[Title 29 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2023 Edition]
[From the U.S. Government Publishing Office]
[[Page 1]]
Title 29
Labor
________________________
Part 2000 to End
Revised as of July 1, 2023
Containing a codification of documents of general
applicability and future effect
As of July 1, 2023
Published by the Office of the Federal Register
National Archives and Records Administration as a
Special Edition of the Federal Register
[[Page ii]]
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[[Page iii]]
As of July 1, 2023
Title 29, Part 1927 to End
Revised as of July 1, 2022
Is Replaced by
Title 29, Part 2000 to End
[[Page v]]
Table of Contents
Page
Explanation................................................. vii
Title 29:
SUBTITLE B--Regulations Relating to Labor (Continued)
Chapter XX--Occupational Safety and Health Review
Commission 5
Chapter XXV--Employee Benefits Security
Administration, Department of Labor 77
Chapter XXVII--Federal Mine Safety and Health Review
Commission 717
Chapter XL--Pension Benefit Guaranty Corporation 769
Finding Aids:
Table of CFR Titles and Chapters........................ 1145
Alphabetical List of Agencies Appearing in the CFR...... 1165
List of CFR Sections Affected........................... 1175
[[Page vi]]
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 29 CFR 2200.1 refers
to title 29, part 2200,
section 1.
----------------------------
[[Page vii]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
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name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
volume.
LEGAL STATUS
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evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
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EFFECTIVE AND EXPIRATION DATES
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OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
Federal agencies to display an OMB control number with their information
collection request.
[[Page viii]]
Many agencies have begun publishing numerous OMB control numbers as
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``[RESERVED]'' TERMINOLOGY
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(a) The incorporation will substantially reduce the volume of
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CFR INDEXES AND TABULAR GUIDES
A subject index to the Code of Federal Regulations is contained in a
separate volume, revised annually as of January 1, entitled CFR Index
and Finding Aids. This volume contains the Parallel Table of Authorities
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alphabetical list of agencies publishing in the CFR are also included in
this volume.
An index to the text of ``Title 3--The President'' is carried within
that volume.
[[Page ix]]
The Federal Register Index is issued monthly in cumulative form.
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the revision dates of the 50 CFR titles.
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The eCFR is a regularly updated, unofficial editorial compilation of
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available at www.ecfr.gov.
Oliver A. Potts,
Director,
Office of the Federal Register
July 1, 2023
[[Page xi]]
THIS TITLE
Title 29--Labor is composed of nine volumes. The parts in these
volumes are arranged in the following order: Parts 0-99, parts 100-499,
parts 500-899, parts 900-1899, parts 1900-Sec. 1910.999, part
1910.1000-end of part 1910, parts 1911-1925, parts 1926-1999, and part
2000 to end. The contents of these volumes represent all current
regulations codified under this title as of July 1, 2023.
The OMB control numbers for title 29 CFR part 1910 appear in Sec.
1910.8. For the convenience of the user, Sec. 1910.8 appears in the
Finding Aids section of the volume containing Sec. 1910.1000 to the
end.
For this volume, Ann Worley was Chief Editor. The Code of Federal
Regulations publication program is under the direction of John Hyrum
Martinez, assisted by Stephen J. Frattini.
[[Page 1]]
TITLE 29--LABOR
(This book contains part 2000 to end)
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SUBTITLE B--Regulations Relating to Labor (Continued)
Part
chapter xx--Occupational Safety and Health Review Commission 2200
chapter xxv--Employee Benefits Security Administration,
Department of Labor....................................... 2509
chapter xxvii--Federal Mine Safety and Health Review
Commission................................................ 2700
chapter xl--Pension Benefit Guaranty Corporation............ 4000
[[Page 3]]
Subtitle B--Regulations Relating to Labor (Continued)
[[Page 5]]
CHAPTER XX--OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION
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Part Page
2000-2199
[Reserved]
2200 Rules of procedure.......................... 7
2201 Regulations implementing the Freedom of
Information Act......................... 44
2202
[Reserved]
2203 Regulations implementing the Government in
the Sunshine Act........................ 56
2204 Implementation of the Equal Access to
Justice Act in proceedings before the
Occupational Safety and Health Review
Commission.............................. 61
2205 Enforcement of nondiscrimination on the
basis of disability in programs or
activities conducted by the Occupational
Safety and Health Review Commission and
in accessibility of Commission
electronic and information technology... 65
2400 Regulations implementing the Privacy Act.... 72
2401-2499
[Reserved]
[[Page 7]]
PARTS 2000 2199 [RESERVED]
PART 2200_RULES OF PROCEDURE--Table of Contents
Subpart A_General Provisions
Sec.
2200.1 Definitions.
2200.2 Scope of rules; applicability of Federal Rules of Civil
Procedure; construction.
2200.3 Use of number.
2200.4 Computing time.
2200.5 Extension of time.
2200.6 Record address.
2200.7 Service, notice, and posting.
2200.8 Filing.
2200.9 Consolidation.
2200.10 Severance.
2200.11 [Reserved]
2200.12 References to cases.
Subpart B_Parties and Representatives
2200.20 Party status.
2200.21 Intervention; appearance by non-parties.
2200.22 Representation of parties and intervenors.
2200.23 Appearances and withdrawals.
2200.24 Brief of an amicus curiae.
Subpart C_Pleadings and Motions
2200.30 General rules.
2200.31 Caption; titles of cases.
2200.32 Signing of pleadings and motions.
2200.33 Notices of contest.
2200.34 Employer contests.
2200.35 Disclosure of corporate parents, subsidiaries, and affiliates.
2200.36 [Reserved]
2200.37 Petitions for modification of the abatement period.
2200.38 Employee contests.
2200.39 Statement of position.
2200.40 Motions and requests.
2200.41 [Reserved]
Subpart D_Prehearing Procedures and Discovery
2200.50 [Reserved]
2200.51 Prehearing conferences and orders.
2200.52 General provisions governing discovery.
2200.53 Production of documents and things.
2200.54 Request for admissions.
2200.55 Interrogatories.
2200.56 Depositions.
2200.57 [Reserved]
Subpart E_Hearings
2200.60 Notice of hearing; location.
2200.61 Submission without hearing.
2200.62 Postponement of hearing.
2200.63 Stay of proceedings.
2200.64 Failure to appear.
2200.65 Issuance of subpoenas; petitions to revoke or modify subpoenas;
payment of witness fees and mileage; right to inspect or copy
data.
2200.66 Transcript of testimony.
2200.67 Duties and powers of Judges.
2200.68 Recusal of the Judge.
2200.69 Examination of witnesses.
2200.70 Exhibits.
2200.71 Rules of evidence.
2200.72 Objections.
2200.73 Interlocutory review.
2200.74 Filing of briefs and proposed findings with the Judge; oral
argument at the hearing.
Subpart F_Posthearing Procedures
2200.90 Decisions and reports of Judges.
2200.91 Discretionary review; petitions for discretionary review;
statements in opposition to petitions.
2200.92 Review by the Commission.
2200.93 Briefs before the Commission.
2200.94 [Reserved]
2200.95 Oral argument before the Commission.
2200.96 Commission receipt of copies of petitions for judicial review of
Commission orders when petitions for review are filed in two
or more courts of appeals with respect to the same order.
Subpart G_Miscellaneous Provisions
2200.100 Settlement.
2200.101 Failure to obey rules.
2200.102 Withdrawal.
2200.103 Expedited proceeding.
2200.104 Standards of conduct.
2200.105 Ex parte communication.
2200.106 Amendment to rules.
2200.107 Special circumstances; waiver of rules.
2200.108 Official Seal of the Occupational Safety and Health Review
Commission.
Subpart H_Settlement Part
2200.120 Settlement procedure.
Subparts I-L [Reserved]
Subpart M_Simplified Proceedings
2200.200 Purpose.
2200.201 Application.
2200.202 Eligibility for Simplified Proceedings.
2200.203 Commencing Simplified Proceedings.
2200.204 Discontinuance of Simplified Proceedings.
2200.205 Filing of pleadings.
2200.206 Disclosure of information.
2200.207 Pre-hearing conference.
[[Page 8]]
2200.208 Discovery.
2200.209 Hearing.
2200.210 Review of Judge's decision.
2200.211 Applicability of subparts A through G.
Authority: 29 U.S.C. 661(g), unless otherwise noted. Section 2200.96
is also issued under 28 U.S.C. 2112(a).
Source: 84 FR 14558, Apr. 10, 2019, unless otherwise noted.
Subpart A_General Provisions
Sec. 2200.1 Definitions.
As used in this part:
(a) Act means the Occupational Safety and Health Act of 1970, 29
U.S.C. 651-678.
(b) Commission, person, employer, and employee have the meanings set
forth in section 3 of the Act, 29 U.S.C. 652.
(c) Secretary means the Secretary of Labor or the Secretary's duly
authorized representative.
(d) Executive Secretary means the Executive Secretary of the
Commission.
(e) Affected employee means an employee of a cited employer who is
exposed to or has access to the hazard arising out of the allegedly
violative circumstances, conditions, practices, or operations.
(f) Judge means an Administrative Law Judge appointed pursuant to
section 12(e) of the Act, 29 U.S.C. 661(e), as amended by Public Law 95-
251, 92 Stat. 183, 184 (1978).
(g) Authorized employee representative means a labor organization
that has a collective bargaining relationship with the cited employer
and that represents affected employees who are members of the collective
bargaining unit.
(h) Representative means any person, including an authorized
employee representative, authorized by a party or intervenor to
represent it in a proceeding.
(i) Citation means a written communication issued by the Secretary
to an employer pursuant to section 9(a) of the Act, 29 U.S.C. 658(a).
(j) Notification of proposed penalty means a written communication
issued by the Secretary to an employer pursuant to section 10(a) or (b)
of the Act, 29 U.S.C. 659(a) or (b).
(k) Day means a calendar day.
(l) Working day means all days except Saturdays, Sundays, or Federal
holidays.
(m) Proceeding means any proceeding before the Commission or before
a Judge.
(n) Pleadings are complaints and answers filed under Sec. 2200.34,
statements of reasons and employers' responses filed under Sec.
2200.38, and petitions for modification of abatement and objecting
parties' responses filed under Sec. 2200.37. A motion is not a pleading
within the meaning of these rules.
[84 FR 14558, Apr. 10, 2019; 84 FR 45654, Aug. 30, 2019]
Sec. 2200.2 Scope of rules; applicability of Federal Rules of
Civil Procedure; construction.
(a) Scope. These rules shall govern all proceedings before the
Commission and its Judges.
(b) Applicability of Federal Rules of Civil Procedure. In the
absence of a specific provision, procedure shall be in accordance with
the Federal Rules of Civil Procedure.
(c) Construction. These rules shall be construed to secure an
expeditious, just, and inexpensive determination of every case.
Sec. 2200.3 Use of number.
Words importing the singular number may extend and be applied to the
plural and vice versa.
[87 FR 8948, Feb. 17, 2022]
Sec. 2200.4 Computing time.
(a) Computation. The following rules apply in computing any time
period specified in these rules or by any order that does not specify a
method of computing time.
(1) Period stated in days or longer unit. When the period is stated
in days or a longer unit of time:
(i) Exclude the day of the event that triggers the period;
(ii) Count every day, including intermediate Saturdays, Sundays, and
Federal holidays; and
(iii) Include the last day of the period, but if the last day is a
Saturday, Sunday, or Federal holiday, the period continues to run until
the end of the
[[Page 9]]
next day that is not a Saturday, Sunday, or Federal holiday.
(2) Period stated in working days. When the period is stated in
working days, count every day except intermediate Saturdays, Sundays,
and Federal holidays.
(3) Operating status of receiving Commission office. Unless the
Commission or the Judge orders otherwise, if the receiving Commission
office is closed on the last day for filing due to inclement weather or
other circumstance, then the time for filing is extended to the first
day the office is open that is not a Saturday, Sunday, or Federal
holiday.
(4) ``Last day'' defined. Unless a different time is set by a rule
or order, the last day ends:
(i) For documents filed electronically in the Commission's E-File
System, at 11:59 p.m. in the time zone of the receiving Commission
office; and
(ii) For filing by other means, when the receiving Commission office
is scheduled to close.
(5) ``Next day'' defined. The ``next day'' is determined by
continuing to count forward when the period is measured after an event
and backward when measured before an event.
(6) ``Federal holiday'' defined. ``Federal holiday'' means:
(i) The day set aside by statute for observing New Year's Day,
Martin Luther King Jr.'s Birthday, Washington's Birthday, Memorial Day,
Juneteenth National Independence Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving Day, or Christmas Day; and,
(ii) Any day declared a holiday by the President or Congress.
(7) Computation examples. (i) If a judge orders that a document is
due in 40 days, count every calendar day starting the day after that
order (day 1) until reaching day 40 (due date). If the receiving
Commission office is closed on day 40 (such as on a Saturday, Sunday, or
Federal holiday), the document would be due the next day the office is
open. In other words, if day 40 falls on a Saturday, and the following
Monday is a Federal holiday, the document would be due on Tuesday, the
day after the holiday.
(ii) If a judge orders that a document is due 14 days before a
hearing, count backwards starting the day before the hearing (day 1)
until reaching day 14. If the receiving Commission office is closed on
day 14 (such as on a Saturday, Sunday, or Federal holiday), the document
would be due on the last day the office is open before the Saturday,
Sunday, or Federal holiday. In other words, if day 14 falls on a Sunday,
and the Friday before is a Federal holiday, the document would be due on
Thursday, the day before the holiday.
(b) Additional time after service by U.S. Mail. When a party may or
must act within a specified time after service and service is made by
U.S. Mail under Sec. 2200.7, 3 days are added after the period would
otherwise expire under Sec. 2200.4(a). Provided, however, that this
provision does not apply to computing the time for filing a petition for
discretionary review under Sec. 2200.91(b).
[84 FR 14558, Apr. 10, 2019, as amended at 87 FR 8948, Feb. 17, 2022]
Sec. 2200.5 Extension of time.
The Commission or the Judge on their own initiative or, upon motion
of a party, for good cause shown, may enlarge or shorten any time
prescribed by these rules or prescribed by an order. All such motions
shall be in writing and shall conform with Sec. 2200.40, but, in
exigent circumstances in a case pending before a Judge, an oral request
may be made and shall be followed by a written motion filed with the
Judge within such time as the Judge prescribes. A request for an
extension of time should be received in advance of the date on which the
pleading or document is due to be filed. However, in exigent
circumstances, an extension of time may be granted even though the
request was filed after the designated time for filing has expired. In
such circumstances, the party requesting the extension must show, in
writing, the reasons for the party's failure to make the request before
the time prescribed for the filing had expired. The motion may be acted
upon before the time for response has expired.
[[Page 10]]
Sec. 2200.6 Record address.
(a) Every pleading or document filed by any party or intervenor
shall contain the name, current address, telephone number, and email
address of the party or intervenor's representative or, if there is no
representative, the party or intervenor's own name, current address,
telephone number, and email address. Any change in such information
shall be communicated promptly in writing to the Judge, or the Executive
Secretary if no Judge has been assigned, and to all other parties and
intervenors. A party or intervenor who fails to furnish such information
shall be deemed to have waived its right to notice and service under
these rules.
(b) Representatives, parties, and intervenors who file case
documents electronically in the Commission's E-File System pursuant to
Sec. 2200.8(c) are responsible for both maintaining a valid email
address associated with the registered account and regularly monitoring
that email address.
[84 FR 14558, Apr. 10, 2019, as amended at 87 FR 8948, Feb. 17, 2022]
Sec. 2200.7 Service, notice, and posting.
(a) When service is required. At the time of filing pleadings or
other documents, the filer shall serve a copy on every other party or
intervenor. Every document relating to discovery required to be served
on a party shall be served on all parties and intervenors. Every order
required by its terms to be served shall be served on all parties and
intervenors.
(b) Service on represented parties or intervenors. Service upon a
party or intervenor who has appeared through a representative shall be
made only upon such representative unless the Judge orders service on
the party or intervenor.
(c) How accomplished. Unless otherwise ordered, service may be
accomplished by the following methods:
(1) Commission's E-File System. For electronically-filed documents,
service shall be deemed accomplished by the simultaneous service of the
document by email on all other parties and intervenors in the case,
together with proof of service pursuant to paragraph (d) of this
section.
(2) U.S. Mail. Service shall be deemed accomplished upon depositing
the item in the U.S. Mail with first-class or higher class (such as
priority mail) postage pre-paid addressed to the recipient's record
address provided pursuant to Sec. 2200.6.
(3) Commercial or other personal delivery. Service shall be deemed
accomplished upon delivery to the recipient's record address provided
pursuant to Sec. 2200.6.
(4) Facsimile transmission. Service by facsimile transmission shall
be deemed accomplished upon delivery to the receiving facsimile machine.
The party serving a document by facsimile is responsible for the
successful transmission and legibility of documents intended to be
served.
(5) Non-E-Filed Documents. Documents required to be served upon
other counsel or parties but that are not filed with the Commission in
the Commission's E-File System (such as discovery documents served
pursuant to Sec. 2200.52(j)) may be served by any means agreed to by
all parties in writing.
(d) Proof of service. Service shall be documented by a written
certificate of service setting forth the date and manner of service. The
certificate of service shall be filed with the pleading or document.
(e) Proof of posting. Where service is accomplished by posting,
proof of such posting shall be filed not later than the first working
day following the posting.
(f) Service on represented employees. Service and notice to
employees represented by an authorized employee representative shall be
deemed accomplished by serving the representative in a manner prescribed
in paragraph (c) of this section.
(g) Service on unrepresented employees. In the event there are
affected employees who are not represented by an authorized employee
representative, the employer shall post, immediately upon receipt, the
docketing notice for the notice of contest or petition for modification
of the abatement period. The posting shall be at or near where the
citation is required to be posted pursuant to section 9(b) of the
Occupational Safety and Health Act of 1970, 29 U.S.C.
[[Page 11]]
658(b), and 29 CFR 1903.16. The employer shall post:
(1) A copy of the notice of contest or petition for modification of
the abatement period;
(2) A notice informing the affected employees of their right to
party status; and
(3) A notice informing the affected employees of the availability of
all pleadings for inspection and copying at reasonable times.
(4)(i) A notice in the following form shall be deemed to comply with
this paragraph:
(Name of employer)
Your employer has been cited by the Secretary of Labor for violation
of the Occupational Safety and Health Act of 1970. The citation has been
contested and will be the subject of a hearing before the OCCUPATIONAL
SAFETY AND HEALTH REVIEW COMMISSION. Affected employees are entitled to
participate in this hearing as parties under terms and conditions
established by the OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION in
its Rules of Procedure. Notice of intent to participate must be filed no
later than 14 days before the hearing. Any notice of intent to
participate should be sent to: Occupational Safety and Health Review
Commission, Office of the Executive Secretary, One Lafayette Centre,
1120 20th Street, NW, Suite 980, Washington, DC 20036-3457. All
pleadings relevant to this matter may be inspected at: (Place reasonably
convenient to employees, preferably at or near workplace.)
(ii) Where appropriate, the second sentence of the above notice will
be deleted and the following sentence will be substituted:
The reasonableness of the period prescribed by the Secretary of
Labor for abatement of the violation has been contested and will be the
subject of a hearing before the OCCUPATIONAL SAFETY AND HEALTH REVIEW
COMMISSION.
(h) Special service requirements; authorized employee
representatives. The authorized employee representative, if any, shall
be served by the employer with the notice set forth in paragraph (g) of
this section and with a copy of the notice of contest or petition for
modification of the abatement period.
(i) Notice of hearing to unrepresented employees. Immediately upon
receipt, a copy of the notice of the hearing to be held before the Judge
shall be served by the employer on affected employees who are not
represented by an authorized employee representative by posting a copy
of the notice of such hearing at or near the place where the citation is
required to be posted pursuant to section 9(b) of the Occupational
Safety and Health Act of 1970, 29 U.S.C. 658(b), and 29 CFR 1903.16.
(j) Notice of hearing to represented employees. Immediately upon
receipt of the notice of the hearing to be held before the Judge, the
employer shall serve a copy of the notice on the authorized employee
representative of affected employees in the manner prescribed in
paragraph (c) of this section. The employer need not serve the notice of
hearing, as stated above, if on or before the date the hearing notice is
received, the authorized employee representative has entered an
appearance in conformance with Sec. Sec. 2200.22 and 2200.23.
(k) Employee contest; service on other employees. (1) Where a notice
of contest with respect to the reasonableness of the abatement period is
filed under Sec. 2200.38 by an affected employee who is not represented
by an authorized employee representative and there are other affected
employees who are represented by an authorized employee representative,
the unrepresented affected employee shall serve the following documents
on the authorized employee representative:
(i) The notice of contest with respect to the reasonableness of the
abatement period; and
(ii) A copy of the Secretary's statement of reasons, filed in
conformance with Sec. 2200.38(a).
(2) Service on the authorized employee representative shall be in
the manner prescribed in paragraph (c) of this section. The
unrepresented affected employee shall file proof of such service.
(l) Employee contest; Service on employer. Where a notice of contest
with respect to the reasonableness of the abatement period is filed by
an affected employee or an authorized employee representative, a copy of
the notice of contest and response filed in support of the notice of
contest shall be provided to the employer for posting in the manner
prescribed in paragraph (g) of this section.
[[Page 12]]
(m) Employee contest; Service on other authorized employee
representatives. An authorized employee representative who files a
notice of contest with respect to the reasonableness of the abatement
period shall be responsible for serving any other authorized employee
representative whose members are affected employees in the manner
prescribed in paragraph (c) of this section.
(n) Duration of posting. Where posting is required by this section,
such posting shall be maintained until the commencement of the hearing
or until earlier disposition.
(o) Service of show cause orders--(1) Service on parties and
intervenors using Commission's E-File System. Service of show cause
orders shall be deemed completed by service through the Commission's E-
File System on a representative who has entered an appearance for a
party or intervenor under Sec. 2200.23 or on a self-represented party
or intervenor who has not been exempted from using the Commission's E-
File System. See also Sec. 2200.101(a).
(2) Service on self-represented parties or intervenors exempted from
using the Commission's E-File System. In addition to the service methods
permitted by Sec. 2200.7(c), the Commission or the Judge shall serve a
show cause order on a self-represented party or intervenor who has been
exempted from using the Commission's E-File System by certified mail or
by any other method (including commercial delivery service) that
provides confirmation of delivery to the addressee's record address
provided under Sec. 2200.6.
[84 FR 14558, Apr. 10, 2019, as amended at 84 FR 53052, Oct. 4, 2019; 85
FR 65220, Oct. 15, 2020; 87 FR 8948, Feb. 17, 2022]
Sec. 2200.8 Filing.
(a) What to file--(1) General. All documents required to be served
on a party or intervenor shall be filed either before service or within
a reasonable time after service.
(2) Discovery documents. Discovery documents generated pursuant to
Sec. Sec. 2200.52 through 2200.56 shall not be filed with the
Commission or the Judge. Filing and retention of such discovery
documents shall comply with Sec. 2200.52(i) and (j).
(b) Where to file. Prior to assignment of a case to a Judge, all
documents shall be filed electronically in the Commission's E-File
System or with the Executive Secretary at One Lafayette Centre, 1120
20th Street NW, Suite 980, Washington, DC 20036-3457. After the
assignment of the case to a Judge, all documents shall be filed
electronically in the Commission's E-File System or with the Judge at
the address given in the notice of assignment. After the docketing of
the Judge's report, all documents shall be filed with the Executive
Secretary, except as provided in Sec. 2200.90(b)(4).
(c) Electronic filing with the Commission--(1) Mandatory e-filing.
All parties and intervenors must file documents electronically in the
Commission's E-File System by following the instructions on the
Commission's website (www.oshrc.gov), unless a self-represented party or
intervenor is able to claim that complying with this paragraph will
place an undue burden upon that party or intervenor under paragraph
(c)(2) of this section or the documents are exempt from e-filing under
paragraph (c)(5) of this section. Documents may not be filed with the
Commission or the Judge via email, unless allowed under paragraph (d)(1)
of this section.
(2) Undue burden. Self-represented parties or intervenors may submit
a written statement to the Judge requesting an exemption from the
mandatory e-filing requirement on the grounds that it would place an
undue burden on them to comply with the requirement. If the Judge grants
an exemption, exempted self-represented parties or intervenors must file
documents by postage-prepaid first class or higher class U.S. Mail,
commercial delivery service, personal delivery, or facsimile
transmission as described in paragraph (d) of this section. Documents
may not be filed with the Commission or the Judge via email, unless
allowed under paragraph (d)(1) of this section.
(3) If technical difficulties prevent the successful submission of
electronically filed documents, the e-filer should refer to the
instructions for electronic filing on the Commission's website
(www.oshrc.gov).
[[Page 13]]
(4) Documents filed electronically in the Commission's E-File System
may contain an electronic signature of the filer which will have the
same legal effect, validity, and enforceability as if signed manually.
The term ``electronic signature'' means an electronic symbol or process
attached to or logically associated with a contact or other record and
executed or adopted by a person with the intent to sign the document.
(5) Confidential and privileged documents. The following documents
must not be filed electronically in the Commission's E-File System:
(i) Documents that may not be released to the public because the
information is covered by a protective order or has been placed ``under
seal'' pursuant to Sec. 2200.52(d) and (e).
(ii) Documents submitted for in camera inspection by the Commission
or the Judge, including material for which a privilege is claimed.
Claims regarding privileged information must comply with Sec.
2200.52(d).
(iii) Confidential settlement documents filed with the Judge
pursuant to settlement procedures pursuant to Sec. 2200.120.
(iv) Applications for subpoenas made ex parte pursuant to Sec.
2200.65.
(6) Sensitive information. Unless the Commission or the Judge orders
otherwise, all sensitive information in documents filed electronically
in the Commission's E-File System must be redacted pursuant to paragraph
(d)(5) of this section.
(7) Date of filing. The date of filing for documents filed
electronically is the day that the complete document is successfully
submitted in the Commission's E-File System pursuant to Sec.
2200.4(a)(4)(i). Electronic filing shall be completed by following the
instructions on the Commission's website (www.oshrc.gov).
(8) Timeliness. Representatives and self-represented parties and
intervenors bear the sole responsibility for ensuring that a filing is
timely made.
(9) Certificate of service. Proof of service shall accompany each
document filed in the Commission's E-File System. The certificate of
service shall certify simultaneous service of the document by email on
all other parties and intervenors in the case. It is the responsibility
of the filing party to retain records showing the date of transmission,
including receipts.
(d) Documents that are not filed in the Commission's E-File System;
alternative filing methods--(1) How to file. Documents may be filed by
postage-prepaid first class or higher class U.S. Mail, commercial
delivery service, personal delivery, or facsimile transmission. Only
documents exempt from e-filing under paragraph (c)(5) of this section
may be filed by email.
(2) Number of copies. Unless otherwise ordered or stated in this
part, only the original of a document shall be filed.
(3) Filing date. (i) Except for the documents listed in paragraph
(d)(3)(ii) of this section, if filing is by U.S. first class mail (or
higher class mail, such as priority mail), then filing is deemed
completed upon depositing the material in the U.S. Mail. If filing is by
any other means (e.g., personal delivery, commercial delivery service,
or facsimile transmission) then filing is deemed completed upon receipt
by the Commission.
(ii) Filing is completed upon receipt by the Commission for
petitions for interlocutory review (Sec. 2200.73), petitions for
discretionary review (Sec. 2200.91), and EAJA applications (Sec.
2204.301).
(iii) Representatives and self-represented parties and intervenors
bear the sole responsibility for ensuring that a filing is timely made.
(4) Certificate of service. A certificate of service shall accompany
each document filed. The certificate shall set forth the dates and
manner of filing and service.
(5) Sensitive information. Unless the Commission or the Judge orders
otherwise, in any filing with the Commission, information that is
sensitive but not privileged (e.g., Social Security numbers, driver's
license numbers, passport numbers, taxpayer-identification numbers,
birthdates, mother's maiden names, names of minors, an individual's
physical personal address, financial account numbers) shall be redacted.
Parties shall exercise caution when filing medical records, medical
treatment records, medical diagnosis records, employment history, and
individual financial information, and shall
[[Page 14]]
redact or exclude materials unnecessary to the case.
(6) Privileged information. Claims regarding privileged information
shall comply with Sec. 2200.52(d).
[84 FR 14558, Apr. 10, 2019; 84 FR 45654, Aug. 30, 2019, as amended at
85 FR 65220, Oct. 15, 2020; 87 FR 8948, Feb. 17, 2022]
Sec. 2200.9 Consolidation.
Cases may be consolidated on the motion of any party conforming to
Sec. 2200.40, on the Judge's own motion, or on the Commission's own
motion, where there exist common parties, common questions of law or
fact or in such other circumstances as justice or the administration of
the Act require.
Sec. 2200.10 Severance.
Upon its own motion, or upon motion of any party or intervenor
conforming to Sec. 2200.40, where a showing of good cause has been made
by the party or intervenor, the Commission or the Judge may order any
proceeding severed with respect to some or all claims or parties.
Sec. 2200.11 [Reserved]
Sec. 2200.12 References to cases.
(a) Citing decisions by Commission and Judges--(1) Generally.
Parties citing decisions by the Commission should include in the
citation the name of the employer, the OSHRC docket number, the year of
the decision, and a citation to a print or electronic reference source.
Citations to Commission and ALJ decisions published on the Commission's
website (www.oshrc.gov) are also accepted. For example,
(i) Print:
(A) Hackensack Steel Corp., 20 BNA OSHC 1387, 1388 (No. 97-0755,
2003).
(B) Hackensack Steel Corp., 2002-2004 CCH OSHD ] 32,690, p. 51,558
(No. 97-0755, 2003).
(ii) Electronic:
(A) Hackensack Steel Corp., No. 97-0755, 2003 WL 22232017, at *4
(OSHRC Sept. 25, 2003).
(B) Hackensack Steel Corp., No. 97-0755, 2003 LEXIS 450392, at *2
(OSHRC Sept. 25, 2003).
(iii) Commission website (www.oshrc.gov):
(A) PDF versions of cases should be cited as follows and identify
the relevant page number: Jacobs Field Servs. N. Am., No. 10-2659, at 5
(OSHRC 2015).
(B) HTML versions of cases should be cited as follows and identify
the relevant paragraph number: Jacobs Field Servs. N. Am., No. 10-2659,
at ] 9 (OSHRC 2015).
(2) Parenthetical statements. When citing the decision of a Judge,
the digest of an opinion, or the opinion of a single Commissioner, a
parenthetical statement identifying that the decision is non-
precedential (e.g. ``ALJ'') must be included. For example, Rust
Engineering Co., 1984 CCH OSHD ] 27,023 (No.79-2090, 1984) (view of
Chairman ______), vacating direction for review of 1980 CCH OSHD ]
24,269 (1980) (ALJ) (digest).
(b) References to court decisions. (1) Citation to court decisions
should be to the official reporter whenever possible. For example:
(i) W.G. Yates & Sons Constr. Co. v. OSHRC, 459 F.3d 604, 608-09
(5th Cir. 2006).
(ii) Martin v. OSHRC (CF & I Steel Corp.), 499 U.S. 144, 150-51
(1991).
(2) Name of employer to be indicated. When a court decision is cited
in which the first-listed party on each side is either the Secretary of
Labor (or the name of a particular Secretary of Labor), the Commission,
or a labor union, the citation should include in parenthesis the name of
the employer in the Commission proceeding. For example, Donovan v.
