Poll set out to quantify fear of bodily harm. The usual measure, police reports and crime statistics, aren’t particularly reliable, since what they report is how many criminals were pursued or caught. ... (Ironically, if a reform-minded mayor brings in an effective police chief, and the chief does a great job at arresting more criminals, it can present the appearance of an increase in crime.) ... Statistics can’t reveal the large number of victims who don’t go to the police after being robbed, raped, or assaulted on the streets. ...

... Gallup scientists found one survey question that gets to the heart of the matter: “Do you feel safe walking alone at night in the city or area where you live?” ... People who feel unsafe are preoccupied to the point that their wellbeing deteriorates. Over time, fear worsens how their entire lives will turn out.

The results of our research are stark. We found that women in sub-Saharan Africa, for example, don’t feel safe walking just 100 meters from their villages, possibly because they fear being raped or beaten. As a result, they can’t walk to markets to buy or sell goods. In the event that their fear is lifted, these women would increase Africa’s GDP a little or a lot with their lost economic activity.

The same effect can strike closer to home. One of us, Jim Clifton, lives in Georgetown, an affluent neighborhood in Washington, D.C. Several years ago, Georgetown had a serious crime spree, and people started going home directly after work -- once home, they tended to stay in. As fear spread about walking alone after dark, spending on everyday things like shopping and dining out decreased significantly. The neighborhood’s economy suffered until law and order was restored through an ambitious effort by local law enforcement.

These are just two examples of fear’s pernicious reach. ... Here are some of the basic findings:

% AFRAID (to walk alone in their neighborhood at night)
Venezuela 74% 
Afghanistan 60% 
Russia 50%
Congo 50%
Mexico 44%
India 35%
United States 25%
Canada 16%
China 16%
Hong Kong 11%

Americans deserve to be shocked to find that a quarter of their fellow citizens are afraid to walk the streets. Gallup tracks the fear score of U.S. citizens nightly and finds huge variance by city. For instance, in the U.S., the three big metro areas with the least fear are Minneapolis, Denver, and Raleigh -- with about 20% of their citizens reporting they have fear walking alone at night. At the other end are Memphis and New Orleans, where more than a whopping 40% of citizens say they fear walking alone at night.

Fear is sometimes linked with actual danger, but that’s not the real point. Fear is personal and subjective. Fear gains its power, as terrorists well know, through the perception that one is in danger.

We feel any government that believes in open communication should publish the fear index for their city or nation, to start a dialogue about how to reduce the causes of fear. Closing the gap between perception and reality, as far as risks are concerned, is equally important. That 25% of Americans who are afraid to walk alone doesn’t mean that one out of four of us is in danger of bodily harm on any given night.

English: Words associated with Fear
English: Words associated with Fear (Photo credit: Wikipedia)
... A rigid law and order society like Singapore is very different than life in the United States, as is the enforced conformity of China. On the other hand, the perception of fear, as it arises in the individual, has known causes. People become more afraid when:
  • They feel isolated and alone.
  • Their surroundings undergo rapid change.
  • Minorities and outsiders are labeled “them,” who are totally unlike “us.”
  • Support structures begin to deteriorate, including police, fire departments, churches, and designated services for the poor and elderly.
In other words, a negative result on the fear index calls for better solutions than clamping down on civil liberties and sending the police out on random stop-and-search patrols. ... Gallup analysts again found huge variance in the hearts and minds of citizens by region.

Globally, the implications of these data are fascinating. Imagine how much different a person’s peace of mind is in Venezuela, where 74% are afraid to walk alone at night, or in Afghanistan, where nearly 60% are afraid, versus Canada (16%) or Hong Kong (10%). Think about how much more psychological energy a society has when people don’t live with chronic anxiety. In countries like the U.S., under conditions many would consider a climate of fear, one only has to witness how a relatively low anxiety level can impact entrepreneurship, innovation, health, and wellbeing -- all the things that make human development possible.

