2 - ERISA’s Coverage

Summary

ERISA generally applies to any “employee benefit plan” established or maintained by an employer or a labor union. Whether a given benefit arrangement qualifies as a plan has been challenged on three grounds: transience, indefiniteness, or restricted coverage. ERISA applies only to plans that provide benefits to employees or their families, with the meaning of employee under ERISA tracking the common-law definition. The nature and intensity of ERISA’s regulation largely depends upon whether the plan provides retirement income or systematically defers compensation until termination of employment or beyond (a pension plan), or whether it provides any of certain other benefits specifically listed by the statute (a welfare plan). Finally, ERISA exempts from its coverage a few benefit arrangements that otherwise meet the statutory definition of an employee benefit plan. The most important exceptions are for unfunded executive deferred compensation programs (so-called top hat plans), and for plans sponsored by government or religious organizations.