Allied Industrial Workers (Archer Daniels Midland Co.), 760 F.2d 783
(7th Cir. 1985); Donovan v. OSHRC (Mobil Oil Corp.), 713 F. 2d 918 (2d
Cir. 1983).
Subpart B_Parties and Representatives
Sec. 2200.20 Party status.
(a) Affected employees. (1) Affected employees and authorized
employee representatives may elect party status concerning any matter in
which the Act confers a right to participate. The election shall be
accomplished by filing a written notice of election at least 14 days
before the hearing. A notice of election filed less than 14 days prior
to the hearing is ineffective unless good
[[Page 15]]
cause is shown for not timely filing the notice.
(2) A notice of election shall be served on all other parties in
accordance with Sec. 2200.7.
(b) Employees no longer employed by cited employer. An employee of a
cited employer who was exposed to or had access to the hazard arising
out of the allegedly violative circumstances, conditions, practices, or
operations and who is no longer employed by the cited employer is
permitted to participate as a party.
(c) Employee contest. (1) Where a notice of contest is filed by an
employee or by an authorized employee representative with respect to the
reasonableness of the period for abatement of a violation, the employer
charged with the responsibility of abating the violation may elect party
status by a notice filed at least 14 days before the hearing.
(2) A notice of election shall be served on all other parties in
accordance with Sec. 2200.7.
Sec. 2200.21 Intervention; appearance by non-parties.
(a) When allowed. A petition for leave to intervene may be filed at
any time prior to 14 days before commencement of the hearing. A petition
filed less than 14 days prior to the commencement of the hearing will be
denied unless good cause is shown for not timely filing the petition. A
petition shall be served on all parties in accordance with Sec. 2200.7.
(b) Requirements of petition. (1) The petition shall set forth the
interest of the petitioner in the proceeding and show that the
participation of the petitioner will assist in the determination of the
issues in question and that the intervention will not unduly delay the
proceeding.
(2) If the petitioner is an employee who is not employed by the
cited employer but who performed work at the cited worksite, the
petition, in addition to the requirements of paragraph (b)(1) of this
section, shall set forth material facts sufficient to demonstrate that
the petitioner was exposed to or has access to the hazard arising out of
the allegedly violative circumstances, conditions, practices, or
operations.
(c) Ruling on petition. (1) For petitions filed by an employee, as
defined in paragraph (b)(2) of this section, the Commission or the Judge
shall grant the petition for intervention.
(2) For all other petitions, the Commission or the Judge may grant a
petition for intervention that meets the requirements of paragraph
(b)(1) of this section.
(3) An order granting a petition shall specify the extent and terms
of an intervenor's participation in the proceedings.
Sec. 2200.22 Representation of parties and intervenors.
(a) Representation. Any party or intervenor may appear in person,
through an attorney, or through any non-attorney representative. A
representative must file an appearance in accordance with Sec. 2200.23.
In the absence of an appearance by a representative, a party or
intervenor will be deemed to appear for itself. A corporation or
unincorporated association may be represented by an authorized officer
or agent.
(b) Affected employees in collective bargaining unit. Where an
authorized employee representative (see Sec. 2200.1(g)) elects to
participate as a party, affected employees who are members of the
collective bargaining unit may not separately elect party status. If the
authorized employee representative does not elect party status, affected
employees who are members of the collective bargaining unit may elect
party status in the same manner as affected employees who are not
members of the collective bargaining unit. See paragraph (c) of this
section.
(c) Affected employees not in collective bargaining unit. Affected
employees who are not members of a collective bargaining unit may elect
party status under Sec. 2200.20(a). If more than one employee so
elects, the Judge shall provide for them to be treated as one party.
(d) Control of proceeding. A representative of a party or intervenor
shall be deemed to control all matters respecting the interest of such
party or intervenor in the proceeding.
[[Page 16]]
Sec. 2200.23 Appearances and withdrawals.
(a) Entry of appearance--(1) General. A representative of a party or
intervenor shall enter an appearance by signing the first document filed
on behalf of the party or intervenor in accordance with paragraph (a)(2)
of this section or subsequently by filing an entry of appearance in
accordance with paragraph (a)(3) of this section.
(2) Appearance in first document or pleading. If the first document
filed on behalf of a party or intervenor is signed by a representative,
the representative shall be recognized as representing that party. No
separate entry of appearance by the representative is necessary,
provided the document contains the information required by Sec. 2200.6.
(3) Subsequent appearance. Where a representative has not previously
appeared on behalf of a party or intervenor, the representative shall
file an entry of appearance with the Executive Secretary, or Judge if
the case has been assigned. The entry of appearance shall be signed by
the representative and contain the information required by Sec. 2200.6.
(b) Withdrawal of counsel. Any counsel or representatives of record
desiring to withdraw their appearance, or any parties desiring to
withdraw the appearance of their counsel or representatives of record,
must file a motion conforming with Sec. 2200.40 with the Commission or
the Judge requesting leave to withdraw, showing that prior notice of the
motion has been given by the counsel or representative or party to the
client or counsel or representative, as the case may be, and providing
current contact information for the client, including street address,
email address, and phone number. The motion of counsel to withdraw may,
in the discretion of the Commission or the Judge, be denied where it is
necessary to avoid undue delay or prejudice to the rights of a party or
intervenor.
Sec. 2200.24 Brief of an amicus curiae.
The brief of an amicus curiae may be filed only by leave of the
Commission or the Judge. The brief may be conditionally filed with the
motion for leave conforming to Sec. 2200.40. A motion for leave shall
identify the interest of the applicant and shall state the reasons why a
brief of an amicus curiae is desirable. Any amicus curiae shall file its
brief within the time allowed the party whose position the amicus will
support unless the Commission or the Judge, for good cause shown, grants
leave for later filing. In that event, the Commission or the Judge may
specify within what period an opposing party may answer. The brief of an
amicus curiae shall conform to Sec. 2200.74 or Sec. 2200.93.
Subpart C_Pleadings and Motions
Sec. 2200.30 General rules.
(a) Format. Pleadings and other documents (other than exhibits)
shall be typewritten, double spaced, with typeface of text being no
smaller than 12-point and typeface of footnotes being no smaller than
11-point, on letter size opaque paper (8\1/2\ inches by 11 inches). All
margins shall be 1\1/2\ inches. Pleadings and other documents shall be
fastened without the use of staples at the upper left corner.
(b) Clarity. Each allegation or response of a pleading or motion
shall be simple, concise, and direct.
(c) Separation of claims. Each allegation or response shall be made
in separate numbered paragraphs. Each paragraph shall be limited as far
as practicable to a statement of a single set of circumstances.
(d) Adoption by reference. Statements in a pleading may be adopted
by reference in a different part of the same pleading or in another
pleading or in any motion. A copy of any written instrument which is an
exhibit to a pleading is a part of the pleading for all purposes.
(e) Alternative pleading. A party may set forth two or more
statements of a claim or defense alternatively or hypothetically. When
two or more statements are made in the alternative and one of them would
be sufficient if made independently, the pleading is not made
insufficient by the insufficiency of one or more of the alternative
statements. A party may state as many separate claims or defenses as it
has regardless of consistency. All statements
[[Page 17]]
shall be made subject to the signature requirements of Sec. 2200.32.
(f) Form of pleadings, motions, and other documents. Any pleading,
motion, or other document shall contain a caption complying with Sec.
2200.31 and a signature complying with Sec. 2200.32. The form and
content of motions shall conform with Sec. 2200.40.
(g) Burden of persuasion. The rules of pleading established by this
subpart are not determinative in deciding which party bears the burden
of persuasion on an issue. By pleading a matter affirmatively, a party
does not waive its right to argue that the burden of persuasion on the
matter is on another party.
(h) Enforcement of pleading rules. The Commission or the Judge may
refuse for filing any pleading or motion that does not comply with the
requirements of this subpart.
[84 FR 14558, Apr. 10, 2019; 84 FR 45654, Aug. 30, 2019]
Sec. 2200.31 Caption; titles of cases.
(a) Notice of contest cases. Cases initiated by a notice of contest
shall be titled:
Secretary of Labor,
Complainant,
v.
(Name of Employer),
Respondent.
(b) Petitions for modification of abatement period. Cases initiated
by a petition for modification of the abatement period shall be titled:
(Name of employer),
Petitioner,
v.
Secretary of Labor,
Respondent.
(c) Location of title. The titles listed in paragraphs (a) and (b)
of this section shall appear at the left upper portion of the initial
page of any pleading or document (other than exhibits) filed.
(d) Docket number. The initial page of any pleading or document
(other than exhibits) shall show, at the upper right of the page,
opposite the title, the docket number, if known, assigned by the
Commission.
Sec. 2200.32 Signing of pleadings and motions.
Pleadings and motions shall be signed by the filing party or by the
party's representative. The signature of a representative constitutes a
representation by the representative that the representative is
authorized to represent the party or parties on whose behalf the
pleading is filed. The signature of a representative or party also
constitutes a certificate by the representative or party that the
representative or party has read the pleading, motion, or other
document, that to the best of the representative's or party's knowledge,
information, and belief, formed after reasonable inquiry, it is well
grounded in fact and is warranted by existing law or a good faith
argument for the extension, modification, or reversal of existing law,
and that it is not included for any improper purpose, such as to harass
or to cause unnecessary delay or needless increase in the cost of
litigation. If a pleading, motion, or other document is signed in
violation of this rule, such signing party or its representative shall
be subject to the sanctions set forth in Sec. 2200.101 or Sec.
2200.104. A signature by a party representative constitutes a
representation by the representative that the representative understands
that the rules and orders of the Commission and its Judges apply equally
to attorney and non-attorney representatives.
[84 FR 14558, Apr. 10, 2019, as amended at 87 FR 8949, Feb. 17, 2022]
Sec. 2200.33 Notices of contest.
Within 15 working days after receipt of any of the following
notices, the Secretary shall notify the Commission of the receipt in
writing and shall promptly furnish to the Executive Secretary of the
Commission the original of any documents or records filed by the
contesting party and copies of all other documents or records relevant
to the contest:
(a) Notification that the employer intends to contest a citation or
proposed penalty under section 10(a) of the Act, 29 U.S.C. 659(a); or
(b) Notification that the employer wishes to contest a notice of a
failure to abate or a proposed penalty under
[[Page 18]]
section 10(b) of the Act, 29 U.S.C. 659(b); or
(c) A notice of contest filed by an employee or representative of
employees with respect to the reasonableness of the abatement period
under section 10(c) of the Act, 29 U.S.C. 659(c).
Note 1 to Sec. 2200.33: Failure to meet the 15-working day
deadline to file a notice of contest results in the citation or
notification of failure to abate becoming a final order of the
Commission. Under extraordinary circumstances, the cited employer, an
affected employee, or an authorized employee representative may seek
relief from the final order pursuant to Federal Rule of Civil Procedure
60, by promptly filing a request for such relief with the Commission's
Executive Secretary, One Lafayette Centre, 1120 20th Street NW, Suite
980, Washington, DC 20036-3457. See Brancifort Builders, Inc., 9 BNA
OSHC 2113, 2116-17 (1981).
Sec. 2200.34 Employer contests.
(a) Complaint. (1) The Secretary shall file a complaint with the
Commission no later than 21 days after receipt of the notice of contest.
(2) The complaint shall set forth all alleged violations and
proposed penalties which are contested, stating with particularity:
(i) The basis for jurisdiction;
(ii) The time, location, place, and circumstances of each such
alleged violation; and
(iii) The considerations upon which the period for abatement and the
proposed penalty of each such alleged violation are based.
(3) Where the Secretary seeks in the complaint to amend the citation
or proposed penalty, the Secretary shall set forth the reasons for
amendment and shall state with particularity the change sought.
(b) Answer. (1) Within 21 days after service of the complaint, the
party against whom the complaint was issued shall file an answer with
the Commission.
(2) The answer shall contain a short and plain statement denying
those allegations in the complaint which the party intends to contest.
Any allegation not denied shall be deemed admitted.
(3) The answer shall include all affirmative defenses being
asserted. Such affirmative defenses include, but are not limited to,
``infeasibility,'' ``unpreventable employee misconduct,'' and ``greater
hazard.''
(4) The failure to raise an affirmative defense in the answer may
result in the party being prohibited from raising the defense at a later
stage in the proceeding, unless the Judge finds that the party has
asserted the defense as soon as practicable.
(c) Motions filed in lieu of an answer. A motion filed in lieu of an
answer pursuant to this subpart shall be filed no later than 21 days
after service of the complaint. The form and content of the motion shall
comply with Sec. 2200.40.
Sec. 2200.35 Disclosure of corporate parents, subsidiaries, and affiliates.
(a) General. All answers, petitions for modification of abatement
period, or other initial pleadings filed under these rules by a
corporation shall be accompanied by a separate declaration listing all
parents, subsidiaries, and affiliates of that corporation or stating
that the corporation has no parents, subsidiaries, or affiliates,
whichever is applicable.
(b) Failure to disclose. The Commission or the Judge in its
discretion may refuse to accept for filing an answer or other initial
pleading that lacks the disclosure declaration required by this
paragraph. A party that fails to file an adequate declaration may be
held in default after being given an opportunity to show cause why it
should not be held in default. All show cause orders issued by the
Commission or the Judge shall be served in a manner prescribed in Sec.
2200.7(o).
(c) Continuing duty to disclose. A party subject to the disclosure
requirement of this paragraph has a continuing duty to notify the
Commission or the Judge of any change in the information on the
disclosure declaration until the Commission issues a final order
disposing of the proceeding.
Sec. 2200.36 [Reserved]
Sec. 2200.37 Petitions for modification of the abatement period.
(a) Grounds for modifying abatement date. An employer may file a
petition for modification of abatement date when such employer has made
a good
[[Page 19]]
faith effort to comply with the abatement requirements of a citation,
but such abatement has not been completed because of factors beyond the
employer's reasonable control.
(b) Contents of petition. A petition for modification of abatement
date shall be in writing and shall include the following information:
(1) All steps taken by the employer, and the dates of such action,
in an effort to achieve compliance during the prescribed abatement
period.
(2) The specific additional abatement time necessary in order to
achieve compliance.
(3) The reasons such additional time is necessary, including the
unavailability of professional or technical personnel or of materials
and equipment, or because necessary construction or alteration of
facilities cannot be completed by the original abatement date.
(4) All available interim steps being taken to safeguard the
employees against the cited hazard during the abatement period.
(c) When and where filed; posting requirement; responses to
petition. A petition for modification of abatement date shall be filed
with the Area Director of the United States Department of Labor who
issued the citation no later than the close of the next working day
following the date on which abatement was originally required. A later-
filed petition shall be accompanied by the employer's statement of
exceptional circumstances explaining the delay.
(1) A copy of such petition shall be posted in a conspicuous place
where all affected employees will have notice of the petition or near
each location where the violation occurred. The petition shall remain
posted for a period of 10 working days.
(2) Affected employees or the representatives may file an objection
in writing to such petition with the aforesaid Area Director. Failure to
file such objection within 10 working days of the date of posting of
such petition shall constitute a waiver of any further right to object
to said petition.
(3) The Secretary or the Secretary's duly authorized agent shall
have the authority to approve any uncontested petition for modification
of abatement date filed pursuant to paragraphs (b) and (c) of this
section. Such uncontested petitions shall become final orders pursuant
to sections 10(a) and (c) of the Act, 29 U.S.C. 659(a) and (c).
(4) The Secretary or the Secretary's authorized representative shall
not exercise the Secretary's approval power until the expiration of 15
working days from the date the petition was posted pursuant to
paragraphs (c)(1) and (2) of this section by the employer.
(d) Contested petitions. Where any petition is objected to by the
Secretary or affected employees, such petition shall be processed as
follows:
(1) The Secretary shall forward the petition, citation, and any
objections to the Commission within 10 working days after the expiration
of the 15 working day period set out in paragraph (c)(4) of this
section.
(2) The Commission shall docket and process such petitions as
expedited proceedings as provided for in Sec. 2200.103 of this Part.
(3) An employer petitioning for a modification of the abatement
period shall have the burden of proving in accordance with the
requirements of section 10(c) of the Act, 29 U.S.C. 659(c), that such
employer has made a good faith effort to comply with the abatement
requirements of the citation and that abatement has not been completed
because of factors beyond the employer's reasonable control.
(4) Where the petitioner is a corporation, it shall file a separate
declaration listing all parents, subsidiaries, and affiliates of that
corporation or stating that the corporation has no parents,
subsidiaries, or affiliates, whichever is applicable, within 10 working
days after service of the Commission docketing notice of the petition
for modification of the abatement date. Service of the filed declaration
on the other parties and intervenors shall be accomplished in a manner
prescribed in Sec. 2200.7(c). The requirements set forth in Sec.
2200.35(b) through (c) shall apply.
(5) Each objecting party shall file a response setting forth the
reasons for opposing the abatement date requested in the petition,
within 10 working days after service of the Commission docketing notice
of the petition for modification of the abatement date. Service
[[Page 20]]
of the response on the other parties and intervenors shall be
accomplished in a manner prescribed in Sec. 2200.7(c).
[84 FR 14558, Apr. 10, 2019; 84 FR 53053, Oct. 4, 2019; as amended at 87
FR 8949, Feb. 17, 2022]
Sec. 2200.38 Employee contests.
(a) Secretary's statement of reasons. Where an affected employee or
authorized employee representative files a notice of contest with
respect to the abatement period, the Secretary shall, within 14 days
from receipt of the notice of contest, file a clear and concise
statement of the reasons the abatement period prescribed by the
Secretary is not unreasonable.
(b) Response to Secretary's statement. Not later than 14 days after
service of the Secretary's statement, referred to in paragraph (a) of
this section, the contesting affected employee or authorized employee
representative shall file a response. Service of the filed statement on
the other parties and intervenors shall be accomplished in a manner
prescribed in Sec. 2200.7(c).
(c) Expedited proceedings. All contests under this section shall be
handled as expedited proceedings as provided for in Sec. 2200.103.
Sec. 2200.39 Statement of position.
At any time prior to the commencement of the hearing before the
Judge, any person entitled to appear as a party, or any person who has
been granted leave to intervene, may file a statement of position with
respect to any or all issues to be heard. The Judge may order the filing
of a statement of position.
Sec. 2200.40 Motions and requests.
(a) How to make. An application or request for an order must be made
by written motion. A motion shall not be included in another pleading or
document, such as a brief or petition for discretionary review, but
shall be made in a separate document. In exigent circumstances in cases
pending before a Judge, an oral motion may be made during an off-the-
record telephone conference if the motion is subsequently reduced to
writing and filed within such time as the judge prescribes.
(b) Form of motions. All motions shall contain a caption complying
with Sec. 2200.31 and a signature complying with Sec. 2200.32.
Requests for orders that are presented in any other form, such as by a
business letter or by an email, shall not be considered or granted.
(c) Content of motions. A motion shall contain a clear and plain
statement of the relief sought and state with particularity the grounds
for seeking the order. Written memoranda, briefs, affidavits, or other
relevant material or documents may be filed in support of the motion or
a response.
(d) Duty to confer. Prior to filing a motion, the moving party shall
confer or make reasonable efforts to confer with all other parties and
shall state in the motion the efforts undertaken to confer. The motion
shall also state if any other party opposes or does not oppose the
motion.
(e) Proposed order for procedural motions. All procedural motions
shall be accompanied by a proposed order that would grant the relief
requested in the motion. A procedural motion may be ruled upon prior to
the expiration of the time for response.
(f) Oral motions. Oral motions may be made during a hearing and
shall be included in the transcript, if a transcript is being made.
(g) When to make. (1) A motion filed in lieu of an answer pursuant
to Sec. 2200.34(c) shall be filed no later than 21 days after service
of the complaint.
(2) Motions shall be made as soon as the grounds for the motion are
known. A party is not required to raise by motion any matter that the
party has previously included in any pleading as defined in Sec.
2200.1(n), unless the party seeks a ruling on the previously pleaded
matter prior to the hearing on the merits.
(3) A motion to postpone a hearing shall comply with Sec. 2200.62.
(h) Responses. Any party or intervenor upon whom a motion has been
served shall file a response within 14 days from service of the motion.
(i) Reconsideration. A party adversely affected by a ruling on any
motion may file a motion for reconsideration within 7 days of service of
the ruling.
(j) Summary judgment motions. The provisions of Federal Rule of
Civil Procedure 56 apply to motions for summary judgment.
[[Page 21]]
Sec. 2200.41 [Reserved]
Subpart D_Prehearing Procedures and Discovery
Sec. 2200.50 [Reserved]
Sec. 2200.51 Prehearing conferences and orders.
(a) Scheduling conference. (1) The Judge may, upon the Judge's
discretion, consult with the attorneys, non-attorney party
representatives, and any self-represented parties, by a scheduling
conference, telephone, mail, or other suitable means, and within 30 days
after the filing of the answer, enter a scheduling order that limits the
time:
(i) To join other parties and to amend the pleadings;
(ii) To file and hear motions; and
(iii) To complete discovery.
(2) The scheduling order also may include:
(i) The date or dates for conferences before hearing, a final
prehearing conference, and hearing; and
(ii) Any other matters appropriate to the circumstances of the case.
(b) Prehearing conference. In addition to the prehearing procedures
set forth in Federal Rule of Civil Procedure 16, the Judge may, upon the
Judge's own initiative or on the motion of a party, direct the parties
to confer among themselves to consider settlement, stipulation of facts,
or any other matter that may expedite the hearing.
(c) Compliance. Parties must fully prepare for a useful discussion
of all procedural and substantive issues involved in prehearing
conferences and shall participate in such conferences in good faith.
Parties failing to do so may be subject to sanctions under Sec. Sec.
2200.101 and 2200.104.
Sec. 2200.52 General provisions governing discovery.
(a) General--(1) Methods and limitations. In conformity with these
rules, any party may, without leave of the Commission or the Judge,
obtain discovery by one or more of the following methods:
(i) Production of documents or things or permission to enter upon
land or other property for inspection and other purposes to the extent
provided in Sec. 2200.53;
(ii) Requests for admission to the extent provided in Sec. 2200.54;
and
(iii) Interrogatories to the extent provided in Sec. 2200.55.
(iv) Discovery is not available under these rules through
depositions except to the extent provided in Sec. 2200.56.
(v) In the absence of a specific provision, discovery procedures
shall be in accordance with the Federal Rules of Civil Procedure, except
that the provisions of Federal Rule of Civil Procedure 26(a) do not
apply to Commission proceedings. This exception does not preclude any
prehearing disclosures (including disclosure of expert testimony and
written reports) directed in a scheduling order entered under Sec.
2200.51.
(2) Time for discovery. A party may initiate all forms of discovery
in conformity with these Rules at any time after the filing of the first
responsive pleading or motion that delays the filing of an answer, such
as a motion to dismiss. Discovery shall be initiated early enough to
permit completion of discovery no later than 14 days prior to the date
set for hearing, unless the Judge orders otherwise.
(3) Service of discovery documents. Every document relating to
discovery required to be served on a party shall be served on all
parties.
(4) Stipulations about discovery procedures. Unless the Commission
or the Judge orders otherwise, the parties may stipulate that:
(i) A deposition may be taken before any person, at any time or
place, on any notice, and in the manner specified--in which event it may
be used in the same way as any other deposition; and
(ii) Other procedures governing or limiting discovery may be
modified--but a stipulation extending the time for any form of discovery
must be approved by the Commission or the Judge if it would interfere
with the time set forth for completing discovery, for hearing a motion,
or for hearing.
(b) Scope of discovery. The information or response sought through
discovery may concern any matter that is not privileged and that is
relevant to the subject matter involved in the
[[Page 22]]
pending case and proportional to the needs of the case, considering the
importance of the issues at stake, the parties' relative access to
relevant information, the parties' resources, the importance of the
discovery in resolving the issues, and whether the burden or expense of
the proposed discovery outweighs its likely benefit. Information within
this scope of discovery need not be admissible in evidence to be
discoverable.
(c) Limitations. The frequency or extent of the discovery methods
provided by these rules may be limited by the Commission or the Judge if
it is determined that:
(1) The discovery sought is unreasonably cumulative or duplicative,
or it is obtainable from some other source that is more convenient, less
burdensome, or less expensive;
(2) The party seeking discovery has had ample opportunity to obtain
the information sought by discovery in the action; or
(3) The proposed discovery is outside the scope permitted by
paragraph (b) of this section.
(d) Privilege--(1) Claims of privilege. The initial claim of
privilege shall specify the privilege claimed and the general nature of
the material for which the privilege is claimed. In response to an order
from the Commission or the Judge, or in response to a motion to compel,
the claim shall: Identify the information that would be disclosed; set
forth the privilege that is claimed; and allege the facts showing that
the information is privileged. The claim shall be supported by
affidavits, depositions, or testimony and shall specify the relief
sought. The claim may be accompanied by a motion for a protective order
or by a motion that the allegedly privileged information be received and
the claim ruled upon in camera, that is, with the record and hearing
room closed to the public, or ex parte, that is, without the
participation of parties and their representatives. The Judge may enter
an order and impose terms and conditions on the Judge's examination of
the claim as justice may require, including an order designed to ensure
that the allegedly privileged information not be disclosed until after
the examination is completed.
(2) Upholding or rejecting claims of privilege. If the Judge upholds
the claim of privilege, the Judge may order and impose terms and
conditions as justice may require, including a protective order. If the
Judge overrules the claim, the person claiming the privilege may obtain
as of right an order sealing from the public those portions of the
record containing the allegedly privileged information pending
interlocutory or final review of the ruling, or final disposition of the
case, by the Commission. Interlocutory review of such an order shall be
given priority consideration by the Commission.
(3) Resolving claims of privilege outside of discovery proceedings.
A Judge may utilize the procedures set forth in paragraphs (d) and (e)
of this section outside of discovery proceedings, including during the
hearing.
(e) Protective orders. In connection with any discovery procedures
and where a showing of good cause has been made, the Commission or the
Judge may make any order including, but not limited to, one or more of
the following:
(1) That the discovery not be had;
(2) That the discovery may be had only on specified terms and
conditions, including a designation of the time or place;
(3) That the discovery may be had only by a method of discovery
other than that selected by the party seeking discovery;
(4) That certain matters not be inquired into, or that the scope of
the discovery be limited to certain matters;
(5) That discovery be conducted with no one present except persons
designated by the Commission or the Judge;
(6) That a deposition after being sealed be opened only by order of
the Commission or the Judge;
(7) That a trade secret or other confidential research, development,
or commercial information not be disclosed or be disclosed only in a
designated way;
(8) That the parties simultaneously file specified documents or
information enclosed in sealed envelopes to be
[[Page 23]]
opened as directed by the Commission or the Judge.
(f) Failure to cooperate; motions to compel; sanctions--(1) Motions
to compel discovery. A party may file a motion conforming to Sec.
2200.40 for an order compelling discovery when another party refuses or
obstructs discovery. In considering a motion to compel, the Judge shall
treat an evasive or incomplete answer as a failure to answer.
(2) Sanctions. If a party fails to comply with an order compelling
discovery, the Judge may enter an order to redress the failure. Such
order may issue upon the initiative of a Judge, after affording an
opportunity to show cause why the order should not be entered, or upon
the motion of a party conforming to Sec. 2200.40. The order may include
any sanction stated in Federal Rule of Civil Procedure 37, including the
following:
(i) An order that designated facts shall be taken to be established
for purposes of the case in accordance with the claim of the party
obtaining that order;
(ii) An order refusing to permit the disobedient party to support or
to oppose designated claims or defenses or prohibiting it from
introducing designated matters in evidence;
(iii) An order striking pleadings or parts of pleadings or staying
further proceedings until the order is obeyed; and
(iv) An order dismissing the action or proceeding or any part of the
action or proceeding or rendering a judgment by default against the
disobedient party.
(g) Unreasonable delays. None of the discovery procedures set forth
in these rules shall be used in a manner or at a time which shall delay
or impede the progress of the case toward hearing status or the hearing
of the case on the date for which it is scheduled, unless, in the
interests of justice, the Judge shall order otherwise. Unreasonable
delays in utilizing discovery procedures may result in termination of
the party's right to conduct discovery.
(h) Show cause orders. All show cause orders issued by the
Commission or the Judge under paragraph (f) of this section shall be
served in a manner prescribed in Sec. 2200.7(o).
(i) Supplementation of responses. A party that has responded to a
request for discovery with a response that was complete when made is
under no duty to supplement the response to include information
subsequently acquired, except as follows:
(1) A party is under a duty to promptly supplement the response with
respect to any question directly addressed to:
(i) The identity and location of persons having knowledge of
discoverable matters; and
(ii) The identity of each person expected to be called as an expert
witness at the hearing, the subject matter on which the person is
expected to testify, and the substance of the person's testimony.
(2) A party is under a duty to promptly amend a prior response if
the party obtains information upon the basis of which:
(i) The party knows that the response was incorrect when made; or
(ii) The party knows that the response though correct when made is
no longer true and the circumstances are such that a failure to amend
the response is in substance a knowing concealment.
(3) A duty to supplement responses may be imposed by order of the
court, agreement of the parties, or at any time prior to the hearing
through new requests for supplementation of prior responses.
(j) Filing of discovery. Requests for production or inspection under
Sec. 2200.53, requests for admission under Sec. 2200.54 and responses
to requests for admission, interrogatories under Sec. 2200.55 and the
answers to interrogatories, and depositions under Sec. 2200.56 shall be
served upon other counsel or parties, but shall not be filed with the
Commission or the Judge. The party responsible for service of the
discovery material shall retain the original and become the custodian.
(k) Relief from discovery requests. If relief is sought under Sec.
2200.101 or Sec. 2200.52(e), (f), or (g) concerning any
interrogatories, requests for production or inspection, requests for
admissions, answers to interrogatories, or responses to requests for
admissions, copies of the portions of the interrogatories, requests,
answers, or responses
[[Page 24]]
in dispute shall be filed with the Commission or the Judge
contemporaneously with any motion filed under Sec. 2200.101 or Sec.
2200.52(e), (f), or (g).
(l) Use at hearing. If interrogatories, requests, answers,
responses, or depositions are to be used at the hearing or are necessary
to a prehearing motion which might result in a final order on any claim,
the portions to be used shall be filed with the Commission or the Judge
at the outset of the hearing or at the filing of the motion insofar as
their use can be reasonably anticipated. Section 2200.56(f) prescribes
additional procedures pertaining to the use of depositions at a hearing.
(m) Use on review or appeal. When documentation of discovery not
previously in the record is needed for review or appeal purposes, upon
an application and order of the Commission or the Judge, the necessary
discovery documents shall be filed with the Executive Secretary of the
Commission.
Sec. 2200.53 Production of documents and things.
(a) Scope. At any time after the filing of the first responsive
pleading or motion that delays the filing of an answer, such as a motion
to dismiss, any party may serve on any other party a request to:
(1) Produce and permit the party making the request, or a person
acting on the party's behalf, to inspect and copy any designated
documents, or to inspect and copy, test, or sample any tangible things
which are in the possession, custody, or control of the party upon whom
the request is served;
(2) Permit entry upon designated land or other property in the
possession or control of the party upon whom the request is served for
the purpose of inspection and measuring, surveying, photographing,
testing, or sampling the property or any designated object or operation
on the property.
(b) Procedure. The request shall set forth the items to be
inspected, either by individual item or by category, and describe each
item and category with reasonable particularity. It shall specify a
reasonable time, place, and manner of making the inspection and
performing related acts. The party upon whom the request is served shall
serve a written response within 30 days after service of the request,
unless the requesting party allows a longer time. The Commission or the
Judge may allow a shorter time or a longer time, should the requesting
party deny an extension. The response shall state, with respect to each
item or category, that inspection and related activities will be
permitted as requested, unless the request is objected to in whole or in
part, in which event the reasons for objection shall be stated. If
objection is made to part of an item or category, that part shall be
specified. To obtain a ruling on an objection by the responding party,
the requesting party shall file a motion conforming to Sec. 2200.40
with the Judge and shall annex its request to the motion, together with
the response and objections, if any.