This post originally appeared in the San Francisco Chronicle.
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Thursday, June 13, 2013

Managing the people side of risk

Companies can create a powerful risk culture without turning the organization upside down.

McKinsey & Company:
May 2013 | byAlexis Krivkovich and Cindy Levy
Most executives take managing risk quite seriously, the better to avoid the kinds of crises that can destroy value, ruin reputations, and even bring a company down. Especially in the wake of the global financial crisis, many have strived to put in place more thorough risk-related processes and oversight structures in order to detect and correct fraud, safety breaches, operational errors, and overleveraging long before they become full-blown disasters.
Yet processes and oversight structures, albeit essential, are only part of the story. Some organizations have found that crises can continue to emerge when they neglect to manage the frontline attitudes and behaviors that are their first line of defense against risk. This so-called risk culture1 is the milieu within which the human decisions that govern the day-to-day activities of every organization are made; even decisions that are small and seemingly innocuous can be critical. Having a strong risk culture does not necessarily mean taking less risk. Companies with the most effective risk cultures might, in fact, take a lot of risk, acquiring new businesses, entering new markets, and investing in organic growth. Those with an ineffective risk culture might be taking too little.
Of course, it is unlikely that any program will completely safeguard a company against unforeseen events or bad actors. But we believe it is possible to create a culture that makes it harder for an outlier, be it an event or an offender, to put the company at risk. In our risk-culture-profiling work with 30 global companies, supported by 20 detailed case studies, we have found that the most effective managers of risk exhibit certain traits—which enable them to respond quickly, whether by avoiding risks or taking advantage of them. We have also observed companies that take concrete steps to begin building an effective risk culture—often starting with data they already have.

