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Will a SPD Posted on Our Company’s Intranet Satisfy ERISA’s Requirements?

picjumbo.com_HNCK8984-1.jpgSummary Plan Descriptions (SPDs) are often one of the most overlooked compliance issues that can produce hefty fines. The Department of Labor (DOL) requires that SPDs be provided in a manner “reasonably calculated to ensure actual receipt” of the material by the participant, but what methods are included?

SPD Delivery Methods

  • Hand-delivered to employees at their worksite (merely posting material is not acceptable).
  • S. mail via first, second or third class only if return and forwarding postage is guaranteed and address correction is requested.  
  • Electronic media (in accordance with electronic distribution guidelines).

This means simply emailing SPDs or posting them on the company intranet (and doing nothing else) will likely be in violation of ERISA and could result in significant fines due to insufficient delivery failures.  This does not satisfy any safe harbor delivery method.

Digital Copies - Are they enough?

So this begs the question: We want to post our company’s SPD on the company’s intranet instead of delivering paper copies to participants. What needs to be done to satisfy the ERISA delivery procedures?

If certain requirements are met posting on the intranet would suffice.  Like all SPD delivery formats, electronically furnished SPDs must meet the underlying SPD content, format, and other requirements.  The DOL provides a safe harbor under which electronic delivery, including posting on an intranet website, will be deemed to satisfy this standard. The safe harbor contains requirements for all electronic disclosures and additional requirements in cases where recipients do not have work-related computer access.

General Electronic Disclosure Requirements

A notice of the SPD’s availability must be provided to each participant at the time the SPD is furnished electronically. The company must ensure that posting the SPD on the company intranet results in actual receipt.  Some of the acceptable steps include placing a prominent link to the SPD on the intranet homepage, maintaining the SPD on the website for a reasonable period of time (actually I can’t think of any reason not to maintain it on the website permanently), and using return-receipt or notice of undelivered email features.  This safe harbor method also requires the company to conduct periodic reviews to confirm receipt of notices regarding the SPD’s availability. For employees that can access documents at any location where the employee reasonably could be expected to perform employment duties and whose computer access is an integral part of those employment duties, no additional requirements apply. Again the key is computer access- electronic distribution of notices to active employees requires that employees have work-related computer access at any location where the employee performs his or her duties.  Merely providing a computer in a common area does not satisfy this requirement.   The initial electronic transmittal must contain a statement that the employee may request a paper copy free of charge.

No Computer Access

There are additional requirements that must be followed if there are participants without regular work related computer access.  In these instances notification can be distributed electronically to employees without work-related access, former employees, spouses or dependents if the individuals give written consent to receive notices in electronic format. Prior to consenting to receive electronic distribution of notices, an individual must be given a statement that clearly explains the types of documents to which the consent applies, the procedures for updating the address used for receipt of such documents, the right to request and obtain paper versions free of charge and hardware or software needed to access and retain electronically distributed documents and the procedures for withdrawing consent. After receiving the explanation the individual must affirmatively consent to electronic disclosure in a manner that reasonably demonstrates the individual’s ability to access information in the electronic form that will be used.

Compliance with these requirements satisfies the safe harbor form of delivery but such compliance is not mandatory.  Satisfying a safe harbor will result in the DOL finding that your plan’s electronic delivery method is acceptable or in their words, “reasonably calculated to ensure actual receipt.”  From a litigation perspective, complying with a safe harbor option increases the likelihood that a court will find the delivery method sufficient.

HNI U: ACA Update October 25th, 2016 - WEBINAR