Sec. 2200.54 Request for admissions.
(a) Scope and procedure--(1) Scope. Any time after the filing of the
first responsive pleading or motion that delays the filing of an answer,
such as a motion to dismiss, a party may serve on any other party a
written request to admit, for purposes of the pending action only, the
truth of any matters within the scope of Sec. 2200.52(b) relating to:
(i) Facts, the application of law to fact, or opinions about either;
and
(ii) The genuineness of any described documents.
(2) Form; copy of a document. Each matter must be separately stated.
The number of requested admissions shall not exceed 25, including
subparts, except upon the agreement of the parties or by order of the
Commission or the Judge. A request to admit the genuineness of a
document must be accompanied by a copy of the document unless it is, or
has been, otherwise furnished or made available for inspection and
copying.
(3) Time to respond; effect of not responding. A matter is admitted
unless, within 30 days after being served, the party to whom the request
is directed serves on the requesting party a written answer or objection
addressed to the matter and signed by the party or its representative. A
shorter or longer time for responding may be provided by
[[Page 25]]
written stipulation of the parties or by order of the Commission or the
Judge.
(4) Answer. If a matter is not admitted, the answer must
specifically deny it or state in detail why the answering party cannot
truthfully admit or deny it. A denial must fairly respond to the
substance of the matter; and when good faith requires that a party
qualify an answer or deny only a part of a matter, the answer must
specify the part admitted and qualify or deny the rest. The answering
party may assert lack of knowledge or information as a reason for
failing to admit or deny only if the party states that it has made
reasonable inquiry and that the information it knows or can readily
obtain is insufficient to enable it to admit or deny.
(5) Objections. The grounds for objecting to a request must be
stated. A party must not object solely on the ground that the request
presents a genuine issue for hearing.
(6) Motion regarding the sufficiency of an answer or objection. The
requesting party may move to determine the sufficiency of an answer or
objection. Unless an objection is sustained, the Commission or the Judge
must order that an answer be served. On finding that an answer does not
comply with this rule, the Commission or the Judge may order either that
the matter is admitted or that an amended answer be served. The
Commission or the Judge may defer the final decision until a prehearing
conference or a specified time before hearing.
(b) Effect of admission; withdrawal or modification. A matter
admitted under paragraph (a) of this section is conclusively established
unless the Commission or the Judge on motion permits the admission to be
withdrawn or amended. The Commission or the Judge may permit withdrawal
or modification if it would promote the presentation of the merits of
the case and if the Commission or the Judge is not persuaded that it
would prejudice the requesting party in maintaining or defending the
case on the merits. An admission under paragraph (a) of this section is
not an admission for any other purpose and cannot be used against the
party in any other proceeding.
Sec. 2200.55 Interrogatories.
(a) General. At any time after the filing of the first responsive
pleading or motion that delays the filing of an answer, such as a motion
to dismiss, any party may serve interrogatories upon any other party.
The number of interrogatories shall not exceed 25 questions, including
subparts, except upon the agreement of the parties or by order of the
Commission or the Judge. The party seeking to serve more than 25
questions, including subparts, shall have the burden of persuasion to
establish that the complexity of the case or the number of citation
items necessitates a greater number of interrogatories.
(b) Answers. All answers shall be made in good faith and as
completely as the answering party's information will permit. The
answering party is required to make reasonable inquiry and ascertain
readily obtainable information. An answering party may not give lack of
information or knowledge as an answer or as a reason for failure to
answer, unless the answering party states that it has made reasonable
inquiry and that information known or readily obtainable by it is
insufficient to enable it to answer the substance of the interrogatory.
(c) Procedure. Each interrogatory shall be answered separately and
fully under oath or affirmation. If the interrogatory is objected to,
the objection shall be stated in lieu of the answer. The answers are to
be signed by the person making them and the objections shall be signed
by the party or its counsel. The party on whom the interrogatories have
been served shall serve a copy of its answers or objections upon the
propounding party within 30 days after the service of the
interrogatories. The Judge may allow a shorter or longer time. The
burden shall be on the party submitting the interrogatories to file a
motion conforming to Sec. 2200.40 for an order with respect to any
objection or other failure to answer an interrogatory.
Sec. 2200.56 Depositions.
(a) General. Depositions of parties, intervenors, or witnesses shall
be allowed only by agreement of all the parties or on order of the
Commission or the
[[Page 26]]
Judge following the filing of a motion of a party stating good and just
reasons. All depositions shall be before an officer authorized to
administer oaths and affirmations at the place of examination. The
deposition shall be taken in accordance with the Federal Rules of Civil
Procedure, particularly Federal Rule of Civil Procedure 30.
(b) When to file. A motion to take depositions may be filed after
the filing of the first responsive pleading or motion that delays the
filing of an answer, such as a motion to dismiss.
(c) Notice of taking. Any depositions allowed by the Commission or
the Judge may be taken after 14 days' written notice to the other party
or parties. The 14-day notice requirement may be waived by the parties
pursuant to Sec. 2200.52(a)(4)(i).
(d) Method of recording and expenses. The party that notices the
deposition must state in the notice the method for recording the
testimony. Unless the Commission or the Judge orders otherwise,
testimony may be recorded by audio, audiovisual, or stenographic means.
Witnesses whose depositions are taken and the person recording the
deposition shall each be paid the same fees that are paid for like
services in the federal courts. Any party may arrange to transcribe a
deposition. The party noticing the deposition shall pay the recording
costs, any witness fees, and mileage expense. Deposition subpoenas shall
comply with Sec. 2200.65.
(e) Use of depositions. Depositions taken under this rule may be
used for discovery, to contradict or impeach the testimony of a deponent
as a witness, or for any other purpose permitted by the Federal Rules of
Evidence and the Federal Rules of Civil Procedure, particularly Federal
Rule of Civil Procedure 32. An audio or audiovisual deposition offered
into evidence in whole or in part must be accompanied by a transcription
of the deposition. All transcription costs must be borne by the party
offering the deposition into evidence.
(f) Excerpts from depositions to be offered at hearing. Except when
used for purposes of impeachment, at least 7 days prior to the hearing,
the parties or counsel shall furnish to the Judge and all opposing
parties or counsel the transcribed excerpts from depositions (by page
and line number) which they expect to introduce at the hearing. Four
working days later, the adverse party or counsel for the adverse party
shall furnish to the Judge and all opposing parties or counsel
additional transcribed excerpts from the depositions (by page and line
number) which they expect to be read pursuant to Federal Rules of Civil
Procedure 32(a)(4), as well as any objections (by page and line number)
to opposing party's or counsel's depositions. With reasonable notice to
the Judge and all parties or counsel, other excerpts may be read.
Sec. 2200.57 [Reserved]
Subpart E_Hearings
Sec. 2200.60 Notice of hearing; location.
Except by agreement of the parties, or in an expedited proceeding
under Sec. 2200.103, when a hearing is first set, the Judge shall give
the parties and intervenors notice of the time, place, and nature of the
hearing at least 30 days in advance of the hearing. If a hearing is
being rescheduled, or if exigent circumstances are present, at least 10
days' notice shall be given. The Judge will designate a place and time
of hearing that involves as little inconvenience and expense to the
parties as is practicable.
Sec. 2200.61 Submission without hearing.
(a) A case may be fully stipulated by the parties and submitted to
the Commission or the Judge for a decision at any time. The stipulation
of facts shall be in writing and signed by the parties or their
representatives. The submission of a case under this rule does not alter
the burden of proof, the requirements otherwise applicable with respect
to adducing proof, or the effect of failure of proof.
(b) Motions for summary judgment are governed by Sec. 2200.40(j).
Sec. 2200.62 Postponement of hearing.
(a) Motion to postpone. A hearing may be postponed by the Judge on
the Judge's own initiative or for good cause shown upon the motion of a
party. A motion for postponement shall state the position of the other
[[Page 27]]
parties, either by a joint motion or by a representation of the moving
party. The filing of a motion for postponement does not automatically
postpone a hearing. The form and content of such motions shall comply
with Sec. 2200.40.
(b) Grounds for postponement. A motion for postponement grounded on
conflicting engagements of counsel or employment of new counsel shall be
promptly filed.
(c) When motion must be received. A motion to postpone a hearing
must be received at least 10 days prior to the hearing. A motion for
postponement received less than 10 days prior to the hearing will
generally be denied unless good cause is shown for late filing.
(d) Postponement in excess of 60 days. No postponement in excess of
60 days shall be granted without the concurrence of the Chief
Administrative Law Judge. The original of any motion seeking a
postponement in excess of 60 days shall be filed with the Judge and a
copy sent to the Chief Administrative Law Judge.
Sec. 2200.63 Stay of proceedings.
(a) Motion for stay. Stays are not favored. A party seeking a stay
of a case assigned to a Judge shall file a motion for stay conforming to
Sec. 2200.40 with the Judge and send a copy to the Chief Administrative
Law Judge. A motion for a stay shall state the position of the other
parties, either by a joint motion or by the representation of the moving
party. The motion shall set forth the reasons a stay is sought and the
length of the stay requested.
(b) Ruling on motion to stay. The Judge, with the concurrence of the
Chief Administrative Law Judge, may grant any motion for stay for the
period requested or for such period as is deemed appropriate.
(c) Periodic reports required. The parties in a stayed proceeding
shall be required to submit periodic reports on such terms and
conditions as the Judge may direct. The length of time between the
reports shall be no longer than 90 days unless the Judge otherwise
orders.
Sec. 2200.64 Failure to appear.
(a) Attendance at hearing. The failure of a party to appear in
person or by a duly authorized representative at the hearing constitutes
a waiver of the right to a hearing. A failure of the Secretary to appear
constitutes abandonment of the case. A failure of the Respondent to
appear is deemed an admission of the facts alleged and consent to the
relief sought in the Complaint (or, in Simplified Proceedings, the
citation and notification of proposed penalty). The Judge may default
the non-appearing party without further proceeding or notice.
(b) Requests for reinstatement. Requests for reinstatement must be
made, in the absence of extraordinary circumstances, within 7 days after
the scheduled hearing date. See Sec. 2200.90(c).
(c) Rescheduling hearing. The Commission or the Judge, upon a
showing of good cause, may excuse such failure to appear. In such event,
the hearing will be rescheduled as expeditiously as possible from the
issuance of the Judge's order.
[84 FR 14558, Apr. 10, 2019; 84 FR 53053, Oct. 4, 2019]
Sec. 2200.65 Issuance of subpoenas; petitions to revoke or
modify subpoenas; payment of witness fees and mileage; right
to inspect or copy data.
(a) Issuance of subpoenas. On behalf of the Commission or any
Commission member, the Judge shall, on the application of any party,
issue to the applying party subpoenas requiring the attendance and
testimony of witnesses and/or the production of any evidence, including,
but not limited to, relevant books, records, correspondence, or
documents, in the witness' possession or under the witness' control, at
a deposition or at a hearing before the Commission or the Judge. The
party to whom the subpoena is issued shall be responsible for its
service. Applications for subpoenas, if filed prior to the assignment of
the case to a Judge, shall be filed with the Executive Secretary at One
Lafayette Centre, 1120 20th Street NW, Suite 980, Washington, DC 20036-
3457. After the case has been assigned to a Judge, applications shall be
filed with the Judge. Applications for subpoena(s) may be made ex parte.
The subpoena shall show on its face the
[[Page 28]]
name and address of the party at whose request the subpoena was issued.
(b) Service of subpoenas. A subpoena may be served by any person who
is not a party and is not less than 18 years of age. Service of a
subpoena upon the person it names may be made by service on the person
named, by certified mail return receipt requested, or by leaving a copy
at the person's principal place of business or at the person's residence
with a person of suitable age and discretion who resides there. A
subpoena may be served at any place in the United States or any
Territory or possession of the United States. A subpoena may command a
person to attend and produce documents or tangible things, from any
place in the United States or any Territory or possession of the United
States, at any designated place of hearing or deposition.
(c) Revocation or modification of subpoenas. Any person served with
a subpoena, whether requiring attendance and testimony (ad
testificandum) or for the production of evidence (duces tecum), shall,
within 5 days after the date of service of the subpoena, move in writing
to revoke or modify the subpoena if the person does not intend to
comply. All motions to revoke or modify shall be served on the party at
whose request the subpoena was issued. The Commission or the Judge shall
revoke or modify the subpoena if in its opinion the evidence whose
production is required does not relate to any matter under investigation
or in question in the proceedings or the subpoena does not describe with
sufficient particularity the evidence to be produced, or if for any
other reason sufficient in law the subpoena is otherwise invalid. The
Commission or the Judge shall make a simple statement of procedural or
other grounds for the ruling on the motion to revoke, modify, or affirm.
The motion to revoke or modify, any answer filed, and any ruling on the
motion shall become part of the record.
(d) Rights of persons compelled to submit data or other information
in documents. Persons compelled to submit data or other information at a
public proceeding are entitled to retain documents they submitted that
contain the data or information, or to procure a copy of such documents
upon their payment of lawfully prescribed costs. If such persons submit
the data or other information by testimony, they are entitled to a copy
of the transcript of their testimony upon their payment of the lawfully
prescribed costs.
(e) Witness fees and mileage. Witnesses summoned to appear for a
deposition or to appear before the Commission or the Judge shall be paid
the same witness fees and mileage expense that are paid witnesses in the
federal courts. Witness fees and mileage expense shall be paid by the
party at whose instance the witness appears.
(f) Failure to comply with subpoena. Upon the failure of any person
to comply with the subpoena issued upon the request of a party, the
Commission by its counsel shall recommend to the U.S. Department of
Justice that proceedings be initiated in the appropriate district court
for the enforcement of the subpoena, if in the Commission's judgment the
enforcement of the subpoena would be consistent with law and with
policies of the Act. In such instances, neither the Commission nor its
counsel shall be deemed to have assumed responsibility for the effective
prosecution of the subpoena before the court.
Sec. 2200.66 Transcript of testimony.
(a) Hearings. Hearings shall be transcribed verbatim. A copy of the
transcript of testimony taken at the hearing, duly certified by the
reporter, shall be filed with the Judge before whom the matter was
heard.
(b) Payment for transcript. The Commission shall bear all expenses
for court reporters' fees and for copies of the hearing transcript
received by it. Each party is responsible for securing and paying for
its copy of the transcript.
(c) Correction of errors. Error in the transcript of the hearing may
be corrected by the Judge on the Judge's own motion, on joint motion by
the parties, or on motion by any party. The motion shall conform to
Sec. 2200.40 and shall state the error in the transcript and the
correction to be made. The official transcript shall reflect the
corrections.
[[Page 29]]
Sec. 2200.67 Duties and powers of Judges.
It shall be the duty of the Judge to conduct a fair and impartial
hearing, to assure that the facts are fully elicited, to adjudicate all
issues and avoid delay. The Judge shall have authority with respect to
cases assigned to the Judge, between the time the Judge is designated
and the time the Judge issues a decision, subject to the rules and
regulations of the Commission, to:
(a) Administer oaths and affirmations;
(b) Issue authorized subpoenas and rule on petitions to modify,
revoke, or affirm, in accordance with Sec. 2200.65;
(c) Rule on claims of privilege and claims that information is
protected and issue protective orders, in accordance with Sec.
2200.52(d) and (e).
(d) Rule upon offers of proof and receive relevant evidence;
(e) Take or cause depositions to be taken whenever the needs of
justice would be served;
(f) Regulate the course of the hearing and, if appropriate or
necessary, exclude persons or counsel from the hearing for contemptuous
conduct and strike all related testimony of witnesses refusing to answer
any proper questions;
(g) Hold conferences for the settlement or simplification of the
issues;
(h) Dispose of procedural requests or similar matters, including
motions referred to the Judge by the Commission and motions to amend
pleadings; also to dismiss complaints, or portions of complaints, and to
order hearings reopened or, upon motion, consolidated prior to issuance
of a decision;
(i) Make decisions that conform to 5 U.S.C. 557 of the
Administrative Procedure Act;
(j) Call and examine witnesses and to introduce into the record
documentary or other evidence;
(k) Approve or appoint an interpreter;
(l) Request the parties to state their respective positions
concerning any issue in the case or theory in support of their position;
(m) Adjourn the hearing as the needs of justice and good
administration require;
(n) Take any other action necessary under the foregoing and
authorized by the published rules and regulations of the Commission.
[84 FR 14558, Apr. 10, 2019; 84 FR 45654, Aug. 30, 2019]
Sec. 2200.68 Recusal of the Judge.
(a) Discretionary recusal. A Judge may recuse themself from a
proceeding whenever the Judge deems it appropriate.
(b) Mandatory recusal. A Judge shall recuse themself under
circumstances that would require disqualification of a Federal judge
under Canon 3(C) of the Code of Conduct for United States Judges, except
that the required recusal may be set aside under the conditions
specified by Canon 3(D).
(c) Request for recusal. Any party may request that the Judge, at
any time following the Judge's designation and before the filing of a
decision, be recused under paragraph (a) or (b) of this section or both
by filing with the Judge, promptly upon the discovery of the alleged
facts, an affidavit setting forth in detail the matters alleged to
constitute grounds for recusal.
(d) Ruling on request. If the Judge finds that a request for recusal
has been filed with due diligence and that the material filed in support
of the request establishes that recusal either is appropriate under
paragraph (a) of this section or is required under paragraph (b) of this
section, the Judge shall recuse themself from the proceeding. If the
Judge denies a request for recusal, the Judge shall issue a ruling on
the record, stating the grounds for denying the request, and shall
proceed with the hearing, or, if the hearing has closed, proceed with
the issuance of a decision under the provisions of Sec. 2200.90.
[84 FR 14558, Apr. 10, 2019, as amended at 87 FR 8949, Feb. 17, 2022]
Sec. 2200.69 Examination of witnesses.
Witnesses shall be examined orally under oath or affirmation.
Opposing parties have the right to cross-examine any witness whose
testimony is introduced by an adverse party. All parties shall have the
right to cross-examine any witness called by the Judge pursuant to Sec.
2200.67(j).
[[Page 30]]
Sec. 2200.70 Exhibits.
(a) Marking exhibits. All exhibits offered in evidence by a party
shall be marked for identification before or during the hearing.
Exhibits shall be marked with the case docket number, with a designation
identifying the party or intervenor offering the exhibit, and numbered
consecutively.
(b) Removal or substitution of exhibits in evidence. Unless the
Judge finds it impractical, a copy of each exhibit shall be given to the
other parties and intervenors. A party may remove an exhibit from the
official record during the hearing or at the conclusion of the hearing
only upon permission of the Judge. The Judge, in the Judge's discretion,
may permit the substitution of a duplicate for any original document
offered into evidence.
(c) Reasons for denial of admitting exhibit. A Judge may, in the
Judge's discretion, deny the admission of any exhibit because of its
excessive size, weight, or other characteristic that prohibits its
convenient transportation and storage. A party may offer into evidence
photographs, models, or other representations of any such exhibit.
(d) Rejected exhibits. All exhibits offered but denied admission
into evidence, except exhibits referred to in paragraph (c) of this
section, shall be placed in a separate file designated for rejected
exhibits.
(e) Return of physical exhibits. A party may on motion request the
return of a physical exhibit within 30 days after expiration of the time
for filing a petition for review of a Commission final order in a United
States Court of Appeals under section 11 of the Act, 29 U.S.C. 660, or
within 30 days after completion of any proceedings initiated in a Court
of Appeals. The motion shall be addressed to the Executive Secretary and
provide supporting reasons. The exhibit shall be returned if the
Executive Secretary determines that it is no longer necessary for use in
any Commission proceeding.
(f) Request for custody of physical exhibit. Any person may on
motion to the Executive Secretary request custody of a physical exhibit
for use in any court or tribunal. The motion shall state the reasons for
the request and the duration of custody requested. If the exhibit has
been admitted in a pending Commission case, the motion shall be served
on all parties to the proceeding. Any person granted custody of an
exhibit shall inform the Executive Secretary of the status every 6
months (e.g., 6 months after January 15 would be July 15) of the
person's continuing need for the exhibit and return the exhibit after
completion of the proceeding.
(g) Disposal of physical exhibit. Any physical exhibit may be
disposed of by the Commission's Executive Secretary subject to the
requirements of the National Archives and Records Administration.
[84 FR 14558, Apr. 10, 2019, as amended at 87 FR 8949, Feb. 17, 2022]
Sec. 2200.71 Rules of evidence.
The Federal Rules of Evidence are applicable.
Sec. 2200.72 Objections.
(a) Statement of objection. Any objection with respect to the
conduct of the hearing, including any objection to the introduction of
evidence or a ruling by the Judge, may be stated orally or in writing,
accompanied by a short statement of the grounds for the objection, and
shall be included in the record. No such objection shall be deemed
waived by further participation in the hearing.
(b) Offer of proof. Whenever evidence is excluded from the record,
the party offering such evidence may make an offer of proof, which shall
be included in the record of the proceeding.
(c) Once the Judge rules definitively on the record--either before
or at the hearing--a party need not renew an objection or offer of proof
to preserve a claim of error for appeal.
Sec. 2200.73 Interlocutory review.
(a) General. Interlocutory review of a Judge's ruling is
discretionary with the Commission. A petition for interlocutory review
may be granted only where the petition asserts and the Commission finds:
(1) That the review involves an important question of law or policy
that controls the outcome of the case, and that immediate review of the
ruling
[[Page 31]]
will materially expedite the final disposition of the proceedings or
subsequent review by the Commission may provide an inadequate remedy; or
(2) That the ruling will result in a disclosure, before the
Commission may review the Judge's report, of information that is alleged
to be privileged.
(b) Petition for interlocutory review. Within 7 days following the
service of a Judge's ruling from which review is sought, a party may
file a petition for interlocutory review with the Commission. Responses
to the petition, if any, shall be filed within 7 days following service
of the petition. Service of the filed petition on the other parties and
intervenors shall be accomplished in a manner prescribed in Sec.
2200.7(c). A copy of the petition and responses shall be filed with the
Judge. The petition is denied unless granted within 30 days of the date
of receipt by the Commission's Executive Secretary. A corporate party
that files a petition for interlocutory review or a response to such a
petition under this section shall file with the Commission a copy of its
declaration of corporate parents, subsidiaries, and affiliates
previously filed with the Judge under the requirements of Sec. 2200.35
or Sec. 2200.37(d)(4). In its discretion the Commission may refuse to
accept for filing a petition or response that fails to comply with this
disclosure requirement. A corporate party filing the declaration
required by this paragraph shall have a continuing duty to advise the
Executive Secretary of any changes to its declaration until the petition
is deemed denied or a decision is issued on the merits.
(c) Denial without prejudice. The Commission's decision not to grant
a petition for interlocutory review shall not preclude a party from
raising an objection to the Judge's interlocutory ruling in a petition
for discretionary review.
(d) Stay--(1) Trade secret matters. The filing of a petition for
interlocutory review of a Judge's ruling concerning an alleged trade
secret shall stay the effect of the ruling until the petition is deemed
denied or ruled upon.
(2) Other cases. In all other cases, the filing or granting of a
petition for interlocutory review shall not stay a proceeding or the
effect of a ruling unless otherwise ordered.
(e) Judge's comments. The Judge may be requested to provide the
Commission with written views on whether the petition is meritorious.
When the written comments are filed with the Commission, the Judge shall
serve the comments on all parties in a manner prescribed in Sec.
2200.7(c).
(f) Briefs. Notice shall be given to the parties if the Commission
decides to request briefs on the issues raised by an interlocutory
review. See Sec. 2200.93--Briefs before the Commission.
(g) When filing effective. A petition for interlocutory review is
deemed to be filed only when received by the Commission, as specified in
Sec. 2200.8(d)(3)(ii).
[84 FR 14558, Apr. 10, 2019; 84 FR 53053, Oct. 4, 2019]
Sec. 2200.74 Filing of briefs and proposed findings with the
Judge; oral argument at the hearing.
(a) General. A party is entitled to a reasonable period at the close
of the hearing for oral argument, which shall be included in the
transcript of the hearing. Any party shall be entitled, upon request
made before the close of hearing, to file a brief, proposed findings of
fact and conclusions of law, or both, with the Judge. In lieu of briefs,
the Judge may permit or direct the parties to file memoranda or
statements of authority.
(b) Time. Briefs shall be filed simultaneously on a date established
by the Judge. A motion for extension of time for filing any brief shall
be made at least 3 working days prior to the due date and shall recite
that the moving party has conferred with the other parties on the
motion. Reply briefs shall not be allowed except by order of the Judge.
(c) Untimely briefs. Untimely briefs will not be accepted unless
accompanied by a motion setting forth good cause for the delay. The form
and content of motions shall comply with Sec. 2200.40.
[[Page 32]]
Subpart F_Posthearing Procedures
Sec. 2200.90 Decisions and reports of Judges.
(a) Judge's decision--(1) Contents of Judge's decision. The Judge
shall prepare a decision that conforms to 5 U.S.C. 557 of the
Administrative Procedure Act and constitutes the final disposition of
the proceedings. The decision shall be in writing and shall include
findings of fact, conclusions of law, and the reasons or bases for them,
on all the material issues of fact, law, or discretion presented on the
record. The decision shall include an order affirming, modifying, or
vacating each contested citation item and each proposed penalty or
directing other appropriate relief. A decision finally disposing of a
petition for modification of the abatement period shall contain an order
affirming or modifying the abatement period.
(2) Service of the Judge's decision. The Judge shall serve a copy of
the decision on each party in a manner prescribed in Sec. 2200.7(c).
(b) Judge's report--(1) Contents of Judge's report. The Judge's
report shall consist of the entire record, including the Judge's
decision.
(2) Filing of Judge's report. On the eleventh day after service of
the decision on the parties, the Judge shall file the report with the
Executive Secretary for docketing.
(3) Docketing of Judge's report by Executive Secretary. Promptly
upon filing of the Judge's report, the Executive Secretary shall docket
the report and notify all parties of the docketing date. The date of
docketing of the Judge's report is the date that the Judge's report is
made for purposes of section 12(j) of the Act, 29 U.S.C. 661(j).
(4) Correction of errors in Judge's report. (i) Until the Judge's
report has been directed for review or, in the absence of a direction
for review, until the decision has become a final order as described in
paragraph (f) of this section, the Judge may correct clerical errors
arising through oversight or inadvertence in decisions, orders, or other
parts of the record under Federal Rule of Civil Procedure 60(a). If a
Judge's report has been directed for review, the decision may be
corrected during the pendency of review with leave of the Commission.
(ii) After a Judge's decision has become a final order as described
in paragraph (f) of this section, the Commission or the Judge may
correct a clerical mistake or a mistake arising from oversight or
omission under Federal Rule of Civil Procedure 60(a).
(c) Relief from default. Until the Judge's report has been docketed
by the Executive Secretary, the Judge may relieve a party of default or
grant reinstatement under Sec. 2200.101(b), Sec. 2200.52(f)(2), or
Sec. 2200.64(b).
(d) Filing documents after the docketing date. Except for documents
filed under paragraph (b)(4)(i) of this section, which shall be filed
with the Judge, on or after the date of docketing of the Judge's report
all documents shall be filed with the Executive Secretary.
(e) Settlement. Settlement documents shall be filed in the manner
prescribed in Sec. 2200.100(c).
(f) Judge's decision final unless review directed. If no
Commissioner directs review of a report on or before the thirtieth day
following the date of docketing of the Judge's report, the decision of
the Judge shall become a final order of the Commission.
[84 FR 14558, Apr. 10, 2019; 84 FR 53053, Oct. 4, 2019]
Sec. 2200.91 Discretionary review; petitions for discretionary
review; statements in opposition to petitions.
(a) Review discretionary. Review by the Commission is not a right. A
Commissioner may, as a matter of discretion, direct review on the
Commissioner's own motion or on the petition of a party.
(b) Petitions for discretionary review. A party adversely affected
or aggrieved by the decision of the Judge may seek review by the
Commission by filing a petition for discretionary review with the
Executive Secretary at any time following the service of the Judge's
decision on the parties but no later than 20 days after the date of
docketing of the Judge's report. Service of the filed petition on the
other parties and intervenors shall be accomplished in a manner
prescribed in Sec. 2200.7(c). The earlier
[[Page 33]]
a petition is filed, the more consideration it can be given. A petition
for discretionary review may be conditional, and it may state that
review is sought only if a Commissioner were to direct review on the
petition of an opposing party.
(c) Cross-petitions for discretionary review. Where a petition for
discretionary review has been filed by one party, any other party
adversely affected or aggrieved by the decision of the Judge may seek
review by the Commission by filing a cross-petition for discretionary
review. The cross-petition may be conditional. See paragraph (b) of this
section. A cross-petition shall be filed directly with the Executive
Secretary within 27 days after the date of docketing of the Judge's
report. The earlier a cross-petition is filed, the more consideration it
can be given.
(d) Contents of the petition. No particular form is required for a
petition for discretionary review. A petition should state why review
should be directed, including: Whether the Judge's decision raises an
important question of law, policy, or discretion; whether review by the
Commission will resolve a question about which the Commission's Judges
have rendered differing opinions; whether the Judge's decision is
contrary to law or Commission precedent; whether a finding of material
fact is not supported by a preponderance of the evidence; whether a
prejudicial error of procedure or an abuse of discretion was committed.
A petition should concisely state the portions of the decision for which
review is sought and should refer to the citations and citation items
(for example, citation 3, item 4a) for which review is sought. A
petition shall not incorporate by reference a brief or legal memorandum.
Brevity and the inclusion of precise references to the record and legal
authorities will facilitate prompt review of the petition.
(e) When filing effective. A petition for discretionary review is
filed when received by the Commission, as specified in Sec.
2200.8(d)(3)(ii).
(f) Prerequisite to judicial review; effect of filing. A petition
for review under this section is, under 5 U.S.C. 704, a prerequisite to
the seeking of judicial review of the final agency action. The effect of
filing a petition for review is to stay the decision of the Judge.
(g) Statements in opposition to petition. Statements in opposition
to petitions for discretionary review may be filed in the manner
specified in this section for the filing of petitions for discretionary
review. Statements in opposition shall concisely state why the Judge's
decision should not be reviewed with respect to each portion of the
petition to which it is addressed.
[84 FR 14558, Apr. 10, 2019; 84 FR 53053, Oct. 4, 2019]
Sec. 2200.92 Review by the Commission.
(a) Jurisdiction of the Commission; issues on review. Unless the
Commission orders otherwise, a direction for review establishes
jurisdiction in the Commission to review the entire case. The issues to
be decided on review are within the discretion of the Commission.
(b) Review on a Commissioner's motion; issues on review. At any time
within 30 days after the docketing date of the Judge's report, a
Commissioner may, on the Commissioner's own motion, direct that a
Judge's decision be reviewed. Factors that may be considered in deciding
whether to direct review absent a petition include, but are not limited
to, whether the case raises novel questions of law or policy or involves
a conflict between Administrative Law Judges' decisions. When a
Commissioner directs review on the Commissioner's own motion, the issues
ordinarily will be those specified in the direction for review or any
later order.