Traits of strong risk cultures

English: Risk bow-tie for regulatory complianc...
English: Risk bow-tie for regulatory compliance strategies - deter, detect & deal with (Photo credit: Wikipedia)
The most effective risk managers we have observed act quickly to move risk issues up the chain of command as they emerge, breaking through rigid governance mechanisms to get the right experts involved whether or not, for example, they sit on a formal risk-management committee. They can respond to risk adroitly because they have fostered a culture that acknowledges risks for what they are, for better or for worse; they have encouraged transparency, making early signs of unexpected events more visible; and they have reinforced respect for internal controls, both in designing them and in adhering to them.
Acknowledging risk
English: A flowchart pointing out the differen...
English: A flowchart pointing out the different types of risks in Banking (Photo credit: Wikipedia)
It takes a certain confidence among managers to acknowledge risks. Doing so—especially to the point of discussing them internally, as well as with shareholders or even regulators— requires that managers rely on their own policies and procedures to work through issues that could lead to crisis, embarrassment, or loss.
The cultural differences between companies that acknowledge risk and those that do not are quite stark. Consider, for example, two global financial institutions that take similar risks and share a similar appetite for risk. The first has built a culture, at all levels of the organization, that prizes staying ahead of the trend. ... The stance it takes is, “If we see it, identify it, and size it, then even if it’s horrible, we’ll be able to manage it.” Where risks cannot be sized, they are at least discussed in qualitative terms. ...
The second institution, in contrast, has a reactive and back-footed culture—one focused more on staying out of trouble, ensuring regulatory compliance, and making sure all the boxes are ticked. Its managers are generally content to move with the pack on risk issues, preferring to wait for regulatory criticism or reprimand before upgrading subpar practices. ... This organization’s stance is, “Let’s wait until we really need to deal with these unpleasant things, because they’re anomalies that may turn out to be nothing at all.” ...
Encouraging transparency
English: The diagram above represents a generi...
English: The diagram above represents a generic framework for risk management. (Photo credit: Wikipedia)
Managers who are confident that their organizational policies and controls can handle—and even benefit from—openness about risk are more likely to share the kinds of information that signal risk events and allow the institution to resolve emerging issues long before they become crises. This means they spot a risk issue developing and mobilize the organization to analyze and remedy it—at the board level if needed, and often within a few working days. In one situation, a division of an energy-services company was operating a contract in an emerging country in which it had not previously worked. There, the division discovered employment practices among subcontractors that ran counter to its own policies and practices. The operating leadership swiftly escalated the issue to the company’s global management board to decide whether specific contractors were acceptable. It was able to reallocate project tasks among contractors, manage timeline slippage and the budget, and consequently reduce the company’s employment-practices risk and safeguard project returns.
Companies with a culture that discourages such discussions—as well as those in which overconfidence leads to denial—are prone to ignoring or failing to recognize risks. In some cases, employees fear telling the boss bad news because they worry about the financial downside of slowing commercial progress, they know the boss doesn’t want to hear it, or they fear being blamed. As a result, they alert managers to risks only when further delay is impossible. ...
The best cultures actively seek information about and insight into risk by making it everyone’s responsibility to flag potential issues. ...
Ensuring respect for risk
Most executives understand the need for controls that alert them to trends and behaviors they should monitor, the better to mobilize in response to an evolving risk situation. And while managers are unlikely to approve of skirting the very guidelines and controls they have put in place, some unintentionally promote situations and behaviors that undermine them. For example, while too few controls can obviously leave companies in the dark as a situation builds, too many can be even more problematic. Managers in such cases mistake more controls for tighter management of risk, though they may be inadvertently encouraging undesired behaviors. ...
English: Frame of reference for research of in...
English: Frame of reference for research of integrateg Governance, Risk & Compliance (GRC) (Photo credit: Wikipedia)
Even companies with the right number of controls in place encounter difficulty if managers do not monitor related trends and behaviors. Companies often unconsciously celebrate a “beat the system” mind-set, rewarding people who create new businesses, launch projects, or obtain approvals for things others cannot—even if it means working around control functions in order to get credit lines or capital allocations, for example.
In the best of cases, respect for rules can be a powerful source of competitive advantage. A global investment company had a comprehensive due-diligence process and sign-off requirements for investments. Once these requirements were fulfilled, however, the board was prepared to make large, early investments in asset classes or companies with the collective support of the senior-executive team, which was ultimately accountable for performance. Company-wide confidence in proceeding resulted from an exhaustive risk debate that reduced fear of failure and encouraged greater boldness relative to competitors. Confidence also stemmed from an appropriately gauged set of risk controls and an understanding that if these controls were followed, failure would not be regarded as a matter of poor decision making.

Building an effective risk culture

Companies that want to reshape their risk culture should be aware that patience and tenacity are crucial. Changing the operating environment of a large organization takes at least two to three years, as individuals come up against specific processes—such as policy decisions, project approvals, or even personnel reviews—that have changed in line with new risk-culture principles. In our observation, companies wrestle with two challenges: building consensus among senior executives and sustaining vigilance over time.
Finding consensus on culture
Improving a company’s risk culture is a group exercise. ... In most global organizations, CEOs and CFOs who want to initiate the process must build a broad consensus among the company’s top 50 or 60 leaders about the current culture’s weaknesses. Then they must agree on and clearly define the kind of culture they want to build. This is no small task, typically requiring agreement on four or five core statements of values about the desired culture that imply clear process changes. ...
The consequence of committing to such statements is that the company will need to change the way it approves activities, whether those are transactions at banks, capital projects in heavy industry, or even surgical procedures at hospitals. It cannot let them proceed if the risk infrastructure does not support them—and business-unit COOs must be held accountable for risk events related to infrastructure in their areas. To make aspirations for the culture operational, managers must translate them into as many as 20 specific process changes around the organization, deliberately intervening where it will make a difference in order to signal the right behavior. In some companies, this has meant changing the way governance committees function or modifying people processes, such as training, compensation, and accountability. And while fine-tuning some of these areas may take a fair number of cycles, even a few symbolic changes in the first cycle can have a profound impact on the culture. ...
Sustaining vigilance
Since cultures are dynamic by definition, sustaining the right attitudes and behaviors over time requires continuing effort. An ongoing risk committee might start off by keeping on top of key issues but become stale and mechanical as people lose energy over time. Or a discontinuity—new leadership or a new set of market pressures, for instance—could send the culture in a different direction. ...
The responsibility for maintaining the new risk culture extends to boards of directors, which should demand periodic reviews of the overall company and individual businesses to identify areas that merit a deeper look. This need not be complicated. Indeed, most companies can aggregate existing data: a people survey, which most companies conduct, can provide one set of indicators; a summary of operational incidents, information on financial performance, and even customer complaints can also be useful. Combined, these data could be displayed in a dashboard of indicators relevant to the company’s desired risk culture and values. Such a review process should become part of the annual risk strategy on which the board signs off.
Obviously, a shortage of risk consciousness will lead to trouble. But it is all too easy to assume that a thorough set of risk-related processes and oversight structures is sufficient to avert a crisis. Companies cannot assume that a healthy risk culture will be a natural result. Rather, leadership teams must tackle risk culture just as thoroughly as any business problem, demanding evidence about the underlying attitudes that pervade day-to-day risk decisions.
About the authors
Alexis Krivkovich is a partner in McKinsey’s San Francisco office, and Cindy Levy is a partner in the London office.

