Technology in Total Rewards

1997 Taxpayer Relief Act

Following a directive in the 1997 Taxpayer Relief Act, the Department of Labor (DOL) provided specific guidance on the use of electronic media in benefit plan administration by issuing regulations regarding plan fiduciaries' duties under the Employee Retirement Income Security Act (ERISA) guidelines. The 1997 regulations applied to the distribution of Summary Plan Descriptions (SPD's) and Summary Material Modifications (SMM's) under health plans. ERISA regulations have very specific recordkeeping and reporting requirements. Benefits records and COBRA (Consolidated Omnibus Budget Reconciliation Act)-related mailings may be kept in electronic form if:

1. There are reasonable controls to ensure the integrity, accuracy, authenticity and reliability of the records kept in electronic form.
2. The electronic records are maintained in reasonable order, in a safe and accessible place, and in a manner in which they may be readily inspected or examined.
3. The electronic records are readily convertible into legible and readable paper copy as may be needed to satisfy reporting and disclosure requirements.
4. The electronic recordkeeping system is not subject, in whole or in part, to any agreement or restriction that would directly or indirectly compromise or limit a person’s ability to comply with any reporting and disclosure requirement or any other obligation under Title I of ERISA.
5. Adequate records management practices are established and implemented.

2002 Final Rules on Electronic Documents

In 2002, the DOL issued final rules on electronic document distribution applicable to both pension and welfare plans establishing a safe harbor test which allows plan administrators to fulfill requirements to distribute ERISA Title I documents, including SPDs, SMMs, and COBRA notifications, through the use of electronic media such as email and websites. The rules prohibit companies from using kiosks as the sole means of giving employees access to electronic documents. Plan administrators may make electronic documents available to employees having the ability to access them anywhere they are able to perform their duties as employees. Additionally, all of the following conditions must be met:

1. All intended recipients must be able to receive plan documents using the chosen electronic means of distribution.
2. Personal information relating to the individual’s accounts and benefits must be protected.
3. When a document is furnished electronically, each recipient must be informed, by electronic or non-electronic means, of the significance of the document when it is not clear as transmitted.
4. Upon request, employees, beneficiaries, or other individuals must be furnished a paper version of the electronically provided documents.
5. Electronically delivered documents must be prepared and furnished in a manner that is consistent with the style, format and content requirements applicable to the particular document (the electronic document does not have to be identical to the paper version).

The requirements apply to employees, beneficiaries, and other persons entitled to plan disclosures. Employees outside of their place of work, beneficiaries, and other persons may also receive electronic documents provided they are given the opportunity to consent to the way the documents are sent to them, be it as hard copy or via email.