(c) Issues not raised before Judge. The Commission will ordinarily
not review issues that the Judge did not have the opportunity to pass
upon. In exercising discretion to review issues that the Judge did not
have the opportunity to pass upon, the Commission may consider such
factors as whether there was good cause for not raising the issue before
the Judge, the degree to which the issue is factual, the degree to which
proceedings will be disrupted or delayed by raising the issue on review,
whether the ability of an adverse party to press a claim or defense
would be impaired, and whether considering the new issue would avoid
injustice or ensure that judgment will be rendered in accordance with
the law and facts.
[[Page 34]]
Sec. 2200.93 Briefs before the Commission.
(a) Requests for briefs. The Commission ordinarily will request the
parties to file briefs on issues before the Commission. After briefs are
requested, a party may, instead of filing a brief, file a letter setting
forth its arguments or a letter stating that it will rely on its
petition for discretionary review or previous brief. A party not
intending to file a brief shall notify the Commission in writing within
the applicable time for filing briefs and shall serve a copy on all
other parties. The provisions of this section apply to the filing of
briefs and letters filed in lieu of briefs.
(b) Filing briefs. Unless the briefing notice states otherwise:
(1) Time for filing briefs. The party required to file the first
brief shall do so within 40 days after the date of the briefing notice.
All other parties shall file their briefs within 30 days after the first
brief is served. Any reply brief permitted by these rules or by order
shall be filed within 15 days after the second brief is served.
(2) Sequence of filing. (i) If one petition for discretionary or
interlocutory review has been filed, the petitioning party shall file
the first brief.
(ii) If more than one petition has been filed, the party whose
petition was filed first shall file the first brief.
(iii) If no petition has been filed, the parties shall file
simultaneous briefs.
(3) Reply briefs. The party that filed the first brief may file a
reply brief, or, if briefs are to be filed simultaneously, both parties
may file a reply brief. Additional briefs are otherwise not allowed
except by leave of the Commission.
(c) Motion for extension of time for filing brief. An extension of
time to file a brief will ordinarily not be granted except for good
cause shown. A motion for extension of time to file a brief shall be
filed at the Commission no later than 5 days prior to the expiration of
the time limit prescribed in paragraph (b) of this section, shall comply
with Sec. 2200.40, and shall include the following information: when
the brief is due, the number and duration of extensions of time that
have been granted to each party, the length of extension being
requested, the specific reason for the extension being requested, and an
assurance that the brief will be filed within the time extension
requested.
(d) Consequences of failure to timely file brief. The Commission may
decline to accept a brief that is not timely filed. If a petitioning
party fails to respond to a briefing notice or expresses no interest in
review, the Commission may vacate the direction for review, or it may
decide the case without that party's brief. If the non-petitioning party
fails to respond to a briefing notice or expresses no interest in
review, the Commission may decide the case without that party's brief.
If a case was directed for review upon a Commissioner's own motion, and
any party fails to respond to the briefing notice, the Commission may
either vacate the direction for review or decide the case without
briefs.
(e) Length of brief. Except by permission of the Commission, a main
brief, including briefs and legal memoranda it incorporates by
reference, shall contain no more than 35 pages of text. A reply brief,
including briefs and legal memoranda it incorporates by reference, shall
contain no more than 20 pages of text.
(f) Format. Briefs shall be typewritten, double spaced, with
typeface of text being no smaller than 12-point and typeface of
footnotes being no smaller than 11-point, on letter size opaque paper
(8\1/2\ inches by 11 inches). All margins shall be 1\1/2\ inches.
(g) Table of contents. A brief in excess of 15 pages shall include a
table of contents.
(h) Failure to meet requirements. The Commission may return briefs
that do not meet the requirements of paragraphs (e) and (f) of this
section.
(i) Brief of an amicus curiae. The Commission may allow a brief of
an amicus curiae pursuant to the criteria and time period set forth in
Sec. 2200.24. Any brief of an amicus curiae must meet the requirements
of paragraphs (b) through (h) of this section. No reply brief of an
amicus curiae will be received.
[84 FR 14558, Apr. 10, 2019; 84 FR 53053, Oct. 4, 2019]
[[Page 35]]
Sec. 2200.94 [Reserved]
Sec. 2200.95 Oral argument before the Commission.
(a) When ordered. Upon motion of any party or upon its own motion,
the Commission may order oral argument. Parties requesting oral argument
must demonstrate why oral argument would facilitate resolution of the
issues before the Commission. Normally, motions for oral argument shall
not be considered until after all briefs have been filed.
(b) Notice of argument. The Executive Secretary shall advise all
parties whether oral argument is to be heard. Within a reasonable time
before the oral argument is scheduled, the Executive Secretary shall
inform the parties of the time and place therefor, the issues to be
heard, and the time allotted to the parties.
(c) Postponement. (1) Except under extraordinary circumstances, a
request for postponement must be filed at least 10 days before oral
argument is scheduled.
(2) The Executive Secretary shall notify the parties of a
postponement in a manner best calculated to avoid unnecessary travel or
inconvenience to the parties. The Executive Secretary shall inform all
parties of the new time and place for the oral argument.
(d) Order and content of argument. (1) Counsel shall be afforded
such time for oral argument as the Commission may provide by order.
Requests for enlargement of time may be made by motion filed reasonably
in advance of the date fixed for the argument.
(2) The petitioning party shall argue first. If the case is before
the Commission on cross-petitions, the Commission will inform the
parties in advance of the order of appearance.
(3) Counsel may reserve a portion of the time allowed for rebuttal
but in opening argument shall present the case fairly and completely and
shall not reserve points of substance for presentation during rebuttal.
(4) Oral argument should undertake to emphasize and clarify the
written arguments appearing in the briefs. The Commission will look with
disfavor on any oral argument that is read from a previously filed
document.
(5) At any time, the Commission may terminate a party's argument or
interrupt the party's presentation for questioning by the Commissioners.
(e) Failure to appear. Should either party fail to appear for oral
argument, the party present may be allowed to proceed with its argument.
(f) Consolidated cases. Where two or more consolidated cases are
scheduled for oral argument, the consolidated cases shall be considered
as one case for the purpose of allotting time to the parties unless the
Commission otherwise directs.
(g) Multiple counsel. Where more than one counsel argues for a party
to the case or for multiple parties on the same side in the case, it is
counsels' responsibility to agree upon a fair division of the total time
allotted. In the event of a failure to agree, the Commission will
allocate the time. The Commission may, in its discretion, limit the
number of counsel heard for each party or side in the argument. No later
than 5 days prior to the date of scheduled argument, the Commission must
be notified of the names of the counsel who will argue.
(h) Exhibits/visual aids. (1) The parties may use exhibits
introduced into evidence at the hearing. If a party wishes to use a
visual aid not part of the record, written notice of the proposed use
shall be given to opposing counsel 15 days prior to the argument.
Objections, if any, shall be in writing, served on all adverse parties,
and filed not fewer than 7 days before the argument.
(2) No visual aid shall introduce or rely upon facts or evidence not
already part of the record.
(3) If visual aids or exhibits other than documents are to be used
at the argument, counsel shall arrange with the Executive Secretary to
have them placed in the hearing room on the date of the argument before
the Commission convenes.
(4) Parties using visual aids not introduced into evidence shall
have them removed from the hearing room unless the Commission directs
otherwise. If such visual aids are not reclaimed by the party within a
reasonable time after notice is given by the Executive
[[Page 36]]
Secretary, such visual aids shall be disposed of at the discretion of
the Executive Secretary.
(i) Recording oral argument. (1) Unless the Commission directs
otherwise, oral arguments shall be electronically recorded and made part
of the record. Any other sound recording in the hearing room is
prohibited. Oral arguments shall also be transcribed verbatim. A copy of
the transcript of the oral argument taken by a qualified court reporter,
shall be filed with the Commission. The Commission shall bear all
expenses for court reporters' fees and for copies of the hearing
transcript received by it.
(2) Persons desiring to listen to the recordings shall make
appropriate arrangements with the Executive Secretary. Any party
desiring a written copy of the transcript is responsible for securing
and paying for its copy.
(3) Error in the transcript of the oral argument may be corrected by
the Commission on its own motion, on joint motion by the parties, or on
motion by any party. The motion shall state the error in the transcript
and the correction to be made. The official transcript shall reflect the
corrections.
(j) Failure to file brief. A party that fails to file a brief shall
not be heard at the time of oral argument except by permission of the
Commission.
(k) Participation in oral argument by amicus curiae. (1) An amicus
curiae will not be permitted to participate in the oral argument without
leave of the Commission upon proper motion. Participation generally will
be limited to a portion of the time allotted to the party in whose
interest the amicus curiae seeks to participate. In extraordinary
circumstances, the amicus curiae may be allotted its own time for oral
argument.
(2) A motion by amicus curiae seeking leave to participate in oral
argument shall be filed no later than 14 days prior to the date oral
argument is scheduled.
(3) The motion of an amicus curiae for leave to participate at oral
argument shall identify the interest of the applicant and shall state
the reason(s) why its participation at oral argument is desirable.
(4) Motions in opposition to the motion of an amicus curiae for
leave to participate in the oral argument must be filed within 10 days
of the date of the motion.
Sec. 2200.96 Commission receipt of copies of petitions for judicial
review of Commission orders when petitions for review are filed in
two or more courts of
appeals with respect to the same order.
The Commission officer and office designated to receive, pursuant to
28 U.S.C. 2112(a)(1), copies of petitions for review of Commission
orders, from the persons instituting the review proceedings in a court
of appeals, are the Executive Secretary and the Office of the Executive
Secretary at the Commission's Office, One Lafayette Centre, 1120 20th
Street NW, Suite 980, Washington, DC 20036-3457. The petition shall
state that it is being submitted to the Commission pursuant to 28 U.S.C.
2112 by the persons or person who filed the petition in the court of
appeals and shall be stamped by the court with the date of filing. (28
U.S.C. 2112(a) contains certain applicable requirements.)
Subpart G_Miscellaneous Provisions
Sec. 2200.100 Settlement.
(a) Policy. Settlement is permitted and encouraged by the Commission
at any stage of the proceedings.
(b) Requirements--(1) Notification of Settlement. If the parties
have agreed to a partial or full settlement, they shall so notify the
Judge in a written joint submission (titled ``Notification of
Settlement'' or ``Notification of Partial Settlement,'' as appropriate),
in which the parties shall:
(i) List the contested items that have been settled and, if only a
partial settlement agreement has been reached, also list the contested
items that remain to be decided;
(ii) If posting of the settlement agreement is required by Sec.
2200.7(g), certify that the parties' settlement agreement has been
posted in the manner prescribed by that rule and certify the date of
posting;
(iii) If party status has been elected under Sec. 2200.20, certify
that the party
[[Page 37]]
has been afforded an opportunity to provide input on all matters
pertaining to the settlement before the agreement is finalized; and
(iv) If the settlement agreement includes the withdrawal of a notice
of contest, citation, notification of proposed penalty, or petition for
modification of abatement period, state whether such withdrawal is with
prejudice.
(2) The parties shall not incorporate the settlement agreement in,
or append it to, the joint submission required in paragraph (b)(1) of
this section or substitute the settlement agreement for the required
joint submission.
(3) Issuance of order terminating proceeding. If the requirements of
paragraphs (b)(1) and (2) of this section have been met with respect to
all contested citation items and no affected employees who have elected
party status have raised an objection to the reasonableness of any
abatement period, the Judge shall issue an Order acknowledging that the
parties have resolved all contested citation items and agreed to
terminate the proceeding before the Commission.
(c) Filing; service and notice. A Notification of Settlement
submitted after a Judge's report has been issued shall be filed with the
Executive Secretary. Proof of service shall be filed with the
Notification of Settlement, showing service upon all parties and
authorized employee representatives in the manner prescribed by Sec.
2200.7(c) and (d) and the posting of notice to non-party affected
employees in the manner prescribed by Sec. 2200.7(g). The parties shall
also file a draft order terminating the proceedings for adoption by the
Judge or, if the Judge's report has been issued, by the Commission. If
the time has not expired under these rules for electing party status, an
order acknowledging the termination of the proceedings before the
Commission because of the settlement shall not be issued until at least
14 days after service or posting to consider any affected employee's or
authorized employee representative's objection to the reasonableness of
any abatement time. The affected employee or authorized employee
representative shall file any such objection within this time. If such
objection is filed, the Commission or the Judge shall provide an
opportunity for the affected employees or authorized employee
representative to be heard and present evidence on the objection, which
shall be limited to the reasonableness of the abatement period.
[84 FR 14558, Apr. 10, 2019, as amended at 85 FR 65220, Oct. 15, 2020]
Sec. 2200.101 Failure to obey rules.
(a) Sanctions. When any party has failed to plead or otherwise
proceed as provided by these rules or as required by the Commission or
the Judge, the party may be declared to be in default either on the
initiative of the Commission or the Judge, after having been afforded an
opportunity to show cause why the party should not be declared to be in
default, or on the motion of a party. Subsequently, the Commission or
the Judge, in their discretion, may enter a decision against the
defaulting party or strike any pleading or document not filed in
accordance with these rules.
(b) Motion to set aside sanctions. For reasons deemed sufficient by
the Commission or the Judge and upon motion conforming to Sec. 2200.40
expeditiously made, the Commission or the Judge may set aside a sanction
imposed under paragraph (a) of this section. See Sec. 2200.90(c).
(c) Discovery sanctions and failure to appear. This section does not
apply to sanctions for failure to comply with orders compelling
discovery, which are governed by Sec. 2200.52(f), or to a default for
failure to appear, which is governed by Sec. 2200.64(a).
(d) Show cause orders. All show cause orders issued by the
Commission or the Judge under paragraph (a) of this section shall be
served in a manner prescribed in Sec. 2200.7(o).
Sec. 2200.102 Withdrawal.
A party may withdraw its notice of contest, citation, notification
of proposed penalty, or petition for modification of abatement period at
any stage of a proceeding. The notice of withdrawal shall be served in
accordance with Sec. 2200.7(c) upon all parties and authorized employee
representatives that are eligible to elect, but have not elected, party
status. It shall also be posted
[[Page 38]]
in the manner prescribed in Sec. 2200.7(g) for the benefit of any
affected employees not represented by an authorized employee
representative who are eligible to elect, but have not elected, party
status. Proof of service shall accompany the notice of withdrawal in
accordance with Sec. 2200.7(d).
Sec. 2200.103 Expedited proceeding.
(a) When ordered. Upon application of any party or intervenor or
upon its own motion, the Commission may order an expedited proceeding.
When an expedited proceeding is ordered by the Commission, the Executive
Secretary shall notify all parties and intervenors.
(b) Automatic expedition. Cases initiated by employee contests and
petitions for modification of abatement period shall be expedited. See
Sec. Sec. 2200.37(d)(2) and 2200.38(c).
(c) Effect of ordering expedited proceeding. When an expedited
proceeding is required by these rules or ordered by the Commission, it
shall take precedence on the docket of the Judge to whom it is assigned,
or on the Commission's review docket, as applicable, over all other
classes of cases, and shall be set for hearing or for the submission of
briefs at the earliest practicable date.
(d) Time sequence set by Judge. The assigned Judge shall make
rulings with respect to time for filing of pleadings and with respect to
all other matters, without reference to times set forth in these rules,
and shall do all other things appropriate to complete the proceeding in
the minimum time consistent with fairness.
Sec. 2200.104 Standards of conduct.
(a) General. All representatives appearing before the Commission and
its Judges shall comply with the letter and spirit of the Model Rules of
Professional Conduct of the American Bar Association.
(b) Misbehavior before a Judge--(1) Exclusion from a proceeding. A
Judge may exclude from participation in a proceeding any person,
including a party or its representative, who engages in disruptive
behavior, refuses to comply with orders or rules of procedure,
continuously uses dilatory tactics, refuses to adhere to standards of
orderly or ethical conduct, or fails to act in good faith. The cause for
the exclusion shall be stated in writing or may be stated in the record
if the exclusion occurs during the course of the hearing. Where the
person removed is a party's attorney or other representative, the Judge
shall suspend the proceeding for a reasonable time for the purpose of
enabling the party to obtain another attorney or other representative.
(2) Appeal rights if excluded. Any attorney or other representative
excluded from a proceeding by a Judge may, within 7 days of the
exclusion, appeal to the Commission for reinstatement. No proceeding
shall be delayed or suspended pending disposition of the appeal.
(c) Disciplinary action by the Commission. If an attorney or other
representative practicing before the Commission engages in unethical or
unprofessional conduct or fails to comply with any rule or order of the
Commission or its Judges, the Commission may, after reasonable notice
and an opportunity to show cause to the contrary, and after hearing, if
requested, take any appropriate disciplinary action, including
suspension or disbarment from practice before the Commission.
(d) Show cause orders. All show cause orders issued by the
Commission under paragraph (c) of this section shall be served in a
manner prescribed in Sec. 2200.7(o).
Sec. 2200.105 Ex parte communication.
(a) General. Except as permitted by Sec. 2200.120 or as otherwise
authorized by law, there shall be no ex parte communication with respect
to the merits of any case not concluded, between any Commissioner,
Judge, employee, or agent of the Commission who is employed in the
decisional process and any of the parties or intervenors,
representatives, or other interested persons.
(b) Disciplinary action. In the event an ex parte communication
occurs, the Commission or the Judge may make such orders or take such
actions as fairness requires. The exclusion of a person by a Judge from
a proceeding shall be governed by Sec. 2200.104(b). Any disciplinary
action by the Commission,
[[Page 39]]
including suspension or disbarment, shall be governed by Sec.
2200.104(c).
(c) Placement on public record. All ex parte communications in
violation of this section shall be placed on the public record of the
proceeding.
Sec. 2200.106 Amendment to rules.
The Commission may at any time upon its own motion or initiative, or
upon written suggestion of any interested person setting forth
reasonable grounds therefor, amend or revoke any of the rules contained
in this Part. The Commission invites suggestions from interested parties
to amend or revoke rules of procedure. Such suggestions should be sent
by email to [email protected] or addressed to the Executive
Secretary of the Commission at One Lafayette Centre, 1120 20th Street
NW, Suite 980, Washington, DC 20036-3457.
Sec. 2200.107 Special circumstances; waiver of rules.
In special circumstances not contemplated by the provisions of these
rules and for good cause shown, the Commission or the Judge may, upon
application by any party or intervenor or on their own motion, after 3
working days' notice to all parties and intervenors, waive any rule or
make such orders as justice or the administration of the Act requires.
Sec. 2200.108 Official Seal of the Occupational Safety and
Health Review Commission.
The seal of the Commission shall consist of: A gold eagle outspread,
head facing dexter, a shield with 13 vertical stripes superimposed on
its breast, holding an olive branch in its claws, the whole superimposed
over a plain solid white Greek cross with a green background, encircled
by a white band edged in black and inscribed ``Occupational Safety and
Health Review Commission'' in black letters.
Subpart H_Settlement Part
Sec. 2200.120 Settlement procedure.
(a) Voluntary settlement--(1) Applicability and duration. (i)
Voluntary settlement applies only to notices of contests by employers
and to applications for fees under the Equal Access to Justice Act and
29 CFR part 2204.
(ii) Upon motion of any party conforming to Sec. 2200.40 after the
docketing of the notice of contest, or with the consent of the parties
at any time in the proceedings, the Chief Administrative Law Judge may
assign a case to a Settlement Judge for proceedings under this section.
In the event either the Secretary or the employer objects to the use of
a Settlement Judge procedure, such procedure shall not be imposed.
(2) Length of voluntary settlement procedures. Voluntary settlement
procedures shall be for a period not to exceed 75 days, unless extended
with the concurrence of the Chief Administrative Law Judge.
(b) Mandatory settlement--(1) Applicability. Mandatory settlement
applies only to notices of contest by employers in which the aggregate
amount of the penalties sought by the Secretary is $205,000 or greater.
Periodically, the aggregate amount of penalties for case referral to
Mandatory Settlement Proceedings may be adjusted proportionately upon
consideration of the penalty increases required by the Inflation
Adjustment Act of 2015. The adjusted aggregate penalty amount for case
referral to Mandatory Settlement will be posted on the Commission's
website (www.oshrc.gov).
(2) Assignment of case and appointment of Settlement Judge.
Notwithstanding any other provisions of these rules, upon the docketing
of the notice of contest, the Chief Administrative Law Judge shall
assign to the Settlement Part any case which satisfies the criteria set
forth in paragraph (b)(1) of this section. The Chief Administrative Law
Judge shall appoint a Settlement Judge, who shall be a Judge other than
the one assigned to hear and decide the case, except as provided in
paragraph (f)(2) of this section.
(3) Mandatory settlement proceedings. (i) The Settlement Judge may
consult all attorneys, non-attorney representatives, and self-
represented parties by any suitable means to schedule the Settlement
Conference and to facilitate preparation for the conference.
[[Page 40]]
(ii) The Settlement Judge may issue a preconference scheduling order
addressing procedural matters, including but not limited to, formal
pleadings, settlement status conference calls, ex parte caucus calls,
and allowing, limiting, or suspending discovery during the settlement
proceedings.
(iii) The Settlement Conference shall be conducted as soon as
practicable, taking into consideration the case size, the complexity of
the issues, and the time needed to complete preconference preparation.
(iv) Mandatory settlement procedures under this section shall be for
a period not to exceed 120 days, unless extended with the concurrence of
the Chief Administrative Law Judge.
(v) If at the conclusion of the settlement proceedings the case has
not been settled, the Settlement Judge shall promptly inform the Chief
Administrative Law Judge in accordance with Sec. 2200.120(f)(2).
(c) Powers and duties of Settlement Judges. (1) The Settlement Judge
shall confer with the parties regarding the whole or partial settlement
of the case and seek resolution of as many issues as is feasible.
(2) The Settlement Judge may require the parties to provide
statements of the issues in controversy and the factual predicate for
each party's position on each issue and may enter other orders as
appropriate to facilitate the proceedings.
(3) The Settlement Judge may allow or suspend discovery during the
settlement proceedings.
(4) The Settlement Judge has the discretion to engage in ex parte
communications throughout the course of settlement proceedings. The
Settlement Judge may suggest privately to each attorney or other
representative of a party what concessions the client should consider
and assess privately with each attorney or other representative the
reasonableness of the party's case or settlement position.
(5) The Settlement Judge may, with the consent of the parties,
conduct such other settlement proceedings as may aid in the settlement
of the case.
(d) Settlement conference--(1) General. The Settlement Judge shall
convene and preside over conferences between the parties. The Settlement
Judge shall designate the time, place, and nature of the conference.
(2) Participation in conference. The Settlement Judge may require
that any attorney or other representative who is expected to try the
case for each party be present. The Settlement Judge may also require
that the party's representative be accompanied by an official of the
party having full settlement authority on behalf of the party. The
parties and their representatives or attorneys are expected to be
completely candid with the Settlement Judge so that the Settlement Judge
may properly guide settlement discussions. The failure to be present at
a settlement conference or otherwise to comply with the orders of the
Settlement Judge or the refusal to cooperate fully within the spirit of
this rule may result in default or the imposition of sanctions under
Sec. 2200.101.
(3) Confidentiality of settlement proceedings. (i) All statements
made and all information presented during the course of settlement
proceedings under this section shall be regarded as confidential and
shall not be divulged outside of these proceedings except with the
consent of the parties. The Settlement Judge shall issue appropriate
orders to protect the confidentiality of settlement proceedings.
(ii) The Settlement Judge shall not divulge any statements or
information presented during private negotiations with a party or the
party's representative during settlement proceedings except with the
consent of that party.
(iii) The following shall not be admissible in any subsequent
hearing, except by stipulation of the parties:
(A) Evidence of statements or conduct in settlement proceedings
under this section within the scope of Federal Rule of Evidence 408,
(B) Notes or other material prepared by or maintained by the
Settlement Judge in connection with settlement proceedings, and
(C) Communications between the Settlement Judge and the Chief
Administrative Law Judge in connection with settlement proceedings
including the report of the Settlement Judge under paragraph (f) of this
section.
[[Page 41]]
(iv) Documents and factual information disclosed in the settlement
proceeding may not be used in litigation unless obtained through
appropriate discovery or subpoena.
(v) With respect to the Settlement Judge's participation in
settlement proceedings, the Settlement Judge shall not discuss the
merits of the case with any other person, nor appear as a witness in any
hearing of the case.
(vi) The requirements of paragraph (d)(3) of this section apply
unless disclosure is required by any applicable law or public policy.
(e) Record of settlement proceedings. No material of any form
required to be held confidential under paragraph (d)(3) of this section
shall be considered part of the official case record required to be
maintained under 29 U.S.C. 661(g), nor shall any such material be open
to public inspection as required by section 661(g), unless the parties
otherwise stipulate. With the exception of an order approving the terms
of any partial settlement agreed to between the parties as set forth in
paragraph (f)(1) of this section, the Settlement Judge shall not file or
cause to be filed in the official case record any material in the
Settlement Judge's possession relating to these settlement proceedings,
including but not limited to communications with the Chief
Administrative Law Judge and the Settlement Judge's report under
paragraph (f) of this section, unless the parties otherwise stipulate.
(f) Report of Settlement Judge. (1) The Settlement Judge shall
promptly notify the Chief Administrative Law Judge in writing of the
status of the case at the conclusion of the settlement period or such
time that the Settlement Judge determines further negotiations would be
fruitless. If the Settlement Judge has made such a determination and a
settlement agreement is not achieved within 75 days of the case being
assigned to voluntary settlement proceedings or within 120 days of being
assigned for mandatory settlement proceedings, the Settlement Judge
shall then advise the Chief Administrative Law Judge in writing. The
Chief Administrative Law Judge may then in the Chief Administrative Law
Judge's discretion allow an additional period of time, for further
proceedings under this section. If at the expiration of the period
allotted under this paragraph the Settlement Judge has not approved a
full settlement, the Settlement Judge shall furnish to the Chief
Administrative Law Judge copies of any written stipulations and orders
embodying the terms of any partial settlement the parties have reached.
(2) At the termination of the settlement period without a full
settlement, the Chief Administrative Law Judge shall promptly assign the
case to an Administrative Law Judge other than the Settlement Judge or
Chief Administrative Law Judge for appropriate action on the remaining
issues. If all the parties, the Settlement Judge, and the Chief
Administrative Law Judge agree, the Settlement Judge may be retained as
the Hearing Judge.
(g) Non-reviewability. Notwithstanding the provisions of Sec.
2200.73 regarding interlocutory review, any decision concerning the
assignment of any Judge and any decision by the Settlement Judge to
terminate settlement proceedings under this section is not subject to
review, appeal, or rehearing.
[84 FR 14558, Apr. 10, 2019, as amended at 87 FR 8949, Feb. 17, 2022]
Subparts I-L [Reserved]
Subpart M_Simplified Proceedings
Sec. 2200.200 Purpose.
(a) The purpose of the Simplified Proceedings subpart is to provide
simplified procedures for resolving contests under the Occupational
Safety and Health Act of 1970, so that parties before the Commission may
reduce the time and expense of litigation while being assured due
process and a hearing that meets the requirements of the Administrative
Procedure Act, 5 U.S.C. 554. These procedural rules will be applied to
accomplish this purpose.
(b) Procedures under this subpart are simplified in a number of
ways. The major differences between these procedures and those provided
in subparts A through G of the Commission's rules of procedure are as
follows.
[[Page 42]]
(1) Complaints and answers are not required.
(2) Pleadings generally are not required. Early discussions among
the parties and the Judge are required to narrow and define the disputes
between the parties.
(3) The Secretary is required to provide the employer with certain
informational documents early in the proceeding.
(4) Discovery is not permitted except as ordered by the Judge.
(5) Interlocutory appeals are not permitted.
(6) Hearings are less formal. The admission of evidence is not
controlled by the Federal Rules of Evidence except as provided for in
Sec. 2200.209(c). The Judge may allow the parties to argue their case
orally at the conclusion of the hearing, and may allow or require post-
hearing briefs or statements of position. The judge may render a
decision from the bench.
Sec. 2200.201 Application.
The rules in this subpart will govern proceedings before a Judge in
a case chosen for Simplified Proceedings under Sec. 2200.203.
Sec. 2200.202 Eligibility for Simplified Proceedings.
(a) Those cases selected for Simplified Proceedings will be those
that do not involve complex issues of law or fact. Cases appropriate for
Simplified Proceedings will generally include those with one or more of
the following characteristics:
(1) Relatively few citation items,
(2) An aggregate proposed penalty of not more than $20,000,
(3) No allegation of willfulness or a repeat violation,
(4) Not involving a fatality,
(5) A hearing that is expected to take less than 2 days, or
(6) A small employer whether self-represented or represented by
counsel.
(b) Those cases with an aggregate proposed penalty of more than
$20,000, but not more than $30,000, if otherwise appropriate, may be
selected for Simplified Proceedings at the discretion of the Chief
Administrative Law Judge.
[84 FR 14558, Apr. 10, 2019; 84 FR 45655, Aug. 30, 2019]
Sec. 2200.203 Commencing Simplified Proceedings.
(a) Selection. Upon receipt of a Notice of Contest, the Chief
Administrative Law Judge may, at the Chief Administrative Law Judge's
discretion, assign an appropriate case for Simplified Proceedings.
(b) Party request. Within 21 days of the notice of docketing, any
party may request that the case be assigned for Simplified Proceedings.
The request must be in writing. For example, ``I request Simplified
Proceedings'' will suffice. The request must be sent to the Executive
Secretary. Copies must be sent to each of the other parties.
(c) Judge's ruling on request. The Chief Administrative Law Judge or
the Judge assigned to the case may grant a party's request and assign a
case for Simplified Proceedings at the Judge's discretion. Such request
shall be acted upon within 14 days of its receipt by the Judge.
(d) Time for filing complaint or answer under Sec. 2200.34. If a
party has requested Simplified Proceedings or the Judge has assigned the
case for Simplified Proceedings, the times for filing a complaint or
answer will not run. If a request for Simplified Proceedings is denied,
the period for filing a complaint or answer will begin to run upon
issuance of the notice denying Simplified Proceedings.
Sec. 2200.204 Discontinuance of Simplified Proceedings.
(a) Procedure. If it becomes apparent at any time that a case is not
appropriate for Simplified Proceedings, the Judge assigned to the case
may, upon motion by any party or upon the Judge's own motion,
discontinue Simplified Proceedings and order the case to continue under
conventional rules. Before discontinuing Simplified Proceedings, the
Judge will consult with the Chief Administrative Law Judge.
(b) Party motion. At any time during the proceedings any party may
request that Simplified Proceedings be discontinued and that the matter
continue under conventional procedures. A motion to discontinue must
conform to Sec. 2200.40 and explain why the case is inappropriate for
Simplified Proceedings. Responses to such motions shall be
[[Page 43]]
filed within the time specified by Sec. 2200.40. Joint motions to
return a case to conventional proceedings shall be granted by the Judge
and do not require a showing of good cause, except that the Judge may
deny such a motion that is filed less than 30 days before a scheduled
hearing date.
(c) Ruling. If Simplified Proceedings are discontinued, the Judge
may issue such orders as are necessary for an orderly continuation under
conventional rules.
Sec. 2200.205 Filing of pleadings.
(a) Complaint and answer. Once a case is designated for Simplified
Proceedings, the complaint and answer requirements are suspended. If the
Secretary has filed a complaint under Sec. 2200.34(a), a response to a
petition under Sec. 2200.37(d)(5), or a response to an employee contest
under Sec. 2200.38(a), and if Simplified Proceedings has been ordered,
no response to these documents will be required.
(b) Motions. Limited, if any, motion practice is contemplated in
Simplified Proceedings, but all motion practice shall conform with Sec.
2200.40.
Sec. 2200.206 Disclosure of information.