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Wednesday, June 12, 2013

How cutting employee hours due to health reform may infringe federal law

Employee Benefit News:
By Craig J. Davidson, CEBS
May 29, 2013
Countless employers and their advisers are considering a health care reform strategy of cutting employees' weekly hours to less than 30 hours to try to avoid dealing with coverage requirements under the Affordable Care Act. At first blush, this approach seems to provide cover from a variety of costs associated with the ACA by getting employees off the health plan eligibility list.
However, a potential problem exists with this strategy and it is found in the backwaters of ERISA Section 510 which refers back to ERISA Section 502. This could be fodder for attorneys depending on the motive of the employer in taking employees part time. ...
The poignant part of ERISA Section 510 states: "It shall be unlawful for any person to discharge, fine, suspend, expel, discipline or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan ... "
A plan participant in an ERISA plan (health plans are ERISA plans) has a legal right to participate in the plan without undo interference.
For sure, employers can - and do - cut employees' hours for reasons of legitimate business necessity. Sometimes a cut in hours relegates a benefit plan participant to ineligibility to participate in the plan under the terms of the plan's eligibility requirements.
Now, let us look at the single motive that some employers are considering to avoid offering health benefits under the terms of the ACA. This is key to a potential ERISA Section 510 claim against an employer.
If the single motive for cutting employees hours is to avoid the purposes of the ACA, to me, that sounds like a subterfuge that interferes with a plan participant's rights to their health plan. That is one of the very prohibitions that ERISA Section 510 was written to prevent.
The bottom line is that you and your employer client may be on shaky ground using the cut-in-hours strategy to knock plan participants off the health plan eligibility list and avoid further provision of health benefits to otherwise qualified plan participants.

Penalties always get attention. A violation of the employee's rights to participate in their plan or retaliation of the sort that results in a loss of group health plan coverage for reasons already discussed can be prohibitively expensive for the employer.
First, a plan participant may start a civil action to address loss of ERISA rights or retaliation for seeking to exercise rights under the plan. Second, the DOL can assess fines for each violation against the fiduciaries of the plan.
When all is said and done, messing with employees' rights to a health plan is tricky and potentially an expensive proposition. Knowing the sleepy 510 and 502 sections of ERISA gives you something valuable to talk with your clients about as so many employers seek a strategy to avoid the full force of the ACA.
Get out and talk to your clients about this important part of benefits law.
Davidson, CEBS, is founder of Davidson Marketing Group and FutureOffice Network. He is also on the faculty at the Sheldon B. Lubar School of Business at the University of Wisconsin, Milwaukee. Reach him

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