Technology is often used to cut costs. In the human resources department, technology can drastically reduce the expenses associated with the "four Ps": printing, paper, postage, and personnel costs. Increasingly, employees are encouraged or required to go online to access company policies and procedures and enroll in various benefit plans.
However, when it comes to providing your employees with summary plan descriptions for welfare or benefit plans, the online self-service rules are so narrowly tailored that they render the effort nearly futile. Wholesale, "It's here on our Web site, come and get it," is not allowed under the rules. The law specifically requires plan administrators to "use measures reasonably calculated to ensure actual receipt of the material by plan participants, beneficiaries, and other specified individuals." 29 C.F.R. § 2520.104b-1(b)(1). Rules vary, depending on whether the information is provided to an employee or another person entitled to the documents. However, some rules apply to everyone.
The plan administrator must take appropriate and necessary steps reasonably calculated to ensure the participant, beneficiary, and other specified individuals actually receive the transmitted information. This may be accomplished by a confirmation email, through mail-delivery failure notification programs, etc.
Each participant, beneficiary, and other specified individuals must be notified of (1) the availability of the required documents electronically; (2) the significance of the document to the participant or beneficiary; and (3) the right to request and receive, free of charge, a paper copy of the document. Unless you can be absolutely certain that every participant, beneficiary, and other specified individuals receive the email notice, this notification should be provided in hard copy.
One category of individuals to whom summary plan descriptions may be provided electronically is employees who have ready access to the employer's information system at a location where the employee is reasonably expected to perform his or her duties. This could be on-site in the employee's office, from home (if the employee works from home), or from a remote location (if the employee's job involves traveling). However, access to the employer's information system must be an "integral part" of the employee's duties; simple use of a computer during working hours is not enough to qualify. 29 C.F.R. § 2520.104b-1(c)(2)(i). Therefore, someone who does not work at a computer, such as a cook or line operator, is not covered under this section. Likewise, a data entry clerk or cashier (even though working on a computer) is not covered under this section.
Can you get around these rules by providing access to a "community" computer that anyone can access? No. The Department of Labor has long held the view that where documents are required to be furnished to participants, it is not acceptable merely to make the documents available in a location frequented by participants. The Department maintains that, even when participants are otherwise provided notice of the documents' availability, requiring the participants to physically seek out the documents in common workplace areas is a disincentive for participants to obtain and review important information affecting their rights, benefits, and obligations under their plan.
Another category of those entitled to receive documents are employees who do not routinely access the company's information system, dependents under a health insurance plan, beneficiaries under a life insurance plan, and retired or former employees. 29 C.F.R. § 2520.104b-1(c)(2)(ii). For these individuals, the rules for electronic delivery of summary plan descriptions are even stricter. Plan administrators must provide these individuals with certain information, and in return, obtain their prior permission before they can use electronic delivery of documents as a method to fulfill their obligations. Prior to accepting permission, the employer must provide a clear and conspicuous statement indicating (1) the type of documents to be delivered electronically, (2) that consent can be withdrawn at any time, (3) the procedures for withdrawing consent and for updating the electronic address or other information, (4) the right to request and obtain a paper version of the electronically furnished documents, and (5) the hardware and software requirements necessary to access and store the documents.
Impact
Failure to timely provide a summary plan description may result in penalties of up to $110 per day. While plan administrators now have the option of utilizing electronic delivery of summary plan descriptions, the rules are strict and do not extinguish a plan administrator's obligation to provide a paper copy upon request. We may become a paperless society someday, but for today, governmental "red tape" has us stuck on paper.
This article was provided by Cynthia P. Letsch, Berens & Tate, P.C., Omaha, NE, Phone: 402-391-1991, Website: www.berenstate.com, Email: berens@berenstate.com. © Berens & Tate, P.C. Reprinted with permission.
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