(a) Disclosure to employer. (1) Within 21 days after a case is
designated for Simplified Proceedings, the Secretary shall provide the
employer, free of charge, copies of the narrative (Form OSHA 1-A) and
the worksheet (Form OSHA 1-B) or their equivalents.
(2) Within 30 days after a case is designated for Simplified
Proceedings, the Secretary shall provide the employer with reproductions
of any photographs or videotapes that the Secretary anticipates using at
the hearing.
(3) Within 30 days after a case is designated for Simplified
Proceedings, the Secretary shall provide to the employer any exculpatory
evidence in the Secretary's possession.
(4) The Judge shall act expeditiously on any claim by the employer
that the Secretary improperly withheld or redacted any portion of the
documents, photographs, or videotapes on the grounds of confidentiality
or privilege.
(b) Disclosure to the Secretary. When the employer raises an
affirmative defense pursuant to Sec. 2200.207(b), the Judge shall order
the employer to disclose to the Secretary such documents relevant to the
affirmative defense as the Judge deems appropriate.
Sec. 2200.207 Pre-hearing conference.
(a) When held. As early as practicable after the employer has
received the documents set forth in Sec. 2200.206(a)(1), the Judge may
conduct a pre-hearing conference, which the Judge may hold in person or
by telephone or electronic means.
(b) Content. At the pre-hearing conference, the parties may discuss
the following: Settlement of the case; the narrowing of issues; an
agreed statement of issues and facts; all defenses; witnesses and
exhibits; motions; and any other pertinent matter. Except under
extraordinary circumstances, any affirmative defenses not raised at the
pre-hearing conference may not be raised later. At the conclusion of the
conference, the Judge will issue an order that may set forth any
agreements reached by the parties and that may specify the issues to be
addressed by the parties at the hearing.
Sec. 2200.208 Discovery.
Discovery, including requests for admissions, will only be allowed
under the conditions and time limits set by the Judge.
Sec. 2200.209 Hearing.
(a) Procedures. As soon as practicable after the conclusion of the
pre-hearing conference, the Judge will hold a hearing on any issue that
remains in dispute. The hearing will be in accordance with subpart E of
these rules, except for Sec. 2200.73 which will not apply.
(b) Agreements. At the beginning of the hearing, the Judge will
enter into the record all agreements reached by the parties as well as
defenses raised during the pre-hearing conference. The parties and the
Judge then will attempt to resolve or narrow the remaining issues. The
Judge will enter into the record any further agreements reached by the
parties.
(c) Evidence. Except as to matters that are protected by evidentiary
privilege, the admission of evidence is not controlled by the Federal
Rules of Evidence, but the Judge may accept a
[[Page 44]]
written stipulation of the parties that the Federal Rules of Evidence
shall apply in whole or, as specified, in part. The Judge will receive
oral, physical, or documentary evidence that is not irrelevant, unduly
repetitious, or unreliable. Testimony will be given under oath or
affirmation.
(d) Reporter. A reporter will be present at the hearing. An official
verbatim transcript of the hearing will be prepared and filed with the
Judge. Parties may purchase copies of the transcript from the reporter.
(e) Oral and written argument. Each party may present an oral
argument at the close of the hearing. The Judge may allow or require
post-hearing briefs or statements of position upon the request of either
party or on the Judge's own motion. The form of any post-hearing briefs
shall conform to Sec. 2200.74 unless the Judge specifies otherwise.
(f) Judge's decision--(1) Bench decision. The Judge may render a
decision from the bench. In rendering a decision from the bench, the
Judge shall state the issues in the case and make clear both the Judge's
findings of fact and conclusions of law on the record. The Judge shall
reduce the bench decision in the matter to writing and serve it on the
parties as soon as practicable, but no later than 45 days after the
hearing. If additional time is needed, approval of the Chief
Administrative Law Judge is required. The decision shall be prepared in
accordance with Sec. 2200.90(a). The written decision shall include, as
an appendix, the bench decision as set forth in the transcript.
(2) Written decision. If the Judge does not render a decision from
the bench, the Judge will issue a written decision within 60 days of the
close of the record. The record will ordinarily be deemed closed upon
the latter of the filing of the hearing transcript, or the completion of
any permitted post-hearing briefing. The decision will be in accordance
with Sec. 2200.90(a). If additional time is needed, approval of the
Chief Administrative Law Judge is required.
(g) Filing of Judge's decision with the Executive Secretary. When
the Judge issues a written decision, service, filing, and docketing of
the Judge's written decision shall be in accordance with Sec. 2200.90.
Sec. 2200.210 Review of Judge's decision.
Any party may petition for Commission review of the Judge's decision
as provided in Sec. 2200.91. After the issuance of the Judge's written
decision, the parties may pursue the case following the rules in Subpart
F of this part.
Sec. 2200.211 Applicability of subparts A through G.
The provisions of subpart D (Sec. Sec. 2200.50-2200.57) and
Sec. Sec. 2200.34, 2200.37(d), 2200.38, 2200.71, and 2200.73 will not
apply to Simplified Proceedings. All other rules contained in subparts A
through G of the Commission's rules of procedure will apply when
consistent with the rules in this subpart governing Simplified
Proceedings.
[84 FR 14558, Apr. 10, 2019; 84 FR 53053, Oct. 4, 2019]
PART 2201_REGULATIONS IMPLEMENTING THE FREEDOM OF
INFORMATION ACT--Table of Contents
Sec.
2201.1 Purpose and scope.
2201.2 Description of agency.
2201.3 Delegation of authority and responsibilities.
2201.4 General policy and definitions.
2201.5 Procedure for requesting records.
2201.6 Responses to requests.
2201.7 Confidential commercial information.
2201.8 Fees for copying, searching, and review.
2201.9 Waiver of fees.
2201.10 Appeal of denials.
2201.11 Maintenance of statistics.
2201.12 Preservation of records.
Appendix A to Part 2201--Schedule of Fees
Authority: 29 U.S.C. 661(g); 5 U.S.C. 552.
Source: 71 FR 56350, Sept. 27, 2006, unless otherwise noted.
Sec. 2201.1 Purpose and scope.
This part prescribes procedures to obtain information and records of
the Occupational Safety and Health Review Commission (OSHRC or
Commission) under the Freedom of Information Act (FOIA), 5 U.S.C. 552.
It applies only to records or information of the Commission or in the
Commission's custody.
[[Page 45]]
This part does not affect discovery in adversary proceedings before the
Commission. Discovery is governed by the Commission's Rules of Procedure
in 29 CFR part 2200, subpart D.
Sec. 2201.2 Description of agency.
OSHRC adjudicates contested enforcement actions under the
Occupational Safety and Health Act of 1970, 29 U.S.C. 651-678. The
Commission decides cases after the parties are given an opportunity for
a hearing. All hearings are open to the public and are conducted at a
place convenient to the parties by an Administrative Law Judge. Any
Commissioner may direct that a decision of a Judge be reviewed by the
full Commission. The President designates one of the Commissioners as
Chairman, who is responsible on behalf of the Commission for the
administrative operations of the Commission.
Sec. 2201.3 Delegation of authority and responsibilities.
(a) The Chairman delegates to the Chief FOIA Officer the authority
to act upon all requests for agency records. The Chief FOIA Officer
shall, subject to the authority of the Chairman:
(1) Have agency-wide responsibility for efficient and appropriate
compliance with this section;
(2) Monitor implementation of the FOIA throughout the agency and
keep the Chairman and the Attorney General appropriately informed of the
agency's performance in implementing this section;
(3) Recommend to the Chairman such adjustments to agency practices,
policies, personnel, and funding as may be necessary to improve
implementation of this section;
(4) Review and report to the Attorney General, through the Chairman,
at such times and in such formats as the Attorney General may direct, on
the agency's performance in implementing this section; and
(5) Facilitate public understanding of the purposes of the statutory
exemptions of this section by including concise descriptions of the
exemptions in both the agency's FOIA Reference Guide, and the agency's
annual report on this section, and by providing an overview, where
appropriate, of certain general categories of agency records to which
those exemptions apply.
(b) The Chief FOIA Officer shall designate the FOIA Disclosure
Officer(s), who shall be responsible for processing FOIA requests.
(c) The Chief FOIA Officer shall designate the FOIA Public
Liaison(s), who shall serve as the official(s) to whom a FOIA requester
can raise concerns about the service the FOIA requester has received
following an initial response. FOIA Public Liaisons shall be responsible
for assisting in reducing delays, increasing transparency and
understanding of the status of requests, and assisting in the resolution
of disputes.
(d) OSHRC establishes a FOIA Requester Service Center that shall be
staffed by the FOIA Disclosure Officer(s) and FOIA Public Liaison(s).
The address of the FOIA Requester Service Center is 1120 20th Street
NW., 9th Floor, Washington, DC 20036-3457. The telephone number, fax
number and additional contact information for the FOIA Requester Service
Center is located on the agency's Web site at: http://www.oshrc.gov/
foia/index.html. The FOIA Requester Service Center is available to
provide information about the status of a request to the requester using
the assigned tracking number (as described in Sec. 2201.6(h)),
including:
(1) The date on which the agency originally received the request;
and
(2) An estimated date on which the agency will complete action on
the request.
[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41371, July 16, 2010;
81 FR 95037, Dec. 27, 2016]
Sec. 2201.4 General policy and definitions.
(a) Non-exempt records available to public. Except for records and
information exempted from disclosure by 5 U.S.C. 552(b) or published in
the Federal Register under 5 U.S.C. 552(a)(1), all records of the
Commission or in its custody are available to any person who requests
them in accordance with Sec. 2201.5. Records include any information
that would be a record subject to the requirements of 5 U.S.C. 552 when
maintained by the Commission in any format, including electronic format.
In
[[Page 46]]
response to FOIA requests, the Commission will search for records
manually or by automated means, except when an automated search would
significantly interfere with the operation of the Commission's automated
information system.
(b) Record availability at the OSHRC e-FOIA Reading Room. The
records of Commission activities are publicly available for inspection
and copying, and may be accessed electronically on the Commission's Web
site at http://www.oshrc.gov/foia/foia_reading_room.html. These records
include:
(1) Final decisions, including concurring and dissenting opinions,
remand orders, as well as Administrative Law Judge decisions pending
OSHRC review, briefing notices, and other significant orders;
(2) OSHRC Rules of Procedure and Guides to those procedures;
(3) Agency policy statements and interpretations adopted by OSHRC
and not published in the Federal Register, if any;
(4) Administrative staff manuals that affect a member of the public,
if any;
(5) Copies of records that have been released to a person under the
FOIA that, because of the subject matter, the Commission determines have
become or are likely to become the subject of subsequent requests for
substantially the same records, or that have been requested three or
more times, as well as records the Commission determines absent a FOIA
request could be of significant public interest; and
(6) A general index of records referred to under paragraph (b)(5) of
this section.
(c) Record availability onsite at OSHRC National Office. Any member
of the public may, upon request, access OSHRC's e-FOIA Reading Room via
a computer terminal at the OSHRC National Office, located at 1120 20th
St. NW., 9th Floor, Washington, DC 20036-3457. Such a request must be
made in writing to the FOIA Requester Service Center, and indicate a
preferred date and time for the requested access. OSHRC reserves the
right to arrange a different date and time with the requester, if
necessary.
(d) Definitions. For purposes of this part:
Commercial use request means a request from or on behalf of a person
who seeks information for a use or purpose that furthers his or her
commercial, trade, or profit interests, which can include furthering
those interests through litigation. The FOIA Disclosure Officer shall
determine, whenever reasonably possible, the use to which a requester
will put the requested records. When it appears that the requester will
put the records to a commercial use, either because of the nature of the
request itself or because the FOIA Disclosure Officer has reasonable
cause to doubt a requester's stated use, the FOIA Disclosure Officer
shall provide the requester a reasonable opportunity to submit further
clarification.
Direct costs means those expenses that the Commission actually
incurs in searching for and duplicating (and, in the case of commercial
use requests, reviewing) records to respond to a FOIA request. Direct
costs include, for example, the salary of the employee performing the
work (the basic rate of pay for the employee, plus 16 percent of that
rate to cover benefits) and the cost of operating duplication machinery.
Not included in direct costs are overhead expenses such as the costs of
space and heating or lighting of the facility in which the records are
kept.
Duplication means the making of a copy of a record, or of the
information contained in it, necessary to respond to a FOIA request.
Copies can take the form of paper, microform, audiovisual materials, or
electronic records (for example, magnetic tape or disk), among others.
The FOIA Disclosure Officer shall honor a requester's specified
preference of form or format of disclosure if the record is readily
reproducible with reasonable efforts in the requested form or format.
Educational institution means a preschool, a public or private
elementary or secondary school, an institution of undergraduate higher
education, an institution of graduate higher education, an institution
of professional education, or an institution of vocational education,
that operates a program of scholarly research. To be in this category, a
requester must show that the
[[Page 47]]
request is authorized by and is made under the auspices of a qualifying
institution and that the records are not sought for a commercial use but
are sought to further scholarly research.
Exceptional circumstances does not include a delay that results from
a predictable agency workload of requests under this section, unless the
agency demonstrates reasonable progress in reducing its backlog of
pending requests.
Noncommercial scientific institution means an institution that is
not operated on a ``commercial'' basis, as that term is defined in this
paragraph, and that is operated solely for the purpose of conducting
scientific research the results of which are not intended to promote any
particular product or industry. To be in this category, a requester must
show that the request is authorized by and is made under the auspices of
a qualifying institution and that the records are not sought for a
commercial use but are sought to further scientific research.
Record means any information that would be an OSHRC record subject
to the requirements of the FOIA when maintained by OSHRC in any format,
including an electronic format, and any such OSHRC record that is
maintained for OSHRC by an entity under Government contract, for the
purposes of records management.
Representative of the news media, or news media requester is any
person or entity that gathers information of potential interest to a
segment of the public, uses its editorial skills to turn the raw
materials into a distinct work, and distributes that work to an
audience. For purposes of this definition, the term ``news'' means
information that is about current events or that would be of current
interest to the public. Examples of news media entities include
television or radio stations broadcasting to the public at large and
publishers of periodicals (but only in those instances where they can
qualify as disseminators of ``news'') who make their products available
for purchase or subscription by, or free distribution to, the general
public. These examples are not all-inclusive. Moreover, as methods of
news delivery evolve (for example the adoption of the electronic
dissemination of newspapers through telecommunications services), such
alternative media shall be considered to be news-media entities. For
``freelance'' journalists to be regarded as working for a news
organization, they must demonstrate a solid basis for expecting
publication through that organization. A publication contract would be
the clearest proof, but OSHRC shall also look to the past publication
record of a requester in making this determination. To be in this
category, a requester must not be seeking the requested records for a
commercial use. However, a request for records supporting the news-
dissemination function of the requester shall not be considered to be
for a commercial use.
Review means the examination of a record located in response to a
request in order to determine whether any portion of it is exempt from
disclosure. It also includes processing any record for disclosure--for
example, doing all that is necessary to redact it and prepare it for
disclosure. Review costs are recoverable even if a record ultimately is
not disclosed. Review time does not include time spent resolving general
legal or policy issues regarding the application of exemptions.
Search means the process of looking for and retrieving records or
information responsive to a request. It includes page-by-page or line-
by-line identification of information within records and also includes
reasonable efforts to locate and retrieve information from records
maintained in electronic form or format. The FOIA Disclosure Officer
shall ensure that searches are done in the most efficient and least
expensive manner reasonably possible. For example, the FOIA Disclosure
Officer shall not search line-by-line where duplicating an entire
document would be quicker and less expensive.
Working day means a regular Federal working day. It does not include
Saturdays, Sundays, or Federal legal public holidays.
[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41371, July 16, 2010;
81 FR 95037, Dec. 27, 2016]
[[Page 48]]
Sec. 2201.5 Procedure for requesting records.
(a) General information. All requests for information must be made
in writing to the FOIA Disclosure Officer and may be: Mailed or
delivered; faxed; or emailed. Requests may also be made using the
Commission's online FOIA request form (which is a downloadable PDF file
found at http://www.oshrc.gov/foia/foia_request_form.html) and the
completed form can be submitted by mail, fax, or email. Contact
information for the FOIA Disclosure Officer is described in Sec.
2201.3(d). For mailed or delivered requests, the words ``Freedom of
Information Act Request'' must be printed on the face of the request's
envelope or covering as well as the request itself.
(b) A requester who is making a request for records about himself or
herself must comply with verification of identity requirements as
required by 29 CFR 2400.4 in OSHRC's Privacy Act regulations.
(c) Where a request for records pertains to another individual, a
requester may receive greater access by submitting either a notarized
authorization signed by that individual or a declaration made in
compliance with the requirements set forth in 28 U.S.C. 1746 by that
individual authorizing disclosure of the records to the requester, or by
submitting proof that the individual is deceased (e.g., a copy of a
death certificate or an obituary).
(d) Description of records sought. A request must describe the
records sought in sufficient detail to enable the Commission to locate
them with a reasonable amount of effort. To the extent possible, the
request should include specific information to identify the requested
records, such as the docket number(s) or case name(s). Before submitting
a request, the requester may contact the FOIA Disclosure Officer, as
described in Sec. 2201.3(d), to discuss the records being sought and
receive assistance in describing them. If a determination is made after
receiving a request that it does not reasonably describe the records
sought, the FOIA Disclosure Officer will contact the requester to
explain what additional information is needed or why the request is
otherwise insufficient. A requester attempting to reformulate or modify
such a request is encouraged to discuss the request with the FOIA
Disclosure Officer. If a request does not reasonably describe the
records sought, the agency's response may be delayed.
(e) Requests may specify the preferred form or format (including
electronic formats) of the response. The FOIA Disclosure Officer shall
honor a requester's specified preference of form or format of disclosure
if the record is readily reproducible with reasonable efforts in the
requested form or format. When a requester does not specify the
preferred form or format of the response, the FOIA Disclosure Officer
shall respond in the form or format in which the record is most
accessible to the Commission.
(f) The requester must provide contact information, such as a phone
number, email address, and/or mailing address, to facilitate the
agency's communication with the requester.
(g) Date of receipt. A request that complies with paragraph (a) of
this section is deemed received on the actual date it is received by the
Commission. A request that does not comply with paragraph (a) of this
section is deemed received when it is actually received by the FOIA
Disclosure Officer. For requests that are expected to result in fees
exceeding $250, the request shall not be deemed to have been received
until the requester is advised of the anticipated costs and the
Commission has received full payment or satisfactory assurance of full
payment as provided under Sec. 2201.8(f).
[81 FR 95037, Dec. 27, 2016, as amended at 85 FR 72565, Nov. 13, 2020]
Sec. 2201.6 Responses to requests.
(a) Responses within 20 working days. The FOIA Disclosure Officer
will either grant or deny a request for records within 20 working days
after receiving the request. The 20-day period shall not be tolled by
the agency except in the following cases. In these cases, the agency's
receipt of the requester's response to the agency's request for
information or clarification ends the tolling period.
(1) The agency may toll the 20-day period once while awaiting
information that it has reasonably requested from
[[Page 49]]
the requester under this section. The agency may make more than one
request to the requester for information not related to issues regarding
fee assessment, but can only toll the 20-day period once; and
(2) The agency may toll the 20-day period as many times as are
necessary to clarify any issues regarding fee assessment.
(b) Extensions of response time in unusual circumstances. In unusual
circumstances, the Commission may extend the time limit prescribed in
paragraph (a) of this section by not more than 10 working days. The FOIA
Disclosure Officer shall notify the requester in writing of the
extension, the reasons for the extension and the date on which a
determination is expected. ``Unusual circumstances'' exists, but only to
the extent reasonably necessary to the proper processing of the
particular request, when there is a need to:
(1) Search for and collect the requested records from one of OSHRC's
regional offices or off-site storage facilities;
(2) Search for, collect, and appropriately examine a voluminous
amount of separate and distinct records that are demanded in a single
request; or
(3) Consult, with all practicable speed, with another agency having
a substantial interest in the determination of the request.
(c) Additional extension. The FOIA Disclosure Officer shall notify
the requester in writing when it appears that a request cannot be
completed within the allowable time (20 working days plus a 10-working-
day extension). In such instances, the requester will be provided an
opportunity to limit the scope of the request so that it may be
processed in the time limit, or to agree to a reasonable alternative
time frame for processing. The FOIA Disclosure Officer or FOIA Public
Liaison shall be available to assist the requester for this purpose and
shall notify the requester of the right to seek dispute resolution
services from the National Archives and Records Administration's Office
of Government Information Services (OGIS).
(d) Two-track processing. To ensure the most equitable treatment
possible for all requesters, the Commission will process requests on a
first-in, first-out basis using a two-track processing system based upon
the estimated time it will take to process the request.
(1) The first track is for requests of simple to moderate complexity
that are expected to be completed within 20 working days.
(2) The second track is for requests involving ``unusual
circumstances'' that are expected to take between 21 to 30 working days
to complete and those that, because of their unusual volume or other
complexity, are expected to take more than 30 working days to complete.
(3) A requester should assume, unless otherwise notified by the
Commission, that its request is in the first track of processing. The
Commission will notify a requester when its request is placed in the
second track for processing and that notification will include the
estimated time for completion. Should subsequent information
substantially change the estimated time to process a request, the
requester will be notified in writing. In the case of a request expected
to take more than 30 working days for action, a requester may modify the
request to allow it to be processed faster or to reduce the cost of
processing. Partial responses may be sent to a requester as documents
are obtained by the FOIA Disclosure Officer from the supplying offices.
(e) Expedited processing. (1) The Commission may place a person's
request at the front of the queue for the appropriate track for that
request upon receipt of a written request that clearly demonstrates a
compelling need for expedited processing. Requesters must provide
detailed explanations to support their expedited requests. For purposes
of determining expedited processing, the term compelling need means:
(i) That a failure to obtain requested records on an expedited basis
could reasonably be expected to pose an imminent threat to the life or
physical safety of any individual; or
(ii) That a request is made by a person primarily engaged in
disseminating information, and that person establishes that there is an
urgency to inform the public concerning actual or alleged Federal
Government activity.
[[Page 50]]
(2) A person requesting expedited processing must include a
statement certifying the compelling need given to be true and correct to
the best of his or her knowledge and belief. The certification
requirement may be waived by the Commission as a matter of agency
discretion.
(3) The FOIA Disclosure Officer will make the initial determination
whether to grant or deny a request for expedited processing and will
notify a requester within 10 calendar days after receiving the request
whether processing will be expedited.
(f) Content of denial. When the FOIA Disclosure Officer denies a
request for records, either in whole or in part, a request for expedited
processing, and/or a request for fee waivers (see Sec. 2201.9), the
written notice of the denial shall state the reason for denial, give a
reasonable estimate of the volume of matter denied (unless doing so
would harm an interest protected by the exemption(s) under which the
request was denied), set forth the name and title or position of the
person responsible for the denial of the request, notify the requester
of the right to appeal the determination as specified in Sec. 2201.10,
and notify the requester of the assistance available from the FOIA
Public Liaison and the dispute resolution services offered by OGIS. A
refusal by the FOIA Disclosure Officer to process the request because
the requester has not made advance payment or given a satisfactory
assurance of full payment required under Sec. 2201.8(f) may be treated
as a denial of the request and appealed under Sec. 2201.10.
(g) Deletions. The FOIA Disclosure Officer shall provide to the
requester in writing a justification for deletions within records. The
amount of information deleted from records shall be indicated on the
released portion of the record, unless including that indication would
harm an interest protected by the exemption under which the deletion is
made. If technically feasible, the place in the record where the
deletion is made, and the exemption under which the deletion is made,
shall be marked.
(h) Tracking numbers. The FOIA Disclosure Officer shall assign an
individualized tracking number to each request received for processing
and provide the requester with the tracking number.
(i) Determining responsive records. In determining which records are
responsive to a request, OSHRC ordinarily will include only records in
its possession as of the date it begins its search for them. If any
other date is used, OSHRC shall inform the requester of that date.
[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41372, July 16, 2010;
81 FR 95038, Dec. 27, 2016; 85 FR 72565, Nov. 13, 2020]
Sec. 2201.7 Confidential commercial information.
(a) Definitions. (1) Confidential commercial information means
commercial or financial information obtained by OSHRC from a submitter
that may be protected from disclosure under Exemption 4 of the FOIA, 5
U.S.C. 552(b)(4).
(2) Submitter means any person or entity, including a corporation,
State, or foreign government, but not including another Federal
Government entity, that provides confidential commercial information,
either directly or indirectly to OSHRC.
(b) Designation of confidential commercial information. A submitter
of confidential commercial information must use good faith efforts to
designate by appropriate markings, at the time of submission, any
portion of its submission that it considers to be protected from
disclosure under Exemption 4. These designations expire 10 years after
the date of the submission unless the submitter requests and provides
justification for a longer designation period.
(c) When notice to submitters is required. OSHRC shall promptly
provide written notice to the submitter of confidential commercial
information whenever records containing such information are requested
under the FOIA if OSHRC determines that it may be required to disclose
the records, provided the submitter has complied with paragraph (b) of
this section or OSHRC has a reason to believe that the requested
information may be protected from disclosure under Exemption 4, but has
not yet determined whether the information is protected from disclosure.
[[Page 51]]
The notice must either describe the commercial information requested or
include a copy of the requested records or portions of records
containing the information.
(d) Exceptions to submitter notice requirements. The notice
requirements of this section do not apply if:
(1) OSHRC determines that the information is exempt under the FOIA,
and therefore will not be disclosed;
(2) The information has been lawfully published or has been
officially made available to the public;
(3) Disclosure of the information is required by a statute other
than the FOIA or by a regulation issued in accordance with the
requirements of Executive Order 12600 of June 23, 1987; or
(4) The designation made by the submitter under paragraph (b) of
this section appears obviously frivolous. In such case, OSHRC shall give
the submitter written notice of any final decision to disclose the
information within a reasonable number of days prior to a specified
disclosure date.
(e) Opportunity to object to disclosure. OSHRC shall specify a
reasonable time period within which the submitter must provide a
response to the notice referenced above. If a submitter has any
objections to disclosure, it should provide a detailed written statement
that specifies all grounds for withholding the particular information
under any exemption of the FOIA. In order to rely on Exemption 4 as
basis for nondisclosure, the submitter must explain why the information
constitutes a trade secret or commercial or financial information that
is confidential. A submitter who fails to respond within the time period
specified in the notice will be considered to have no objection to
disclosure of the information. OSHRC is not required to consider any
information received after the date of any disclosure decision. Any
information provided by a submitter under this subpart may itself be
subject to disclosure under the FOIA.
(f) Analysis of objections. OSHRC shall consider a submitter's
objections and specific grounds for nondisclosure in deciding whether to
disclose the requested information.
(g) Notice of decision. OSHRC shall provide the submitter with
written notice once a decision is made as to whether or not to disclose
information over the submitter's objection. When a decision is made to
disclose information over the submitter's objection, this notice shall
include a statement of the reasons why each of the submitter's
disclosure objections was not sustained, a description of the
information to be disclosed or copies of the records as the agency
intends to release them, and a specified disclosure date (which must be
a reasonable time after the notice).
(h) Notice of FOIA lawsuit. OSHRC shall promptly notify the
submitter when a requester files a lawsuit seeking to compel the
disclosure of confidential commercial information.
(i) Requester notification. OSHRC shall notify the requester
whenever it provides the submitter with notice and an opportunity to
object to disclosure; whenever it notifies the submitter of its intent
to disclose the requested information; and whenever a submitter files a
lawsuit to prevent the disclosure of the information.
[81 FR 95038, Dec. 27, 2016]
Sec. 2201.8 Fees for copying, searching, and review.
(a) Fees required unless waived. The FOIA Disclosure Officer shall
charge fees in accordance with the Uniform Freedom of Information Fee
Schedule and Guidelines published by the Office of Management and Budget
and in accordance with paragraph (b) of this section. See appendix A to
this part. If the fees for a request are less than the threshold amount
as provided in OSHRC's fee schedule, no fees shall be charged. The FOIA
Disclosure Officer shall, however, waive the fees in the circumstances
stated in Sec. 2201.9.
(b) Calculation of fees. Fees for copying, searching and reviewing
will be based on the direct costs of these services, including the
average hourly salary (base plus DC locality payment), plus 16 percent
for benefits, of the following three categories of employees involved in
responding to FOIA requests: Clerical--based on an average of all
employees at GS-9 and below; professional--based on an average of all
employees at GS-10 through GS-14; and managerial--based on an average of
all
[[Page 52]]
employees at GS-15 and above. OSHRC will calculate a schedule of fees
based on these direct costs. The schedule of fees under this section
appears in appendix A to this part. A copy of the schedule of fees may
also be obtained at no charge from the FOIA Disclosure Officer. See
Sec. 2201.3(d).
(1) Copying fee. The fee per copy of each page shall be calculated
in accordance with the per-page amount established in OSHRC's fee
schedule. See appendix A to this part. For other forms of duplication,
direct costs of producing the copy, including operator time, shall be
calculated and assessed. Copying fees shall not be charged for the first
100 pages of copies unless the copies are requested for a commercial
use. No copying fee shall be charged for educational, scientific, or
news media requests if the agency fails to comply with any time limit in
Sec. 2201.6, provided that no unusual or exceptional circumstances (as
those terms are defined in Sec. Sec. 2201.6(b) and 2201.4(d),
respectively) apply to the processing of the request.
(2) Search fee. Search fees shall be calculated in accordance with
the amounts established in OSHRC's fee schedule. See appendix A to this
part. Commercial requesters shall be charged for all search time, except
as described below. Search fees shall be charged even if the responsive
documents are not located or if they are located but withheld on the
basis of an exemption. However, search fees shall be limited or not
charged as follows:
(i) Easily identifiable decisions. Search fees shall not be charged
for searching for decisions that the requester identifies by name and
date, or by docket number, or that are otherwise easily identifiable.
(ii) Educational, scientific or news media requests. No fee shall be
charged if the request is not for a commercial use and is by an
educational or scientific institution, whose purpose is scholarly or
scientific research, or by a representative of the news media.
(iii) Other non-commercial requests. No fee shall be charged for the
first two hours of searching if the request is not for a commercial use
and is not by an educational or scientific institution, or a
representative of the news media.
(iv) Requests for records about self. No fee shall be charged to
search for records filed in the Commission's systems of records if the
requester is the subject of the requested records. See the Privacy Act
of 1974, 5 U.S.C. 552a(f)(5) (fees to be charged only for copying).
(v) Failure to comply with time limits. No search fee shall be
charged if the Commission fails to comply with any time limit in Sec.
2201.6, provided that no unusual or exceptional circumstances (as those
terms are defined in Sec. Sec. 2201.6(b) and2201.4(d), respectively)
apply to the processing of the request.
(3) Unusual circumstances. (i) If the Commission has determined that
unusual circumstances, as defined in Sec. 2201.6(b), apply and has
provided timely written notice to the requester, a failure to comply
with the time limit shall be excused for an additional 10 days and the
Commission shall assess fees as usual.
(ii) If the Commission has determined that unusual circumstances, as
defined in Sec. 2201.6(b), apply and more than 5,000 pages are
necessary to respond to the request, the Commission may charge search
fees, or, in the case of requesters described in Sec. 2201.8(b)(2)(ii),
may charge duplication fees, if the Commission provided timely written
notice of unusual circumstances to the requester in accordance with
Sec. 2201.6(b) and the Commission discussed with the requester via
written mail, email, or telephone (or made not less than three good-
faith attempts to do so) how the requester could effectively limit the
scope of the request in accordance with the FOIA. If this exception is
satisfied, the Commission may charge all applicable fees incurred in the
processing of the request even if such processing extends beyond an
additional 10 days.
(4) If a court has determined that exceptional circumstances exist,
as defined in Sec. 2201.4(d), a failure to comply with the time limits
shall be excused for the length of time provided by the court order.
(5) Review fee. A review fee shall be charged only for commercial
requests. Review fees shall be calculated in accordance with the amounts
established
[[Page 53]]
in OSHRC's schedule of fees. See appendix A to this part. A review fee
shall be charged for the initial examination of documents located in
response to a request to determine if it may be withheld from
disclosure, and for the excision of withholdable portions. However, a
review fee shall not be charged for review by the Chairman under Sec.
2201.10 (Appeal of denials).
(c) Invoices. The FOIA Disclosure Officer shall provide the
requester with an invoice containing an itemization of assessed fees.
(d) Aggregation of requests. When the FOIA Disclosure Officer
reasonably believes that a requester, or a group of requesters acting in
concert, is attempting to break a request into a series of requests for
the purpose of evading the assessment of fees, the FOIA Disclosure
Officer may aggregate any such requests and charge accordingly.
(e) Fees likely to exceed $25. If the total fee charges are likely
to exceed $25, the FOIA Disclosure Officer shall notify the requester of
the estimated amount of the charges, unless the requester has indicated
a willingness to pay fees up to the estimated amount. The notification
shall offer the requester an opportunity to confer with the FOIA
Disclosure Officer to reformulate the request to meet the requester's
needs at a lower cost. In cases in which a requester has been notified
that actual or estimated fees amount to more than $25, the time period
for responding to the request shall be tolled in accordance with Sec.
2201.6(a)(2) and further work shall not be done on it until the
requester agrees to pay the actual or estimated total fee. Any such
agreement shall be memorialized in writing.
(f) Advance payments. Advance payment of fees will generally not be
required. If, however, charges are likely to exceed $250, the FOIA
Disclosure Officer shall notify the requester of the likely cost and: if
the requester has a history of prompt payment of FOIA charges, obtain
satisfactory assurance of full payment; or if the requester has no
history of payment, require an advance payment of an amount up to the
full estimated charge. If the requester has previously failed to pay a
fee within 30 days of the date of billing, the FOIA Disclosure Officer
shall require the requester to pay the full amount owed plus any
interest owed as provided in paragraph (h) of this section or
demonstrate that he or she has, in fact, paid the fee, and to make an
advance payment of the full amount of the estimated charges before the
FOIA Disclosure Officer begins to process the new request or a pending
request from that requester.
(g) Fees for services not required by the Freedom of Information
Act. The Commission has discretion regarding its response to requests
for services not required by the FOIA. For example, the FOIA does not
require agencies to certify or authenticate responsive documents, nor
does it require responsive documents to be sent by express mail. If
these services are requested, the FOIA Disclosure Officer shall assess
the direct costs of such services.
(h) Interest on unpaid bills. The Commission's Office of the
Executive Director shall begin assessing interest charges on unpaid
bills starting on the thirty-first day after the date the bill was sent.
Interest will accrue from the date of billing until the Commission
receives full payment. Interest will be at the rate described in 31
U.S.C. 3717.
(i) Debt collection procedures. If bills are unpaid 60 days after
the mailing of a written notice to the requester, the Commission's
Office of the Executive Director may resort to the debt collection
procedures set out in the Debt Collection Act of 1982 (Pub. L. 97-365,
96 Stat. 1749), as amended, and its administrative procedures, including
the use of consumer reporting agencies, collection agencies, and offset.
[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41372, July 16, 2010.
Redesignated and amended at 81 FR 95038, 95039, Dec. 27, 2016; 85 FR
72565, Nov. 13, 2020]
Sec. 2201.9 Waiver of fees.
(a) General. The FOIA Disclosure Officer shall waive part or all of
the fees assessed under Sec. 2201.8(b) if two conditions are satisfied:
Disclosure of the information is in the public interest because it is
likely to contribute significantly to public understanding of the
operations or activities of the government; and disclosure is not
primarily
[[Page 54]]
in the commercial interest of the requester. Where the FOIA Disclosure
Officer has reasonable cause to doubt the use to which a requester will
put the records sought, or where that use is not clear from the request
itself, the FOIA Disclosure Officer may seek clarification from the
requester before assigning the request to a specific category for fee
assessment purposes. The FOIA Disclosure Officer shall afford the
requester the opportunity to show that the requester comes within these
two conditions. The following factors may be considered in determining
whether the two conditions are satisfied:
(1) Whether the subject of the requested records concerns the
operations or activities of the government;
(2) Whether the disclosure is likely to contribute significantly to
public understanding of government operations or activities;
(3) Whether the requester has a commercial interest that would be
furthered by the requested disclosure; and, if so, whether the magnitude
of the identified commercial interest of the requester is sufficiently
large, in comparison with the public interest in disclosure, that
disclosure is primarily in the commercial interest of the requester.
(b) Partial waiver of fees. If the two conditions stated in
paragraph (a) of this section are met, the FOIA Disclosure Officer will
ordinarily waive all fees. In exceptional cases, however, only a partial
waiver may be granted if the request for records would impose an
exceptional burden or require an exceptional expenditure of Commission
resources, and the request for a waiver minimally satisfies the ``public
interest'' requirement in paragraph (a) of this section.
[71 FR 56350, Sept. 27, 2006. Redesignated and amended at 81 FR 95038,
95039, Dec. 27, 2016]
Sec. 2201.10 Appeal of denials.
(a) Requirements for making an appeal. A denial of a request for
records, either in whole or in part, a request for expedited processing,
or a request for fee waivers, may be appealed in writing to the Chairman
of the Commission. To be considered timely, the appeal must be
postmarked, or in the case of electronic submissions, transmitted,
within 90 calendar days of the date of the agency's written notice of
denial. The appeal should clearly identify the agency determination that
is being appealed and the assigned FOIA tracking number. To facilitate
handling, the requester should mark both the appeal and its envelope, or
state in the subject line of an electronic transmission, ``Freedom of
Information Act Appeal.''
(b) Adjudication of appeals. The Chairman shall act on the appeal
under 5 U.S.C. 552(a)(6)(A)(ii) within 20 working days after the receipt
of the appeal. An appeal ordinarily will not be adjudicated if the
request becomes a matter of FOIA litigation. On receipt of any appeal
involving classified information, the Chairman shall take appropriate
action to ensure compliance with applicable classification rules.
(c) Decisions on appeals. The Chairman shall provide the decision on
an appeal in writing. If the Chairman wholly or partially upholds the
denial of the request, the decision shall contain a statement that
identifies the reasons for the affirmance, including any FOIA exemptions
applied. The decision must include notification that the requester may
obtain judicial review of the decision under 5 U.S.C. 552(a)(4)(B)-(G).
The decision shall also inform the requester of the dispute resolution
services offered by OGIS as a non-exclusive alternative to litigation.
If the Chairman's decision is remanded or modified on appeal to the
court, the requester will be notified by the agency of that
determination in writing. The Commission shall then further process the
request in accordance with the appeal determination and shall respond
directly to the requester.
(d) Engaging in dispute services provided by OGIS. Dispute
resolution is a voluntary process. If the Commission agrees to
participate in the dispute resolution services provided by OGIS, it will
actively engage as a partner in the process in an attempt to resolve the
dispute.
(e) When appeal is required. Before seeking review by a court of the
Commission's adverse determination, a requester generally must first
submit a timely administrative appeal.
[81 FR 95039, Dec. 27, 2016]
[[Page 55]]
Sec. 2201.11 Maintenance of statistics.
(a) The FOIA Disclosure Officer shall maintain records of:
(1) The number of determinations made by the agency not to comply
with the requests for records made to the agency and the reasons for
those determinations;
(2) The number of appeals made by persons, the results of those
appeals, and the reason for the action upon each appeal that results in
a denial of information;
(3) A complete list of all statutes that the agency used to
authorize the withholding of information under 5 U.S.C. 552(b)(3), which
exempts information that is specifically exempted from disclosure by
other statutes and the number of occasions on which each statute was
relied upon;
(4) A description of whether a court has upheld the decision of the
agency to withhold information under each of those statutes cited, and a
concise description of the scope of any information upheld;
(5) The number of requests for records pending before the agency as
of September 30 of the preceding year, and the median and average number
of days that these requests had been pending before the agency as of
that date;
(6) The number of requests for records received by the agency and
the number of requests the agency processed;
(7) The median number of days taken by the agency to process
different types of requests, based on the date on which the requests
were received by the agency;
(8) The average number of days for the agency to respond to a
request beginning on the date on which the request was received by the
agency, the median number of days for the agency to respond to such
requests, and the range in number of days for the agency to respond to
such requests;
(9) Based on the number of business days that have elapsed since
each request was originally received by the agency--
(i) The number of requests for records to which the agency has
responded with a determination within a period up to and including 20
days, and in 20-day increments up to and including 200 days;
(ii) The number of requests for records to which the agency has
responded with a determination within a period greater than 200 days and
less than 301 days;
(iii) The number of requests for records to which the agency has
responded with a determination within a period greater than 300 days and
less than 401 days; and
(iv) The number of requests for records to which the agency has
responded with a determination within a period greater than 400 days;
(10) The average number of days for the agency to provide the
granted information beginning on the date on which the request was
originally filed, the median number of days for the agency to provide
the granted information, and the range in number of days for the agency
to provide the granted information;
(11) The median and average number of days for the agency to respond
to administrative appeals based on the date on which the appeals
originally were received by the agency, the highest number of business
days taken by the agency to respond to an administrative appeal, and the
lowest number of business days taken by the agency to respond to an
administrative appeal;
(12) Data on the 10 active requests with the earliest filing dates
pending at the agency, including the amount of time that has elapsed
since each request was originally received by the agency;
(13) Data on the 10 active administrative appeals with the earliest
filing dates pending before the agency as of September 30 of the
preceding year, including the number of business days that have elapsed
since the requests were originally received by the agency;
(14) The number of expedited review requests that are granted and
denied, the average and median number of days for adjudicating expedited
review requests, and the number adjudicated within the required 10 days;
(15) The number of fee waiver requests that are granted and denied,
and the average and median number of days for adjudicating fee waiver
determinations;
[[Page 56]]
(16) The total amount of fees collected by the agency for processing
requests;
(17) The number of full-time staff of the agency devoted to the
processing of requests for records under this section; and
(18) The total amount expended by the agency for processing these
requests.
(b) The FOIA Disclosure Officer shall annually, on or before
February 1 of each year, prepare and submit to the Attorney General an
annual report covering each of the categories of records to be
maintained in accordance with paragraph (a) of this section, for the
previous fiscal year. A copy of the report will be available for public
inspection and copying at the OSHRC FOIA Reading Room, and a copy will
be accessible on OSHRC's Web site at http://www.oshrc.gov.
[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41373, July 16, 2010.
Redesignated and amended at 81 FR 95038, 95040, Dec. 27, 2016]
Sec. 2201.12 Preservation of records.
OSHRC shall preserve all correspondence pertaining to FOIA requests,
as well as copies of all requested records, until disposition or
destruction is authorized pursuant to title 44 of the United States Code
or the applicable General Records Schedule of the National Archives and
Records Administration. OSHRC shall not dispose of or destroy records
while they are the subject of a pending request, appeal or lawsuit under
the FOIA.
[81 FR 95040, Dec. 27, 2016]
Sec. Appendix A to Part 2201--Schedule of Fees
------------------------------------------------------------------------
Type of fee Amount of fee
------------------------------------------------------------------------
Threshold Amount (Amount below which fees $10
will not be assessed).
Search and Review Hourly Fees:
Clerical (GS-9 and below)............. 23
Professional (GS-10 through GS 14).... 46
Managerial (GS-15 and above).......... 76
Duplication cost per page................. 0.25
Computer printout copying fee............. 0.40
Searches of computerized records.......... Actual cost to the
Commission, but shall not
exceed $300 per hour,
including machine time and
the cost of the operator
and clerical personnel.
Certification Fee......................... $35 per authenticating
affidavit or declaration.
(Note: Search and review
charges may be assessed in
accordance with the rates
listed above.)
------------------------------------------------------------------------
PART 2202 [RESERVED]
PART 2203_REGULATIONS IMPLEMENTING THE GOVERNMENT IN THE
SUNSHINE ACT--Table of Contents
Sec.
2203.1 Purpose and scope.
2203.2 Definitions.
2203.3 Public attendance at Commission meetings.
2203.4 Procedures applicable to regularly-scheduled meetings.
2203.5 Procedures applicable to other meetings.
2203.6 Certification by the General Counsel.
2203.7 Transcripts, recordings and minutes of closed meetings.
Authority: 29 U.S.C. 661(g); 5 U.S.C. 552b(d)(4); 5 U.S.C. 552b(g).
Source: 50 FR 51679, Dec. 19, 1985, unless otherwise noted.
Sec. 2203.1 Purpose and scope.
This part applies to all meetings of the Occupational Safety and
Health Review Commission. Its purpose is to implement the Government in
the Sunshine Act, 5 U.S.C. 552b. The rules in this part are intended to
open to public observation, to the extent practicable, the meetings of
the Commission, while preserving the Commission's ability to fulfill its
adjudicatory responsibilities and protecting the rights of individuals.
Sec. 2203.2 Definitions.
For the purposes of this part:
Expedited closing procedure means the simplified procedures
described at 5 U.S.C. 552b(d)(4) for announcing and closing certain
agency meetings.
General Counsel means the General Counsel of the Commission, or any
other person designated by the General
[[Page 57]]
Counsel to carry out his responsibilities under this part.
Meeting means the deliberations of at least two Commissioners, where
such deliberations determine or result in the joint conduct or
disposition of ``official Commission business.'' A conference telephone
call among the Commissioners is a meeting if it otherwise qualifies as a
meeting under this paragraph. The term does not include:
(a) The deliberations required or permitted under Sec. Sec.
2203.4(d) and 2203.5, e.g., a discussion of whether to open or close a
meeting under this part;
(b) Business that is conducted by circulating written materials
sequentially among the Commissioners for their consideration on an
individual basis;
(c) A gathering at which the Chairman of the Commission seeks the
advice of the other Commissioners on the carrying out of a function that
has been vested in the Chairman, by statute or otherwise; or
(d) Informal discussions of the Commissioners that clarify issues
and expose varying views but do not effectively predetermine official
actions.
Official Commission business means matters that are the
responsibility of the Commission acting as a collegial body, including
the adjudication of litigated cases. The term does not include matters
that are the responsibility of the Commission's Chairman. See, e.g., 29
U.S.C. 661(e).
Regularly-scheduled meetings means meetings of the Commission that
are held at 10:30 a.m. on Thursday of each week, except on legal
holidays. The term includes regularly-scheduled meetings that have been
rescheduled for another time or day.
[50 FR 51679, Dec. 19, 1985, as amended at 73 FR 56492, Sept. 29, 2008;
74 FR 63988, Dec. 7, 2009]
Sec. 2203.3 Public attendance at Commission meetings.
(a) Policy. Commissioners will not jointly conduct or dispose of
official Commission business in a meeting unless it is conducted in
accordance with this part. Because the Commission was created for the
purpose of adjudicating litigated cases, it can be expected that most of
its meetings will be closed to the public. However, meetings that do not
involve Commission adjudication or discussion of issues in cases before
it will be open to the extent practicable. The public will not be
allowed to participate in discussions during open meetings.
(b) Grounds for closing meetings. Except where the Commission finds
that the public interest requires otherwise, all or part of a meeting
may be closed to the public, and information about a meeting may be
withheld from the public, where the Commission determines that the
meeting, or part of the meeting, or information about the meeting, is
likely to:
(1) Disclose matters that are:
(i) Specifically authorized under criteria established by an
Executive order to be kept secret in the interests of national defense
or foreign policy and
(ii) In fact properly classified pursuant to such Executive order;
(2) Relate solely to the internal personnel rules and practices of
the Commission;
(3) Disclose matters specifically exempted from disclosure by
statute (other than section 552 of title 5), provided that such statute
(i) Requires that the matter be withheld from the public in such a
manner as to leave no discretion on the issue, or
(ii) Establishes particular criteria for withholding or refers to
particular types of matters to be withheld;
(4) Disclose trade secrets and commercial or financial information
obtained from a person that are privileged or confidential;
(5) Involve accusing any person of a crime, or formally censuring
any person;
(6) Disclose information of a personal nature where disclosure would
constitute a clearly unwarranted invasion of personal privacy;
(7) Disclose investigatory records compiled for law enforcement
purposes, or information which if written would be contained in such
records, but only to the extent that the production of such records or
information would:
(i) Interfere with enforcement proceedings,
(ii) Deprive a person of a right to a fair trial or an impartial
adjudication,
[[Page 58]]
(iii) Constitute an unwarranted invasion of personal privacy,
(iv) Disclose the identity of a confidential source and, in the case
of a record compiled by a criminal law enforcement authority in the
course of a criminal investigation, or by an agency conducting a lawful
national security intelligence investigation, confidential information
furnished only by the confidential source,
(v) Disclose investigative techniques and procedures, or
(vi) Endanger the life or physical safety of law enforcement
personnel;
(8) Disclose information contained in or related to examination,
operating, or condition reports prepared by, on behalf of, or for the
use of an agency responsible for the regulation or supervision of
financial institutions;
(9) Disclose information the premature disclosure of which would:
(i) Be likely to (A) lead to significant financial speculation in
currencies, securities, or commodities, or (B) significantly endanger
the stability of any financial institution, or
(ii) Be likely to significantly frustrate implementation of a
proposed Commission action, except where the Commission has already
disclosed to the public the content or nature of its proposed action, or
where the Commission is required by law to make such disclosure on its
own initiative prior to taking final agency action on such proposal; or
(10) Specifically concern the Commission's issuance of a subpoena or
the Commission's participation in a civil action or proceeding, an
action in a foreign court or international tribunal, or an arbitration,
or the initiation, conduct, discussion or disposition by the Commission
of a particular case of formal Commission adjudication.
(c) Regularly-scheduled meetings. The Commission will hold
regularly-scheduled meetings for the purpose of considering matters that
may properly be closed to the public under paragraph (b)(4), (8), (9)(i)
or (10) of this section, or any combination thereof. Primarily, these
meetings will be held for the purpose of considering or disposing of
particular cases of formal Commission adjudication. The Commission
therefore expects to close all regularly-scheduled meetings. The
procedures established in Sec. 2203.4 apply to the public announcement
and closing of regularly-scheduled meetings.
(d) Other Commission meetings. All other meetings of the Commission
will be open to public observation unless the Commission determines that
all or part of a meeting is likely to disclose information of the kind
set forth in any subparagraph of paragraph (b) of this section. The
procedures established in Sec. 2203.5 apply to the public announcement
of Commission meetings that are not regularly scheduled and to the total
or partial closing of these meetings.
[50 FR 51679, Dec. 19, 1985, as amended at 62 FR 35963, July 3, 1997; 74
FR 63988, Dec. 7, 2009]
Sec. 2203.4 Procedures applicable to regularly-scheduled meetings.
(a) Statutory authority to adopt expedited closing procedure. The
Government in the Sunshine Act provides, at 5 U.S.C. 552b(d)(4), that
qualified agencies may establish by regulation expedited procedures for
announcing and closing certain meetings. Specifically, ``[a]ny agency, a
majority of whose meetings may properly be closed to the public pursuant
to paragraph (4), (8), (9)(A), or (10) of subsection (c) [of the
statute], or any combination thereof, may provide by regulation for the
closing of such meetings or portions thereof [through the expedited
closing procedure].'' See Sec. 2203.3(b)(4), (8), (9)(i) and (10),
which are equivalent to the referenced paragraphs of the statute. The
Commission had determined, for the reasons stated in paragraph (b) of
this section, that it is qualified to adopt implementing regulations
under 5 U.S.C. 552b(d)(4). It hereby announces that it will follow the
expedited closing procedure authorized under that statutory provision in
conducting its regularly-scheduled meetings.
(b) Commission qualification to adopt expedited closing procedure.
The Commission has determined that a majority of its meetings may be
closed to the public under 5 U.S.C. 552b(c)(10). See Sec.
2203.3(b)(10). The Commission is an adjudicatory agency that has no
regulatory functions. It was established to
[[Page 59]]
resolve disputes arising out of enforcement actions brought by the
Secretary of Labor under the Occupational Safety and Health Act of 1970,
29 U.S.C. 651-678. See 29 U.S.C. 659(c). The Commission's experience
under the Government in the Sunshine Act has been that almost all of its
meetings have been closed, in whole or in part, under 5 U.S.C.
552b(c)(10) because they involved only formal agency adjudication of
specific cases.
(c) Announcements. Regularly-scheduled meetings of the Commission
will be held at 10:30 a.m. every Thursday, except for legal holidays, in
the Hearing Room (Suite 965) of the Commission's national office at One
Lafayette Centre, 1120-20th Street NW., Washington, DC 20036-3457. If a
regularly-scheduled meeting is scheduled, public announcement of the
time, date and place of the meeting will be made at the earliest
practicable time by posting a notice in a prominent place at the
Commission's national office. If a regularly-scheduled meeting is
cancelled, a notice of cancellation will be posted in the same manner.
Information about the subject of each regularly-scheduled meeting will
be made available in the Office of the General Counsel, telephone number
(202) 606-5410, at the earliest practicable time. However, no
information that may be withheld under Sec. 2203.3(b) will be made
available, and individual items may be added to or deleted from the
agenda at any time. Inquiries from the public regarding any regularly-
scheduled meeting will be directed to the Office of the General Counsel.
(d) Voting. At the beginning of each regularly-scheduled meeting,
the Commission will vote on whether to close the meeting. No proxy vote
will be permitted and the vote of each Commissioner will be recorded.
This record of each Commissioner's vote will be made available to the
public at the Commission's national office immediately after the
meeting.
[50 FR 51679, Dec. 19, 1985, as amended at 58 FR 26066, Apr. 30, 1993;
73 FR 56492, Sept. 29, 2008]
Sec. 2203.5 Procedures applicable to other meetings.
(a) Announcements--(1) Meetings announced. Public announcement will
be made of every meeting that is not a regularly-scheduled meeting. This
announcement will state the time, place, and subject of the meeting,
whether it is to be open or closed, and the name and phone number of the
person designated to respond to requests for information about the
meeting. The announcement will be made at least one week before the
meeting unless at least two Commissioners determine by a recorded vote
that Commission business requires that such meeting be called at an
earlier date. In that case, the Commission will make its public
announcement at the earliest practicable time.
(2) Changes announced. The time or place of a meeting may be changed
following the public announcement required by paragraph (a)(1) of this
section, but only if public announcement of the change is made at the
earliest practicable time. The subject of a meeting, or the
determination by the Commission to open or close all or part of a
meeting, may also be changed following the public announcement required
by paragraph (a)(1) of this section; however, these changes may be made
only if:
(i) At least two Commissioners determine by recorded vote that
Commission business so requires and that no earlier announcement of the
change was possible and
(ii) Public announcement of the change and the vote of each
Commissioner on the change is made at the earliest practicable time.
(3) Form of announcements. The announcements required under
paragraph (a) of this section will be made by posting a notice in a
prominent place at the Commission's national office. In addition,
immediately following each announcement required by paragraph (a) of
this section, notice of the same matters described in the posted notice
will also be submitted for publication in the Federal Register.
(b) Voting--(1) Requirement that vote be taken. Action to close all
or part of a meeting that is not regularly scheduled or to withhold
information about a
[[Page 60]]
meeting that is not regularly scheduled, under any paragraph of Sec.
2203.3(b), will be taken only when at least two Commissioners vote to
take the proposed action.
(2) Separate votes required. A separate vote of the Commissioners
will be taken with respect to each Commission meeting or each part of a
meeting that is proposed to be closed under paragraph (b) of this
section or with respect to any information that is proposed to be
withheld under paragraph (b) of this section.
(3) Single vote on a series of meetings. A single vote may be taken
with respect to closing all or part of a series of meetings under
paragraph (b) of this section, or with respect to any information
concerning a series of meetings, so long as each meeting in the series
involves the same particular matters and is scheduled to be held no more
than 30 days after the initial meeting in the series.
(4) Public requests to close meetings. Any person whose interest may
be directly affected by a portion of an open meeting may request that
the Commission close that portion to the public for any of the reasons
referred to in paragraph (b)(5), (6) or (7) of Sec. 2203.3. Upon the
motion of any Commissioner, the Commission will vote by recorded vote
whether to grant the request.
(5) Proxy votes; recording of votes. No proxy vote will be permitted
for any vote required under paragraph (b) of this section. The vote of
each participating Commissioner will be recorded.
(6) Public announcement of votes. Within one day after any vote
taken under paragraph (b) of this section, the vote of each Commissioner
on the question will be made publicly available at the Commission's
national office. If any part of a meeting is to be closed under
paragraph (b) of this section, a full written explanation of the
Commission's action, together with a list of all persons expected to
attend the meeting and their affiliation, will be made publicly
available at the Commission's national office within one day after the
vote to close.
Sec. 2203.6 Certification by the General Counsel.
For every meeting closed under any provision of these rules, the
General Counsel will be asked to certify before the meeting that in his
opinion the meeting may properly be closed to the public, and to state
which exemptions he has relied upon. A copy of this certification,
together with a statement (from the Commissioner presiding over the
meeting) setting forth the time and place of the meeting and the persons
present, shall be retained by the Commission as part of the transcript,
recording or minutes of the meeting described in Sec. 2203.7.
Sec. 2203.7 Transcripts, recordings and minutes of closed meetings.
(a) Record of meeting. The Commission will make a complete
transcript or electronic recording adequate to record fully the
proceedings of each meeting, or portion of a meeting, closed to the
public. However, if all or part of a meeting is closed under paragraph
(b)(8), (9)(i) or (10) of Sec. 2203.3, the Commission shall maintain
either such a transcript or recording, or a set of minutes. Such minutes
will fully and clearly describe all matters discussed and will provide a
full and accurate summary of any actions taken, and the reasons for the
actions. The minutes will also include a description of each of the
views expressed on any item and a record of any roll call vote
(reflecting the vote of each Commissioner on the question). In addition,
the minutes will identify all documents considered in connection with
any action.
(b) Public access to records. The Commission will make promptly
available to the public, at its national office, the transcript,
electronic recording, or minutes of the discussion of any item on the
agenda, or of any testimony of any witness received at the meeting,
except for such item or items of such discussion or testimony as the
Commission determines to contain information which may be withheld under
Sec. 2203.3(b). Copies of the transcript, the minutes, or a
transcription of the recording disclosing the identity of each speaker,
with the deletions noted in the preceding sentence, will be furnished to
any person at the actual cost
[[Page 61]]
of duplication or transcription. Requests to inspect or to have copies
made of any transcript, electronic recording or set of minutes of any
meeting, or any item(s) on the agenda of any meeting, should be made in
writing to the General Counsel at the Office of the General Counsel,
Occupational Safety and Health Review Commission, Room 941, One
Lafayette Centre, 1120-20th Street NW., Washington, DC 20036-3457. The
request should identify the time, date, and place of the meeting and
briefly describe the items sought. The Commission will maintain a
complete verbatim copy of the transcript, a complete copy of the
minutes, or a complete electronic recording of each closed meeting, or
closed portion of a meeting, for a period of at least two years after
the meeting, or until one year after the conclusion of any Commission
proceeding with respect to which all or part of the meeting was held,
whichever occurs later.
[50 FR 51679, Dec. 19, 1985, as amended at 58 FR 26066, Apr. 30, 1993;
73 FR 56492, Sept. 29, 2008]
PART 2204_IMPLEMENTATION OF THE EQUAL ACCESS TO JUSTICE ACT IN
PROCEEDINGS BEFORE THE OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION
--Table of Contents
Subpart A_General Provisions
Sec.
2204.101 Scope of this part.
Subpart B_Definitions
2204.201 Definitions.
Subpart C_EAJA Application
2204.301 Application requirements.
2204.302 Net worth exhibit.
2204.303 Documentation of fees and expenses.
Subpart D_Procedures for Considering Applications
2204.401 Filing and service of documents.
2204.402 Answer to application.
2204.403 Reply.
2204.404 Settlement.
2204.405 Further proceedings.
2204.406 Decision.
2204.407 Commission review.
2204.408 Judicial review.
2204.409 Stay of decision concerning award.
2204.410 Waiver.
2204.411 Payment of award.
Authority: 5 U.S.C. 504.
Source: 86 FR 26659, May 17, 2021, unless otherwise noted.
Subpart A_General Provisions
Sec. 2204.101 Scope of this part.
The Equal Access to Justice Act, 5 U.S.C. 504 (called ``EAJA'' in
this part), provides for the award of attorney or agent fees and other
expenses to eligible individuals and entities who are parties to certain
administrative proceedings (called ``adversary adjudications'') before
the Occupational Safety and Health Review Commission. An eligible party
may receive an award when it prevails over the Secretary of Labor,
unless the Secretary's position in the proceeding was substantially
justified or special circumstances make an award unjust. Alternatively,
an eligible party, even if not a prevailing party, may receive an award
under 5 U.S.C. 504(a)(4) when it successfully defends against an
excessive demand made by the Secretary.
Subpart B_Definitions
Sec. 2204.201 Definitions.
For the purposes of this part:
Adversary adjudication means an adjudication under 5 U.S.C. 554 and
29 U.S.C. 659(c) in which the position of the Secretary is represented
by counsel or otherwise, subject to certain exclusions set forth in 5
U.S.C. 504(b)(1)(C).
Agent means any person other than an attorney who represents a party
in a proceeding before the Commission pursuant to Sec. 2200.22 of this
chapter.
Commission means the Occupational Safety and Health Review
Commission.
Demand means the express demand of the Secretary which led to the
adversary adjudication, but does not include a recitation by the
Secretary of the maximum statutory penalty:
(1) In the administrative complaint; or
(2) Elsewhere when accompanied by an express demand for a lesser
amount.
[[Page 62]]
Excessive demand means a demand by the Secretary, in an adversary
adjudication arising from the Secretary's action to enforce a party's
compliance with a statutory requirement that is substantially in excess
of the decision of the judge or Commission and is unreasonable when
compared with such decision, under the facts and circumstances of the
case.
Final disposition means the date on which a decision or order
disposing of the merits of the adversary adjudication or any other
complete resolution of the adversary adjudication, such as a settlement
or voluntary dismissal, become final and unappealable, both within the
agency and to the courts.
Judge means the Administrative Law Judge appointed under 29 U.S.C.
661(j) who presided over the adversary adjudication or presides over an
EAJA proceeding.
Party means a party, as defined in 5 U.S.C. 551(3), who is:
(1) An individual whose net worth did not exceed $2,000,000 at the
time the adversary adjudication was initiated; or
(2) Any owner of an unincorporated business, or any partnership,
corporation, association, unit of local government, or organization, the
net worth of which did not exceed $7,000,000 at the time the adversary
adjudication was initiated, and which had not more than 500 employees at
the time the adversary adjudication was initiated; except that an
organization described in section 501(c)(3) of the Internal Revenue Code
of 1986 exempt from taxation under section 501(a) of such Code, or a
cooperative association as defined in section 15(a) of the Agricultural
Marketing Act, may be a party regardless of the net worth of such
organization or cooperative association. For purposes of 5 U.S.C.
504(a)(4), ``party'' also includes a small entity as defined in 5 U.S.C.
601.
Position of the Secretary means, in addition to the position taken
by the Secretary in the adversary adjudication, the action or failure to
act by the Secretary upon which the adversary adjudication is based,
except that fees and other expenses may not be awarded to a party for
any portion of the adversary adjudication in which the party has
unreasonably protracted the proceedings.
Secretary means the Secretary of Labor.
Subpart C_EAJA Application
Sec. 2204.301 Application requirements.
(a) A party seeking an award under EAJA shall file an application
with the judge that conducted the adversarial adjudication within 30
days after the final disposition of the adversary adjudication.
(b) The application shall identify the applicant and the proceeding
for which an award is sought. The application shall show that the
applicant has prevailed and identify the position of the Secretary that
the applicant alleges was not substantially justified; or, if the
applicant has not prevailed, shall show that the Secretary's demand was
substantially in excess of the decision of the judge or Commission and
was unreasonable when compared with that decision under the facts and
circumstances of that case. The application shall also identify the
Secretary's position(s) in the proceeding that the applicant alleges was
(were) not substantially justified or the Secretary's demand that is
alleged to be excessive and unreasonable. Unless the applicant is an
individual, the application shall also state the number of employees of
the applicant and briefly describe the type and purpose of its
organization or business.
(c) The application shall also show that the applicant meets the
definition of ``party'' in Sec. 2204.201, including adequate
documentation of its net worth, as set forth in Sec. 2204.302.
(d) The application shall state the amount of fees and expenses for
which an award is sought, subject to the requirements and limitations as
set forth in 5 U.S.C. 504(b)(1)(A), with adequate documentation as set
forth in Sec. 2204.303.
(e) The application shall be signed by the applicant or an
authorized officer, attorney, or agent of the applicant. It shall also
contain or be accompanied by a written verification under penalty of
perjury that the information provided in the application is true and
correct.
[[Page 63]]
Sec. 2204.302 Net worth exhibit.
(a) Each applicant except a qualified tax-exempt organization,
cooperative association, or, in the case of an application for an award
related to an allegedly excessive demand by the Secretary, a small
entity as that term is defined by 5 U.S.C. 601(6), shall provide with
its application a detailed exhibit showing the net worth of the
applicant as required by Sec. 2204.301(c) when the proceeding was
initiated. The exhibit may be in any form convenient to the applicant
that provides full disclosure of the applicant's assets and liabilities
and is sufficient to determine whether the applicant qualifies as a
party as defined in Sec. 2204.201. The judge or Commission may require
an applicant to file additional information to determine its eligibility
for an award.
(b) Ordinarily, the net worth exhibit will be included in the public
record of the proceeding. However, an applicant that objects to public
disclosure of information in any portion of the exhibit and believes
there are legal grounds for withholding it from disclosure may request
that the documents be filed under seal or otherwise be treated as
confidential, pursuant to Sec. Sec. 2200.8 and 2200.52 of this chapter.
[86 FR 26659, May 17, 2021, as amended at 86 FR 31166, June 11, 2021]
Sec. 2204.303 Documentation of fees and expenses.
The application shall be accompanied by adequate documentation of
the fees and other expenses incurred after the initiation of the
adversary adjudication, including, but not limited to, the reasonable
cost of any study, analysis, engineering report, test, or project. An
application seeking an increase in fees to account for inflation
pursuant to Sec. 2200.406 of this chapter shall also include adequate
documentation of the change in the consumer price index for the attorney
or agent's locality. With respect to a claim for fees and expenses
involving an excessive demand by the Secretary, the application shall be
accompanied by adequate documentation of such fees and expenses incurred
after initiation of the adversary adjudication for which an award is
sought attributable to the portion of the demand alleged to be excessive
and unreasonable. A separate itemized statement shall be submitted for
each professional firm or individual whose services are covered by the
application, showing the hours spent in connection with the proceeding
by each individual, a description of the specific services performed,
the rate at which each fee has been computed, any expenses for which
reimbursement is sought, the total amount claimed, and the total amount
paid or payable by the applicant or by any other person or entity for
the services provided. The judge or Commission may require the applicant
to provide vouchers, receipts, or other substantiation for any fees or
expenses claimed.
Subpart D_Procedures for Considering Applications
Sec. 2204.401 Filing and service of documents.
Any application for an award, or any accompanying documentation
related to an application shall be filed and served on all parties to
the proceeding in accordance with Sec. Sec. 2200.7 and 2200.8 of this
chapter, except as provided in Sec. 2204.302(b) for confidential
financial information.
Sec. 2204.402 Answer to application.
(a) Within 30 days after service of an application, the Secretary
shall file an answer to the application. Unless the Secretary requests
an extension of time for filing or files a statement of intent to
negotiate under paragraph (b) of this section, failure to file an answer
within the 30-day period may be treated as a consent to the award
requested.
(b) If the Secretary and the applicant believe that the issues in
the fee application can be settled, they may jointly file a statement of
their intent to negotiate a settlement. The filing of this statement
shall extend the time for filing an answer for an additional 30 days,
and further extensions may be granted by the judge upon request.
(c) The answer shall explain in detail any objections to the award
requested and identify the facts relied on in support of the Secretary's
position. If the answer is based on any alleged facts
[[Page 64]]
not already in the record of the proceeding, the Secretary shall include
with the answer either supporting affidavits or a request for further
proceedings under Sec. 2204.405.
Sec. 2204.403 Reply.
Within 15 days after service of an answer, the applicant may file a
reply. If the reply is based on any alleged facts not already in the
record of the proceeding, the applicant shall include with the reply
either supporting affidavits or a request for further proceedings under
Sec. 2204.405.
Sec. 2204.404 Settlement.
The applicant and the Secretary may agree on a proposed settlement
of the award before final action on the application, either in
connection with a settlement of the underlying adversary adjudication,
or after the adversary adjudication has been concluded, in accordance
with the Commission's standard settlement procedures as set forth in
Sec. 2200.120 of this chapter. If a prevailing party and the Secretary
agree on a proposed settlement of an award before an application has
been filed, the application shall be filed with the proposed settlement.
If a proposed settlement of an underlying proceeding provides that each
side shall bear its own expenses and the settlement is accepted, no
application may be filed.
Sec. 2204.405 Further proceedings.
(a) Ordinarily, the determination of an award will be made on the
basis of the written record. However, on request of either the applicant
or the Secretary, or on his or her own initiative, the judge presiding
over an EAJA proceeding may, if necessary for a full and fair decision
on the application, order the filing of additional written submissions;
hold oral argument; or allow for discovery or hold an evidentiary
hearing, but only as to issues other than whether the agency's position
was substantially justified (such as those involving the applicant's
eligibility or substantiation of fees and expenses). Any written
submissions shall be made, oral argument held, discovery conducted, and
evidentiary hearing held as promptly as possible so as not to delay a
decision on the application for fees. Whether or not the position of the
Secretary was substantially justified shall be determined on the basis
of the administrative record, as a whole, which is made in the adversary
adjudication for which fees and other expenses are sought.
(b) A request for further proceedings under this section shall
specifically identify the information sought or the disputed issues and
shall explain why the additional proceedings are necessary to resolve
the issues.
Sec. 2204.406 Decision.
The preparation and issuance of decision on the fee application
shall be in accordance with Sec. 2200.90 of this chapter.
(a) For an application involving a prevailing party. The decision
shall include written findings and conclusions on the applicant's
eligibility and status as a prevailing party and an explanation of the
reasons for any difference between the amount requested and the amount
awarded. The decision shall also include, if applicable, findings on
whether the Secretary's position was substantially justified, whether
the applicant unduly protracted the proceedings, or whether special
circumstances make an award unjust.
(b) For an application involving an allegedly excessive agency
demand. The decision shall include written findings and conclusions on
the applicant's eligibility and an explanation of the reasons why the
agency's demand was or was not determined to be substantially in excess
of the underlying decision in the matter and whether the Secretary's
demand was or was not unreasonable. That determination shall be based
upon all the facts and circumstances of the case.
(c) Awards. The judge presiding over an EAJA proceeding or the
Commission on review may reduce the amount to be awarded, or deny any
award, to the extent that the party during the course of the proceedings
engaged in conduct which unduly and unreasonably protracted the final
resolution of the matter in controversy.
(1) Awards shall be based on rates customarily charged by persons
engaged in the business of acting as attorneys, agents and expert
witnesses,
[[Page 65]]
even if the services were made available without charge or at a reduced
rate to the applicant.
(2) An award for the fee of an attorney or agent under this
paragraph (c) shall not exceed the hourly rate specified in 5 U.S.C.
504(b)(1)(A), except to account for inflation since the last update of
the statute's maximum award upon the request of the applicant as
documented in the application pursuant to Sec. 2204.303. An award to
compensate an expert witness shall not exceed the highest rate at which
the Secretary pays expert witnesses. However, an award may include the
reasonable expenses of the attorney, agent or witness as a separate
item, if the attorney, agent or witness ordinarily charges clients
separately for such expenses.
(3) In determining the reasonableness of the fee sought for an
attorney, agent, or expert witness, the following shall be considered:
(i) If the attorney, agent, or witness is in private practice, his
or her customary fee for similar services, or, if an employee of the
applicant, the fully allocated cost of the services;
(ii) The prevailing rate for similar services in the community in
which the attorney, agent, or witness ordinarily perform services;
(iii) The time actually spent in the representation of the
applicant;
(iv) The time reasonably spent in light of the difficulty or
complexity of the issues in the proceeding; and
(v) Such other factors as may bear on the value of the services
provided.
(4) The reasonable cost of any study, analysis, engineering report,
test, project, or similar matter prepared on behalf of the party may be
awarded, to the extent that the charge for the service does not exceed
the prevailing rate for similar services, and the study or other matter
was necessary for preparation of the applicant's case.
Sec. 2204.407 Commission review.
Either the applicant or the Secretary may seek review of the judge's
decision on the fee application, and the Commission may grant such a
petition for review or direct review of the decision on the Commission's
own initiative. Review by the Commission shall be in accordance with
Sec. Sec. 2200.91 and 2200.92 of this chapter.
Sec. 2204.408 Judicial review.
Judicial review of final decisions on awards may be sought as
provided in 5 U.S.C. 504(c)(2).
Sec. 2204.409 Stay of decision concerning award.
Any proceedings on an application for fees under this part shall be
automatically stayed until the adversary adjudication has become a final
disposition.
Sec. 2204.410 Waiver.
After reasonable notice to the parties, the judge or the Commission
may waive, for good cause shown, any provision contained in this part as
long as the waiver is consistent with the terms and purpose of the EAJA.
Sec. 2204.411 Payment of award.
An applicant seeking payment of an award shall submit to the officer
designated by the Secretary a copy of the Commission's final decision
granting the award, accompanied by a certification that the applicant
will not seek review of the decision in the United States courts.
PART 2205_ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF
DISABILITY IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE
OCCUPATIONAL SAFETY AND HEALTH REVIEW
COMMISSION AND IN ACCESSIBILITY OF COMMISSION ELECTRONIC AND
INFORMATION TECHNOLOGY--Table of Contents
Sec.
2205.101 Purpose.
2205.102 Application.
2205.103 Definitions.
2205.104-2205.10 [Reserved]
2205.111 Notice.
2205.112-2205.129 [Reserved]
2205.130 General prohibitions against discrimination.
2205.131-2205.134 [Reserved]
2205.135 Electronic and information technology requirements.
2205.136-2205.139 [Reserved]
2205.140 Employment.
[[Page 66]]
2205.141-2205.148 [Reserved]
2205.149 Program accessibility: Discrimination prohibited.
2205.150 Program accessibility: Existing facilities.
2205.151 Program accessibility: New construction and alterations.
2205.152-2205.159 [Reserved]
2205.160 Communications.
2205.161-2205.169 [Reserved]
2205.170 Compliance procedures.
2205.171-2205.999 [Reserved]
Authority: 29 U.S.C. 794; 29 U.S.C. 794d.
Source: 76 FR 39285, July 6, 2011, unless otherwise noted.
Sec. 2205.101 Purpose.
This part effectuates section 119 of the Rehabilitation,
Comprehensive Services, and Developmental Disabilities Amendments of
1978, which amended section 504 of the Rehabilitation Act of 1973 to
prohibit discrimination on the basis of disability in programs or
activities conducted by Executive agencies or the United States Postal
Service. This part also effectuates section 508 of the Rehabilitation
Act of 1973, as amended, with respect to the accessibility of electronic
and information technology developed, procured, maintained, or used by
the agency.
Sec. 2205.102 Application.
This part applies to all programs or activities conducted by the
agency and to its development, procurement, maintenance, and use of
electronic and information technology.
Sec. 2205.103 Definitions.
For purposes of this part, the term--
Assistant Attorney General means the Assistant Attorney General,
Civil Rights Division, United States Department of Justice.
Auxiliary aids means services or devices that enable persons with
impaired sensory, manual, or speaking skills to have an equal
opportunity to participate in, and enjoy the benefits of, programs or
activities conducted by the agency. For example, auxiliary aids useful
for persons with impaired vision include readers, brailled materials,
audio recordings, telecommunications devices and other similar services
and devices. Auxiliary aids useful for persons with impaired hearing
include telephone handset amplifiers, telephones compatible with hearing
aids, telecommunication devices for deaf persons (TDD's), interpreters,
notetakers, written materials, and other similar services and devices.
Complete complaint means a written statement that contains the
complainant's name and address and describes the agency's alleged
discriminatory action in sufficient detail to inform the agency of the
nature and date of the alleged violation of section 504 or section 508.
It shall be signed by the complainant or by someone authorized to do so
on his or her behalf. Complaints filed on behalf of classes or third
parties shall describe or identify (by name, if possible) the alleged
victims of discrimination.
Electronic and Information technology includes information
technology and any equipment or interconnected system or subsystem of
equipment that is used in the creation, conversion, or duplication of
data or information. The term electronic and information technology
includes, but is not limited to, telecommunications products (such as
telephones), information kiosks and transaction machines, World Wide Web
sites, multimedia, and office equipment such as copiers and fax
machines. The term does not include any equipment that contains embedded
information technology that is used as an integral part of the product,
but the principal function of which is not the acquisition, storage,
manipulation, management, movement, control, display, switching,
interchange, transmission, or reception of data or information. For
example, HVAC (heating, ventilation, and air conditioning) equipment
such as thermostats or temperature control devices, and medical
equipment where information technology is integral to its operation are
not information technology.
Facility means all or any portion of buildings, structures,
equipment, roads, walks, parking lots, rolling stock or other
conveyances, or other real or personal property.
Historic preservation programs means programs conducted by the
agency that have preservation of historic properties as a primary
purpose.
[[Page 67]]
Historic properties means those properties that are listed or
eligible for listing in the National Register of Historic Places or
properties designated as historic under a statute of the appropriate
State or local government body.
Individual with a disability means any person who has a physical or
mental impairment that substantially limits one or more major life
activities, has a record of such an impairment, or is regarded as having
such an impairment. As used in this definition, the phrase:
(1) Physical or mental impairment includes--
(i) Any physiological disorder or condition, cosmetic disfigurement,
or anatomical loss affecting one or more of the following body systems:
Neurological; musculoskeletal; special sense organs; respiratory,
including speech organs; cardiovascular; reproductive; digestive;
genitourinary; hemic and lymphatic; skin; and endocrine; or
(ii) Any mental or psychological disorder, such as mental
retardation, organic brain syndrome, emotional or mental illness, and
specific learning disabilities. The term physical or mental impairment
includes, but is not limited to, such diseases and conditions as
orthopedic, visual, speech, and hearing impairments, cerebral palsy,
epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease,
diabetes, mental retardation, emotional illness, and drug addiction and
alcoholism.
(2) Major life activities includes functions such as caring for
one's self, performing manual tasks, walking, seeing, hearing, speaking,
breathing, learning, and working.
(3) Has a record of such an impairment means has a history of, or
has been misclassified as having, a mental or physical impairment that
substantially limits one or more major life activities.
(4) Is regarded as having an impairment means--
(i) Has a physical or mental impairment that does not substantially
limit major life activities but is treated by the agency as constituting
such a limitation;
(ii) Has a physical or mental impairment that substantially limits
major life activities only as a result of the attitudes of others toward
such impairment; or
(iii) Has none of the impairments defined in subparagraph (1) of
this definition but is treated by the agency as having such an
impairment.
Information technology means any equipment or interconnected system
or subsystem of equipment that is used in the automatic acquisition,
storage, manipulation, management, movement, control, display,
switching, interchange, transmission, or reception of data or
information. The term information technology includes computers,
ancillary equipment, software, firmware and similar procedures, services
(including support services), and related resources.
Qualified individual with a disability means--
(1) With respect to any agency program or activity under which a
person is required to perform services or to achieve a level of
accomplishment, an individual with a disability who meets the essential
eligibility requirements and who can achieve the purpose of the program
or activity without modifications in the program or activity that the
agency can demonstrate would result in a fundamental alteration in its
nature;
(2) With respect to any other program or activity, an individual
with a disability who meets the essential eligibility requirements for
participation in, or receipt of benefits from, that program or activity;
and
(3) Qualified individual with a disability is defined for purposes
of employment in 29 CFR 1630.2(m), which is made applicable to this part
by Sec. 2205.140.
Section 504 means section 504 of the Rehabilitation Act of 1973
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617);
the Rehabilitation, Comprehensive Services, and Developmental
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955); and the
Rehabilitation Act Amendments of 1986 (Pub. L. 99-506, 100 Stat. 1810).
As used in this part, section 504 applies only to programs or activities
conducted by Executive agencies and not to federally assisted programs.
[[Page 68]]
Section 508 means section 508 of the Rehabilitation Act of 1973,
Pub. L. 93-112, Title V, section 508, as added by Pub. L. 99-506, Title
VI, section 603(a), Oct. 21, 1986, 100 Stat. 1830, and amended Pub. L.
100-630, Title II, section 206(f), Nov. 7, 1988, 102 Stat. 3312; Pub. L.
102-569, Title V, section 509(a), Oct. 29, 1992, 106 Stat. 4430; Pub. L.
105-220, Title IV, section 408(b), Aug. 7, 1998, 112 Stat. 1203.
Substantial impairment means a significant loss of the integrity of
finished materials, design quality, or special character resulting from
a permanent alteration.
Sec. Sec. 2205.104-2205.110 [Reserved]
Sec. 2205.111 Notice.
The agency shall make available to employees, applicants,
participants, beneficiaries, and other interested persons such
information regarding the provisions of this part and its applicability
to the programs or activities conducted by the agency, and make such
information available to them in such manner as the Chairman finds
necessary to apprise such persons of the protections against
discrimination assured them by section 504 or the access to technology
provided under section 508 and this regulation.
Sec. Sec. 2205.112-2205.129 [Reserved]
Sec. 2205.130 General prohibitions against discrimination.
(a) No qualified individual with a disability shall, on the basis of
disability, be excluded from participation in, be denied the benefits
of, or otherwise be subjected to discrimination under any program or
activity conducted by the agency.
(b)(1) The agency, in providing any aid, benefit, or service, may
not, directly or through contractual, licensing, or other arrangements,
on the basis of disability--
(i) Deny a qualified individual with a disability the opportunity to
participate in or benefit from the aid, benefit, or service;
(ii) Afford a qualified individual with a disability an opportunity
to participate in or benefit from the aid, benefit, or service that is
not equal to that afforded others;
(iii) Provide a qualified individual with a disability with an aid,
benefit, or service that is not as effective in affording equal
opportunity to obtain the same result, to gain the same benefit, or to
reach the same level of achievement as that provided to others;
(iv) Provide different or separate aid, benefits, or services to
individuals with disabilities or to any class of individuals with
disabilities than is provided to others unless such action is necessary
to provide qualified individuals with disabilities with aid, benefits,
or services that are as effective as those provided to others;
(v) Deny a qualified individual with a disability the opportunity to
participate as a member of planning or advisory boards; or
(vi) Otherwise limit a qualified individual with a disability in the
enjoyment of any right, privilege, advantage, or opportunity enjoyed by
others receiving the aid, benefit, or service.
(2) The agency may not deny a qualified individual with a disability
the opportunity to participate in programs or activities that are not
separate or different, despite the existence of permissibly separate or
different programs or activities.
(3) The agency may not, directly or through contractual or other
arrangements, utilize criteria or methods of administration the purpose
or effect of which would--
(i) Subject qualified individuals with disabilities to
discrimination on the basis of disability; or
(ii) Defeat or substantially impair accomplishment of the objectives
of a program or activity with respect to individuals with disabilities.
(4) The agency may not, in determining the site or location of a
facility, make selections the purpose or effect of which would--
(i) Exclude individuals with disabilities from, deny them the
benefits of, or otherwise subject them to discrimination under any
program or activity conducted by the agency; or
(ii) Defeat or substantially impair the accomplishment of the
objectives of a program or activity with respect to individuals with
disabilities.
(5) The agency, in the selection of procurement contractors, may not
use
[[Page 69]]
criteria that subject qualified individuals with disabilities to
discrimination on the basis of disability.
(6) The agency may not administer a licensing or certification
program in a manner that subjects qualified individuals with
disabilities to discrimination on the basis of disability, nor may the
agency establish requirements for the programs or activities of
licensees or certified entities that subject qualified individuals with
disabilities to discrimination on the basis of disability. However, the
programs or activities of entities that are licensed or certified by the
agency are not, themselves, covered by this part.
(c) The exclusion of individuals without disabilities from the
benefits of a program limited by Federal statute or Executive order to
individuals with disabilities or the exclusion of a specific class of
individuals with disabilities from a program limited by Federal statute
or Executive order to a different class of individuals with disabilities
is not prohibited by this part.
(d) The agency shall administer programs and activities in the most
integrated setting appropriate to the needs of qualified individuals
with disabilities.
Sec. Sec. 2205.131-2205.134 [Reserved]
Sec. 2205.135 Electronic and information technology requirements.
(a) In accordance with section 508 and the standards published by
the Architectural and Transportation Barriers Compliance Board at 36 CFR
part 1194, the agency shall ensure, absent an undue burden, that the
electronic and information technology developed, procured, maintained,
or used by the agency allows:
(1) Individuals with disabilities who are agency employees or
applicants to have access to and use of information and data that is
comparable to the access to and use of information and data by agency
employees who are individuals without disabilities; and
(2) Individuals with disabilities who are members of the public
seeking information or services from the agency to have access to and
use of information and data that is comparable to the access to and use
of information and data by such members of the public who are not
individuals with disabilities.
(b) When development, procurement, maintenance, or use of electronic
and information technology that meets the standards at 36 CFR part 1194
would impose an undue burden, the agency shall provide individuals with
disabilities covered by this section with the information and data
involved by an alternative means of access that allows the individuals
to use the information and data.
Sec. Sec. 2205.136-2205.139 [Reserved]
Sec. 2205.140 Employment.
No qualified individual with a disability shall, on the basis of
disability, be subjected to discrimination in employment under any
program or activity conducted by the agency. The definitions,
requirements, and procedures of section 501 of the Rehabilitation Act of
1973 (29 U.S.C. 791), as established by the Equal Employment Opportunity
Commission in 29 CFR part 1614, shall apply to employment in federally
conducted programs or activities.
Sec. Sec. 2205.141-2205.148 [Reserved]
Sec. 2205.149 Program accessibility: discrimination prohibited.
Except as otherwise provided in Sec. 2205.150, no qualified
individual with a disability shall, because the agency's facilities are
inaccessible to or unusable by individuals with disabilities, be denied
the benefits of, be excluded from participation in, or otherwise be
subjected to discrimination under any program or activity conducted by
the agency.
Sec. 2205.150 Program accessibility: existing facilities.
(a) General. The agency shall operate each program or activity so
that the program or activity, when viewed in its entirety, is readily
accessible to and usable by individuals with disabilities. This
paragraph (a) does not--
(1) Necessarily require the agency to make each of its existing
facilities accessible to and usable by individuals with disabilities;
(2) In the case of historic preservation programs, require the
agency to
[[Page 70]]
take any action that would result in a substantial impairment of
significant historic features of an historic property; or
(3) Require the agency to take any action that it can demonstrate
would result in a fundamental alteration in the nature of a program or
activity or in undue financial and administrative burdens. In those
circumstances where agency personnel believe that the proposed action
would fundamentally alter the program or activity or would result in
undue financial and administrative burdens, the agency has the burden of
proving that compliance with this paragraph (a) would result in such
alteration or burdens. The decision that compliance would result in such
alteration or burdens must be made by the Chairman or his or her
designee after considering all agency resources available for use in the
funding and operation of the conducted program or activity, and must be
accompanied by a written statement of the reasons for reaching that
conclusion. If an action would result in such an alteration or such
burdens, the agency shall take any other action that would not result in
such an alteration or such burdens but would nevertheless ensure that
individuals with disabilities receive the benefits and services of the
program or activity.
(b) Methods--(1) General. The agency may comply with the
requirements of this section through such means as redesign of
equipment, reassignment of services to accessible buildings, assignment
of aides to beneficiaries, home visits, delivery of services at
alternate accessible sites, alteration of existing facilities and
construction of new facilities, use of accessible rolling stock, or any
other methods that result in making its programs or activities readily
accessible to and usable by individuals with disabilities. The agency is
not required to make structural changes in existing facilities where
other methods are effective in achieving compliance with this section.
The agency, in making alterations to existing buildings, shall meet
accessibility requirements to the extent compelled by the Architectural
Barriers Act of 1968, as amended (42 U.S.C. 4151-4157), and any
regulations implementing it. In choosing among available methods for
meeting the requirements of this section, the agency shall give priority
to those methods that offer programs and activities to qualified
individuals with disabilities in the most integrated setting
appropriate.
(2) Historic preservation programs. In meeting the requirements of
paragraph (a) of this section in historic preservation programs, the
agency shall give priority to methods that provide physical access to
individuals with disabilities. In cases where a physical alteration to
an historic property is not required because of paragraph (a)(2) or (3)
of this section, alternative methods of achieving program accessibility
include--
(i) Using audio-visual materials and devices to depict those
portions of an historic property that cannot otherwise be made
accessible;
(ii) Assigning persons to guide individuals with disabilities into
or through portions of historic properties that cannot otherwise be made
accessible; or
(iii) Adopting other innovative methods.
Sec. 2205.151 Program accessibility: new construction and alterations.
Each building or part of a building that is constructed or altered
by, on behalf of, or for the use of the agency shall be designed,
constructed, or altered so as to be readily accessible to and usable by
individuals with disabilities. The definitions, requirements, and
standards of the Architectural Barriers Act (42 U.S.C. 4151-4157), as
established in 41 CFR 102-76.60 to 102-76.95, apply to buildings covered
by this section.
Sec. Sec. 2205.152-2205.159 [Reserved]
Sec. 2205.160 Communications.
(a) The agency shall take appropriate steps to ensure effective
communication with applicants, participants, personnel of other Federal
entities, and members of the public.
(1) The agency shall furnish appropriate auxiliary aids where
necessary to afford an individual with a disability an equal opportunity
to participate in,
[[Page 71]]
and enjoy the benefits of, a program or activity conducted by the
agency.
(i) In determining what type of auxiliary aid is necessary, the
agency shall give primary consideration to the requests of the
individual with a disability.
(ii) The agency need not provide individually prescribed devices,
readers for personal use or study, or other devices of a personal
nature.
(2) Where the agency communicates with applicants and beneficiaries
by telephone, TDD's or equally effective telecommunication systems shall
be used.
(b) The agency shall ensure that interested persons, including
persons with impaired vision or hearing, can obtain information as to
the existence and location of accessible services, activities, and
facilities.
(c) The agency shall provide signage at a primary entrance to each
of its inaccessible facilities, directing users to a location at which
they can obtain information about accessible facilities. The
international symbol for accessibility shall be used at each primary
entrance of an accessible facility.
(d) This section does not require the agency to take any action that
it can demonstrate would result in a fundamental alteration in the
nature of a program or activity or in undue financial and administrative
burdens. In those circumstances where agency personnel believe that the
proposed action would fundamentally alter the program or activity or
would result in undue financial and administrative burdens, the agency
has the burden of proving that compliance with this section would result
in such alteration or burdens. The decision that compliance would result
in such alteration or burdens must be made by the Chairman or his or her
designee after considering all agency resources available for use in the
funding and operation of the conducted program or activity, and must be
accompanied by a written statement of the reasons for reaching that
conclusion. If an action required to comply with this section would
result in such an alteration or such burdens, the agency shall take any
other action that would not result in such an alteration or such burdens
but would nevertheless ensure that, to the maximum extent possible,
individuals with disabilities receive the benefits and services of the
program or activity.
Sec. Sec. 2205.161-2205.169 [Reserved]
Sec. 2205.170 Compliance procedures.
(a) Except as provided in paragraph (b) of this section, this
section applies to all allegations of discrimination on the basis of
disability in programs or activities conducted by the agency in
violation of section 504. Paragraphs (c) through (j) of this section
also apply to all complaints alleging a violation of the agency's
responsibility to procure electronic and information technology under
section 508, whether filed by members of the public or agency employees
or applicants.
(b) The agency shall process complaints alleging violations of
section 504 with respect to employment according to the procedures
established by the Equal Employment Opportunity Commission in 29 CFR
part 1614 pursuant to section 501 of the Rehabilitation Act of 1973 (29
U.S.C. 791).
(c)(1) Any person who believes that he or she has been subjected to
discrimination prohibited by this part or that the agency's procurement
of electronic and information technology has violated section 508, or an
authorized representative of such person, may file a complaint with the
Executive Director.
(2) The Executive Director shall be responsible for coordinating
implementation of this section. Complaints shall be sent to Executive
Director, Occupational Safety and Health Review Commission, One
Lafayette Centre, 1120-20th Street NW., 9th Floor, Washington, DC 20036-
3457. Complaints shall be filed with the Executive Director within 180
days of the alleged act of discrimination. A complaint shall be deemed
filed on the date it is postmarked, or, in the absence of a postmark, on
the date it is received by the agency. The agency may extend this time
period for good cause.
(d)(1) The agency shall accept a complete complaint that is filed in
accordance with paragraph (c) of this section and over which it has
jurisdiction. The Executive Director shall notify the
[[Page 72]]
complainant and the respondent of receipt and acceptance of the
complaint.
(2) If the agency receives a complaint that is not complete, the
Executive Director shall notify the complainant, within 30 days of
receipt of the incomplete complaint, that additional information is
needed. If the complainant fails to complete the complaint within 30
days of receipt of this notice, the Executive Director shall dismiss the
complaint without prejudice and shall so inform the complainant.
(3) If the agency receives a complaint over which it does not have
jurisdiction, it shall promptly notify the complainant and shall make
reasonable efforts to refer the complaint to the appropriate government
entity.
(e) The agency shall notify the Architectural and Transportation
Barriers Compliance Board upon receipt of any complaint alleging that a
building or facility that is subject to the Architectural Barriers Act
of 1968, as amended (42 U.S.C. 4151-4157), or section 502 of the
Rehabilitation Act of 1973, as amended (29 U.S.C. 792), is not readily
accessible to and usable by individuals with disabilities.
(f) Within 180 days of the receipt of a complete complaint for which
it has jurisdiction, the agency shall notify the complainant of the
results of the investigation in a letter containing--
(1) Findings of fact and conclusions of law;
(2) A description of a remedy for each violation found; and
(3) A notice of the right to appeal.
(g) Appeals of the findings of fact and conclusions of law or
remedies must be filed with the Chairman by the complainant within 90
days of receipt from the agency of the letter required by paragraph (f)
of this section. The agency may extend this time for good cause. Appeals
shall be sent to the Chairman, Occupational Safety and Health Review
Commission, One Lafayette Centre, 1120-20th Street, NW., 9th Floor,
Washington, DC 20036-3457. An appeal shall be deemed filed on the date
it is postmarked, or, in the absence of a postmark, on the date it is
received by the agency. It should be clearly marked ``Appeal of Section
504 decision'' or ``Appeal of Section 508 decision'' and should contain
specific objections explaining why the complainant believes the initial
decision was factually or legally wrong. Attached to the appeal letter
should be a copy of the initial decision being appealed.
(h) Timely appeals shall be accepted and decided by the Chairman.
The Chairman shall notify the complainant of the results of the appeal
within 60 days of the receipt of the request. If the Chairman determines
that additional information is needed from the complainant, he or she
shall have 60 days from the date of receipt of the additional
information to make his or her determination on the appeal.
(i) The time limits cited in paragraphs (f) and (h) of this section
may be extended with the permission of the Assistant Attorney General.
(j) The agency may delegate its authority for conducting complaint
investigations to other Federal agencies or may contract with non-
Federal entities to conduct such investigations, except that the
authority for making the final determination may not be delegated.
Sec. Sec. 2205.171-2205.999 [Reserved]
PART 2400_REGULATIONS IMPLEMENTING THE PRIVACY
ACT--Table of Contents
Sec.
2400.1 Purpose and scope.
2400.2 Description of agency.
2400.3 Delegation of authority.
2400.4 Procedures for requesting notification of and access to personal
records.
2400.5 Special procedures for requesting medical records.
2400.6 Procedures for amending personal records.
2400.7 Procedures for appealing.
2400.8 Procedures for statements of disagreement and notification of
amendment.
2400.9 Schedule of fees.
Authority: 5 U.S.C. 552a(f); 5 U.S.C. 553.
Source: 85 FR 65222, Oct. 15, 2020, unless otherwise noted.
Sec. 2400.1 Purpose and scope.
This part provides procedures to implement the Privacy Act of 1974,
5 U.S.C. 552a. It is applicable only to records that are maintained by
the Occupational Safety and Health Review
[[Page 73]]
Commission (OSHRC or the Commission), which includes all systems of
records operated by an entity on behalf of OSHRC, pursuant to a
contract, to accomplish an agency function. For purposes of this part,
such contractors do not include any consumer reporting agency to which a
record is disclosed under 31 U.S.C. 3711(e). This part does not affect
discovery in adversary proceedings before the Commission. Discovery is
governed by the Commission's Rules of Procedures in 29 CFR part 2200,
subpart D.
Sec. 2400.2 Description of agency.
OSHRC adjudicates contested enforcement actions under the
Occupational Safety and Health Act of 1970, 29 U.S.C. 651-678. The
Commission decides cases after the parties are given an opportunity for
a hearing. All hearings are open to the public and are conducted at a
place convenient to the parties by an Administrative Law Judge. Any
Commissioner may direct that a decision of a Judge be reviewed by the
full Commission. The President designates one of the Commissioners as
Chairman, who is responsible on behalf of the Commission for the
administrative operations of the Commission.
Sec. 2400.3 Delegation of authority.
The Chairman shall designate an OSHRC employee as the Privacy
Officer and shall delegate to the Privacy Officer the authority to
ensure agency-wide compliance with this part. As necessary, the Privacy
Officer shall coordinate this delegated responsibility with the Senior
Agency Official for Privacy.
Sec. 2400.4 Procedures for requesting notification of and access to personal records.
The purpose of this section is to provide procedures by which an
individual may request notification about whether a system of records
contains a record about that individual (``a personal record''), or may
gain access to such a record included in a system of records.
(a) Submission of requests--(1) Manner. An individual seeking
information regarding the content of a system of records or access to a
personal record in a system of records should submit a written request
either in person or by mail to the Privacy Officer, OSHRC, One Lafayette
Centre, 1120 20th Street NW, Ninth Floor, Washington, DC 20036-3457. A
request may also be submitted to the FOIA Disclosure Officer in
accordance with the procedures set forth at 29 CFR 2201.5(a). Such a
request, however, must be identified as a ``Privacy Act Request.'' The
FOIA Disclosure Officer will forward any request identified in this
manner to the Privacy Officer for processing.
(2) Notification requests. A request for notification about whether
a system of records contains a personal record must specify which system
of records, as described in the agency's system-of-records notices
published in Federal Register, is the subject of the request.
(3) Access requests. A request for access to a personal record shall
describe the nature of the record sought, the approximate dates covered
by the record, and the system of records in which the record is thought
to be included as described in the agency's system-of-records notices
published in the Federal Register. The request should also indicate
whether the requester wishes to review the record in person or obtain a
copy by mail. If the information supplied is insufficient to locate or
identify the record, the requester shall be notified promptly and, if
necessary, informed of the additional information required.
(b) Period for response. After receiving a request, the Privacy
Officer shall respond to it no later than 10 working days from the
request's receipt.
(c) Verification of identity. The following standards for verifying
an individual's identity are applicable to any individual who requests a
personal record under this part:
(1) An individual seeking access to a record in person shall, if
possible, present a government-issued identification that includes a
photo, such as a passport or a driver's license.
(2) An individual seeking access to a record by mail shall, if
possible, provide a signature, address, date of birth, place of birth,
and a photocopy of a government-issued identification that includes a
photo, such as a passport or a driver's license.
[[Page 74]]
(3) An individual seeking access to a record either by mail or in
person who cannot provide the necessary documentation of identification
specified in paragraphs (c)(1) and (2) of this section may provide a
declaration in accordance with 28 U.S.C. 1746, swearing or affirming to
his or her identity and to the fact that he or she understands the
penalties for false statements pursuant to 18 U.S.C. 1001.
(d) Verification of guardianship. The parent or guardian of a minor
or an individual judicially determined to be incompetent and seeking to
act on behalf of such minor or incompetent shall, in addition to
establishing his or her own identity, establish the identity of the
minor or other individual he or she represents as required in paragraph
(c) of this section and establish his or her own parentage or
guardianship of the subject of the record by furnishing either a copy of
a birth certificate showing parentage or a court order establishing the
guardianship.
(e) Accompanying persons. An individual seeking to review a personal
record in person may be accompanied by another individual of his or her
own choosing. Both the individual seeking access and the accompanying
individual shall be required to sign a form provided by OSHRC indicating
that OSHRC is authorized to discuss the contents of the subject record
in the presence of both individuals.
(f) When compliance is possible. (1) The Privacy Officer shall
inform the requester of the determination to grant the request and shall
make the personal record available to the individual in the manner
requested, that is, either by forwarding a copy of the information to
the requester or by making it available for review, unless:
(i) It is impracticable to provide the requester with a copy, in
which case the requester shall be notified of this and informed of the
procedures set forth in paragraph (c) of this section, or
(ii) The Privacy Officer has reason to believe that the cost of a
copy is considerably more expensive than anticipated by the requester,
in which case the Privacy Officer shall notify the requester of the
estimated cost, and ascertain whether the requester still wishes to be
provided with a copy of the information.
(2) Where a personal record is to be reviewed by the requester in
person, the Privacy Officer shall inform the requester in writing of:
(i) The date on which the record shall become available for review,
the location at which it may be reviewed, and the hours for inspection;
(ii) The requirements for verifying identity as set forth in
paragraphs (c) and (d);
(iii) The requester's right to be accompanied by another individual
to review the record as set forth in paragraph (e) of this section; and
(iv) The requester's right to have another individual review the
record.
(3) If the requester seeks to inspect the personal record without
receiving a copy, the requester shall not leave OSHRC premises with the
record and shall sign a statement identifying the specific record or
category of records that has been reviewed.
(g) When compliance is not possible. The denial of a written request
to review a personal record shall be sent to the requester in writing
and signed by the Privacy Officer. This response shall be provided when
the requested record does not exist, does not contain personal
information relating to the requester, or is exempt. The response shall
include a statement regarding the determining factors of denial, and the
requester's rights to administrative appeal and, thereafter, judicial
review in a district court of the United States.
Sec. 2400.5 Special procedures for requesting medical records.
(a) Upon an individual's request for access to any medical record
about the requester, including any psychological record, the Privacy
Officer shall make a preliminary determination on whether access to such
record(s) could have an adverse effect upon the requester. If the
Privacy Officer determines that access could have an adverse effect on
the requester, OSHRC shall notify the requester in writing and advise
that the record(s) at issue can be made available only to a physician of
the requester's designation.
(b) OSHRC shall forward such record(s) to the physician designated
[[Page 75]]
by the requester once the following requirements are met:
(1) The requester has informed OSHRC of the designated physician's
identity;
(2) OSHRC has verified the identity of the physician; and
(3) The physician has agreed to review the record(s) with the
requester to both explain the meaning of the record(s) and offer
counseling designed to temper any adverse reaction.
(c) If, within 60 calendar days of OSHRC's written request for a
designation, the requester has failed to respond or designate a
physician, or the physician fails to agree to the release conditions,
then OSHRC shall hold the records(s) in abeyance and advise the
requester that this action may be construed as a technical denial. OSHRC
shall also advise the requester of his or her rights to administrative
appeal and, thereafter, judicial review in a district court of the
United States.
Sec. 2400.6 Procedures for amending personal records.
(a) Submission of requests for amendment. Upon review of an
individual's personal record, that individual may submit a request to
amend such record. This request shall be submitted in writing to the
Privacy Officer, in accordance with Sec. 2400.4(a)(1)'s procedures, and
shall include a statement of the amendment requested and the reasons for
such amendment, e.g., relevance, accuracy, timeliness or completeness of
the record.
(b) Action to be taken by the Privacy Officer. Upon receiving an
amendment request, the Privacy Officer shall promptly:
(1) Acknowledge in writing within 10 working days the receipt of the
request;
(2) Make such inquiry as is necessary to determine whether the
amendment is appropriate; and
(3) Resolve the request by either:
(i) Correcting or eliminating any information that is found to be
incomplete, inaccurate, irrelevant to a statutory purpose of OSHRC, or
untimely and notifying the requester in writing when this action is
complete; or
(ii) Notifying the requester in writing of a determination not to
amend the personal record, including the reasons for the denial, and
advising the requester of his or her right to appeal in accordance with
Sec. 2400.7.
Sec. 2400.7 Procedures for appealing.
(a) Submission of appeal. (1) If a request to provide notification
of a personal record, or to access or amend a personal record, is denied
either in whole or in part, or if no determination is made within the
period prescribed by this part, then the requester may appeal in writing
to the Chairman by mailing an appeal letter to the following address:
Privacy Appeal, OSHRC, One Lafayette Centre, 1120 20th Street NW, Ninth
Floor, Washington, DC 20036-3457.
(2) To be considered timely, the requester must submit the appeal
letter within 30 calendar days of the date of denial, or within 90
calendar days of his or her request if the appeal is from a failure of
the Privacy Officer to make a determination. The appeal letter should
include, as applicable:
(i) Reasonable identification of the system to which notification
was sought, the personal record to which access was sought, or the
amendment that was requested.
(ii) A statement of the OSHRC action or failure to act being
appealed and the relief sought.
(iii) A copy of the request, the notification of denial, and any
other related correspondence.
(b) Final decisions. The Chairman must make a final decision no
later than 30 working days from the date of the request, but the
Chairman may extend this time period for good cause. The requester,
however, must be notified of the extension within the initial 30
working-day period, and the extension may not exceed 90 calendar days
from the date of the request. Any personal record found on appeal to be
incomplete, inaccurate, irrelevant, or untimely, shall within 30 working
days of the date of such findings be appropriately amended.
(c) Decision requirements. The decision of the Chairman constitutes
the final decision of OSHRC on the right of the requester to be notified
of, or to access or amend, a personal record. The decision on the appeal
shall be in writing
[[Page 76]]
and, in the event of a denial, shall set forth the reasons for such
denial and state the individual's right to obtain judicial review in a
district court of the United States. An indexed file of the agency's
decisions on appeal shall be maintained by the Privacy Officer.
Sec. 2400.8 Procedures for statements of disagreement and
notification of amendment.
(a) Submission of statement of disagreement. If a final decision
concerning an amendment request does not satisfy the requester, then the
requester may provide a statement of disagreement that is of reasonable
length and sets forth a position regarding the disputed information.
This statement of disagreement shall be accepted by OSHRC and included
in the relevant personal record. If deemed appropriate, OSHRC may also
include a concise statement in the record of its reasons for not making
a requested amendment.
(b) Notification of amendment and statement of disagreement. (1)
OSHRC shall inform any person or other agency about an amendment to a
personal record, or notation made to the record under paragraph (a) of
this section, if that record has been disclosed to the person or agency,
the amendment or notation was made pursuant to this part, and an
accounting of the disclosure was made pursuant to 5 U.S.C. 552a(c).
(2) When a personal record is disclosed to a person or other agency
after a notation under paragraph (a) of this section is made to the
record, OSHRC shall clearly note any portion of the record that is
disputed and provide a copy of any notation included in the record.
Sec. 2400.9 Schedule of fees.
(a) Policy. The purpose of this section is to establish fair and
equitable fees to permit reproduction of personal records for concerned
individuals.
(b) Reproduction. (1) For the fees associated with reproduction of
personal records, refer to appendix A to part 2201, Schedule of Fees.
(2) OSHRC shall not normally furnish more than one copy of any
record.
(c) Limitations. No fee shall be charged to any individual for the
process of retrieving, reviewing, or amending personal records.
PARTS 2401 2499 [RESERVED]
[[Page 77]]
CHAPTER XXV--EMPLOYEE BENEFITS SECURITY ADMINISTRATION, DEPARTMENT OF
LABOR
--------------------------------------------------------------------
Editorial Note: Nomenclature changes to chapter XXV appear at 68 FR
16400, Apr. 3, 2003.
SUBCHAPTER A--GENERAL
Part Page
2500-2508
[Reserved]
2509 Interpretive bulletins relating to the
Employee Retirement Income Security Act
of 1974................................. 79
SUBCHAPTER B--DEFINITIONS AND COVERAGE UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
2510 Definition of terms used in subchapters C,
D, E, F, G, and L of this chapter....... 110
SUBCHAPTER C--REPORTING AND DISCLOSURE UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
2520 Rules and regulations for reporting and
disclosure.............................. 151
SUBCHAPTER D--MINIMUM STANDARDS FOR EMPLOYEE PENSION BENEFIT PLANS UNDER
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
2530 Rules and regulations for minimum standards
for employee pension benefit plans...... 255
SUBCHAPTER E [RESERVED]
SUBCHAPTER F--FIDUCIARY RESPONSIBILITY UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
2550 Rules and regulations for fiduciary
responsibility.......................... 298
SUBCHAPTER G--ADMINISTRATION AND ENFORCEMENT UNDER THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974
2560 Rules and regulations for administration and
enforcement............................. 379
2570 Procedural regulations under the Employee
Retirement Income Security Act.......... 410
[[Page 78]]
2571 Procedural regulations for administration
and enforcement under the Employee
Retirement Income Security Act.......... 465
2575 Adjustment of civil penalties under ERISA
Title I................................. 470
2578 Rules and regulations for abandoned plans... 473
SUBCHAPTER H [RESERVED]
SUBCHAPTER I--TEMPORARY BONDING RULES UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
2580 Temporary bonding rules..................... 488
SUBCHAPTER J--FIDUCIARY RESPONSIBILITY UNDER THE FEDERAL EMPLOYEES'
RETIREMENT SYSTEM ACT OF 1986
2582 Rules and regulations for fiduciary
responsibility.......................... 505
2584 Rules and regulations for the allocation of
fiduciary responsibility................ 506
SUBCHAPTER K--ADMINISTRATION AND ENFORCEMENT UNDER THE FEDERAL
EMPLOYEES' RETIREMENT SYSTEM ACT OF 1986
2589 Rules and regulations for administration and
enforcement............................. 510
SUBCHAPTER L--GROUP HEALTH PLANS
2590 Rules and regulations for group health plans 511
2591-2599
[Reserved]
[[Page 79]]
SUBCHAPTER A_GENERAL
PARTS 2500 2508 [RESERVED]
PART 2509_INTERPRETIVE BULLETINS RELATING TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974--Table of Contents
Sec.
2509.75-2 Interpretive bulletin relating to prohibited transactions.
2509.75-3 Interpretive bulletin relating to investments by employee
benefit plans in securities of registered investment
companies.
2509.75-4 Interpretive bulletin relating to indemnification of
fiduciaries.
2509.75-5 Questions and answers relating to fiduciary responsibility.
2509.75-6 Interpretive bulletin relating to section 408(c)(2) of the
Employee Retirement Income Security Act of 1974.
2509.75-8 Questions and answers relating to fiduciary responsibility
under the Employee Retirement Income Security Act of 1974.
2509.75-10 Interpretive bulletin relating to the ERISA Guidelines and
the Special Reliance Procedure.
2509.78-1 Interpretive bulletin relating to payments by certain employee
welfare benefit plans.
2509.94-3 Interpretive bulletin relating to in-kind contributions to
employee benefit plans.
2509.95-1 Interpretive bulletin relating to the fiduciary standards
under ERISA when selecting an annuity provider for a defined
benefit pension plan.
2509.96-1 Interpretive bulletin relating to participant investment
education.
2509.99-1 Interpretive bulletin relating to payroll deduction IRAs.
2509.2015-2 Interpretive bulletin relating to state savings programs
that sponsor or facilitate plans covered by the Employee
Retirement Income Security Act of 1974.
2509.2022-1 Interpretive bulletin relating to guidance on independence
of accountant retained by employee benefit plan.
Authority: 29 U.S.C. 1135. Secretary of Labor's Order 1-2003, 68 FR
5374 (Feb. 3, 2003). Sections 2509.75-10 and 2509.75-2 issued under 29
U.S.C. 1052, 1053, 1054. Sec. 2509.75-5 also issued under 29 U.S.C.
1002. Sec. 2509.95-1 also issued under sec. 625, Pub. L. 109-280, 120
Stat. 780.
Sec. 2509.75-2 Interpretive bulletin relating to prohibited transactions.
On February 6, 1975, the Department of Labor issued an interpretive
bulletin, ERISA IB 75-2, with respect to whether a party in interest has
engaged in a prohibited transaction with an employee benefit plan where
the party in interest has engaged in a transaction with a corporation or
partnership (within the meaning of section 7701 of the Internal Revenue
Code of 1954) in which the plan has invested.
On November 13, 1986 the Department published a final regulation
dealing with the definition of ``plan assets''. See Sec. 2510.3-101 of
this title. Under that regulation, the assets of certain entities in
which plans invest would include ``plan assets'' for purposes of the
fiduciary responsibility provisions of the Act. Section 2510.3-101
applies only for purposes of identifying plan assets on or after the
effective date of that section, however, and Sec. 2510.3-101 does not
apply to plan investments in certain entities that qualify for the
transitional relief provided for in paragraph (k) of that section. The
principles discussed in paragraph (a) of this Interpretive Bulletin
continue to be applicable for purposes of identifying assets of a plan
for periods prior to the effective date of Sec. 2510.3-101 and for
investments that are subject to the transitional rule in Sec. 2510.3-
101(k). Paragraphs (b) and (c) of this Interpretive Bulletin, however,
relate to matters outside the scope of Sec. 2510.3-101, and nothing in
that section affects the continuing application of the principles
discussed in those parts.
(a) Principles applicable to plan investments to which Sec. 2510.3-
101 does not apply. Generally, investment by a plan in securities
(within the meaning of section 3(20) of the Employee Retirement Income
Security Act of 1974) of a corporation or partnership will not, solely
by reason of such investment, be considered to be an investment in the
underlying assets of such corporation or partnership so as to make such
assets of the entity ``plan assets'' and thereby make a subsequent
transaction between the party in interest and the corporation or
partnership a prohibited transaction under section 406 of the Act.
For example, where a plan acquires a security of a corporation or a
limited partnership interest in a partnership, a subsequent lease or
sale of property between such corporation or partnership and a party in
interest will not be a prohibited transaction solely by reason of the
plan's investment in the corporation or partnership.
This general proposition, as applied to corporations and
partnerships, is consistent with section 401(b)(1) of the Act, relating
to
[[Page 80]]
plan investments in investment companies registered under the Investment
Company Act of 1940. Under section 401(b)(1), an investment by a plan in
securities of such an investment company may be made without causing,
solely by reason of such investment, any of the assets of the investment
company to be considered to be assets of the plan.
(b) [Reserved]
(c) Applications of the fiduciary responsibility rules. The
preceding paragraphs do not mean that an investment of plan assets in a
security of a corporation or partnership may not be a prohibited
transaction. For example, section 406(a)(1)(D) prohibits the direct or
indirect transfer to, or use by or for the benefit of, a party in
interest of any assets of the plan and section 406(b)(1) prohibits a
fiduciary from dealing with the assets of the plan in his own interest
or for his own account.
Thus, for example, if there is an arrangement under which a plan
invests in, or retains its investment in, an investment company and as
part of the arrangement it is expected that the investment company will
purchase securities from a party in interest, such arrangement is a
prohibited transaction.
Similarly, the purchase by a plan of an insurance policy pursuant to
an arrangement under which it is expected that the insurance company
will make a loan to a party in interest is a prohibited transaction.
Moreover, notwithstanding the foregoing, if a transaction between a
party in interest and a plan would be a prohibited transaction, then
such a transaction between a party in interest and such corporation or
partnership will ordinarily be a prohibited transaction if the plan may,
by itself, require the corporation or partnership to engage in such
transaction.
Similarly, if a transaction between a party in interest and a plan
would be a prohibited transaction, then such a transaction between a
party in interest and such corporation or partnership will ordinarily be
a prohibited transaction if such party in interest, together with one or
more persons who are parties in interest by reason of such persons'
relationship (within the meaning of section 3(14)(E) through (I)) to
such party in interest may, with the aid of the plan but without the aid
of any other persons, require the corporation or partnership to engage
in such a transaction. However, the preceding sentence does not apply if
the parties in interest engaging in the transaction, together with one
or more persons who are parties in interest by reason of such persons'
relationship (within the meaning of section 3(14)(E) through (I)) to
such party in interest, may, by themselves, require the corporation or
partnership to engage in the transaction.
Further, the Department of Labor emphasizes that it would consider a
fiduciary who makes or retains an investment in a corporation or
partnership for the purpose of avoiding the application of the fiduciary
responsibility provisions of the Act to be in contravention of the
provisions of section 404(a) of the Act.
[51 FR 41280, Nov. 13, 1986, as amended at 61 FR 33849, July 1, 1996]
Sec. 2509.75-3 Interpretive bulletin relating to investments by employee
benefit plans in securities of registered investment companies.
On March 12, 1975, the Department of Labor issued an interpretive
bulletin, ERISA IB 75-3, with regard to its interpretation of section
3(21)(B) of the Employee Retirement Income Security Act of 1974. That
section provides that an investment by an employee benefit plan in
securities issued by an investment company registered under the
Investment Company Act of 1940 shall not by itself cause the investment
company, its investment adviser or principal underwriter to be deemed to
be a fiduciary or party in interest ``except insofar as such investment
company or its investment adviser or principal underwriter acts in
connection with an employee benefit plan covering employees of the
investment company, the investment adviser, or its principal
underwriter.''
The Department of Labor interprets this section as an elaboration of
the principle set forth in section 401(b)(1) of the Act and ERISA IB 75-
2 (issued February 6, 1975) that the assets of an investment company
shall not be deemed to be assets of a plan solely by reason of an
investment by such plan in the shares of such investment company.
Consistent with this principle, the Department of Labor interprets this
section to mean that a person who is connected with an investment
company, such as the investment company itself, its investment adviser
or its principal underwriter, is not to be deemed to be a fiduciary of
or party in interest with respect to a plan solely because the plan has
invested in the investment company's shares.
This principle applies, for example, to a plan covering employees of
an investment adviser to an investment company where the plan invests in
the securities of the investment company. In such a case the investment
company or its principal underwriter is not to be deemed to be a
fiduciary of or party in interest with respect to the plan solely
because of such investment.
On the other hand, the exception clause in section 3(21) emphasizes
that if an investment company, its investment adviser or its principal
underwriter is a fiduciary or party in interest for a reason other than
the investment in the securities of the investment company, such a
person remains a party in interest or fiduciary. Thus, in the preceding
[[Page 81]]
example, since an employer is a party in interest, the investment
adviser remains a party in interest with respect to a plan covering its
employees.
The Department of Labor emphasized that an investment adviser,
principal underwriter or investment company which is a fiduciary by
virtue of section 3(21)(A) of the Act is subject to the fiduciary
responsibility provisions of part 4 of title I of the Act, including
those relating to fiduciary duties under section 404.
[40 FR 31599, July 28, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]
Sec. 2509.75-4 Interpretive bulletin relating to indemnification of fiduciaries.
On June 4, 1975, the Department of Labor issued an interpretive
bulletin, ERISA IB 75-4, announcing the Department's interpretation of
section 410(a) of the Employee Retirement Income Security Act of 1974,
insofar as that section relates to indemnification of fiduciaries.
Section 410(a) states, in relevant part, that ``any provision in an
agreement or instrument which purports to relieve a fiduciary from
responsibility or liability for any responsibility, obligation, or duty
under this part shall be void as against public policy.''
The Department of Labor interprets this section to permit
indemnification agreements which do not relieve a fiduciary of
responsibility or liability under part 4 of title I. Indemnification
provisions which leave the fiduciary fully responsible and liable, but
merely permit another party to satisfy any liability incurred by the
fiduciary in the same manner as insurance purchased under section
410(b)(3), are therefore not void under section 410(a).
Examples of such indemnification provisions are:
(1) Indemnification of a plan fiduciary by (a) an employer, any of
whose employees are covered by the plan, or an affiliate (as defined in
section 407(d)(7) of the Act) of such employer, or (b) an employee
organization, any of whose members are covered by the plan; and
(2) Indemnification by a plan fiduciary of the fiduciary's employees
who actually perform the fiduciary services.
The Department of Labor interprets section 410(a) as rendering void
any arrangement for indemnification of a fiduciary of an employee
benefit plan by the plan. Such an arrangement would have the same result
as an exculpatory clause, in that it would, in effect, relieve the
fiduciary of responsibility and liability to the plan by abrogating the
plan's right to recovery from the fiduciary for breaches of fiduciary
obligations.
While indemnification arrangements do not contravene the provisions
of section 410(a), parties entering into an indemnification agreement
should consider whether the agreement complies with the other provisions
of part 4 of title I of the Act and with other applicable laws.
[40 FR 31599, July 28, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]
Sec. 2509.75-5 Questions and answers relating to fiduciary responsibility.
On June 25, 1975, the Department of Labor issued an interpretive
bulletin, ERISA IB 75-5, containing questions and answers relating to
certain aspects of the recently enacted Employee Retirement Income
Security Act of 1974 (the ``Act'').
Pending the issuance of regulations or other guidelines, persons may
rely on the answers to these questions in order to resolve the issues
that are specifically considered. No inferences should be drawn
regarding issues not raised which may be suggested by a particular
question and answer or as to why certain questions, and not others, are
included. Furthermore, in applying the questions and answers, the effect
of subsequent legislation, regulations, court decisions, and
interpretative bulletins must be considered. To the extent that plans
utilize or rely on these answers and the requirements of regulations
subsequently adopted vary from the answers relied on, such plans may
have to be amended.
An index of the questions and answers, relating them to the
appropriate sections of the Act, is also provided.
Index
key to question prefixes
D--Refers to Definitions.
FR--Refers to Fiduciary Responsibility.
------------------------------------------------------------------------
Section No. Question No.
------------------------------------------------------------------------
3(21)..................................... D-1.
3(38)..................................... FR-6, FR-7.
402(a).................................... FR-1, FR-2, FR-3.
402(b)(1)................................. FR-4, FR-5.
402(c)(3)................................. FR-6, FR-7.
404(a).................................... FR-10.
405(a)(3)................................. FR-10.
405(b)(1)(A).............................. FR-10.
406(a).................................... FR-9.
409(a).................................... FR-10.
412(a).................................... FR-8, FR-9.
------------------------------------------------------------------------
D-1 Q: Is an attorney, accountant, actuary or consultant who renders
legal, accounting, actuarial or consulting services to an employee
benefit plan (other than an investment adviser to the plan) a fiduciary
to the plan solely by virtue of the rendering of such services, absent a
showing that such consultant (a) exercises discretionary authority or
discretionary control respecting the management of the plan, (b)
exercises authority or
[[Page 82]]
control respecting management or disposition of the plan's assets, (c)
renders investment advice for a fee, direct or indirect, with respect to
the assets of the plan, or has any authority or responsibility to do so,
or (d) has any discretionary authority or discretionary responsibility
in the administration of the plan?
A: No. However, while attorneys, accountants, actuaries and
consultants performing their usual professional functions will
ordinarily not be considered fiduciaries, if the factual situation in a
particular case falls within one of the categories described in clauses
(a) through (d) of this question, such persons would be considered to be
fiduciaries within the meaning of section 3(21) of the Act. The Internal
Revenue Service notes that such persons would also be considered to be
fiduciaries within the meaning of section 4975(e)(3) of the Internal
Revenue Code of 1954.
FR-1 Q: If an instrument establishing an employee benefit plan
provides that the plan committee shall control and manage the operation
and administration of the plan and specifies who shall constitute the
plan committee (either by position or by naming individuals to the
committee), does such provision adequately satisfy the requirement in
section 402(a) that a ``named fiduciary'' be provided for in a plan
instrument?
A: Yes. While the better practice would be to state explicitly that
the plan committee is the ``named fiduciary'' for purposes of the Act,
clear identification of one or more persons, by name or title, combined
with a statement that such person or persons have authority to control
and manage the operation and administration of the plan, satisfies the
``named fiduciary'' requirement of section 402(a). The purpose of this
requirement is to enable employees and other interested persons to
ascertain who is responsible for operating the plan. The instrument in
the above example, which provides that ``the plan committee shall
control and manage the operation and administration of the plan'', and
specifies, by name or position, who shall constitute the committee,
fulfills this requirement.
FR-2 Q: In a union negotiated employee benefit plan, the instrument
establishing the plan provides that a joint board on which employees and
employers are equally represented shall control and manage the operation
and administration of the plan. Does this provision adequately satisfy
the requirement in section 402(a) that a ``named fiduciary'' be provided
for in a plan instrument?
A: Yes, for the reasons stated in response to question FR-1. The
joint board is clearly identified as the entity which has authority to
control and manage the operation and administration of the plan, and the
persons designated to be members of such joint board would be named
fiduciaries under section 402(a).
FR-3 Q: May an employee benefit plan covering employees of a
corporation designate the corporation as the ``named fiduciary'' for
purposes of section 402(a)(1) of the Act?
A: Yes, it may. Section 402(a)(2) of the Act states that a ``named
fiduciary'' is a fiduciary either named in the plan instrument or
designated according to a procedure set forth in the plan instrument. A
fiduciary is a ``person'' falling within the definition of fiduciary set
forth in section 3(21)(A) of the Act. A ``person'' may be a corporation
under the definition of person contained in section 3(9) of the Act.
While such designation satisfies the requirement of enabling employees
and other interested persons to ascertain the person or persons
responsible for operating the plan, a plan instrument which designates a
corporation as ``named fiduciary'' should provide for designation by the
corporation of specified individuals or other persons to carry out
specified fiduciary responsibilities under the plan, in accordance with
section 405(c)(1)(B) of the Act.
FR-4 Q: A defined benefit pension plan's procedure for establishing
and carrying out a funding policy provides that the plan's trustees
shall, at a meeting duly called for the purpose, establish a funding
policy and method which satisfies the requirements of part 3 of title I
of the Act, and shall meet annually at a stated time of the year to
review such funding policy and method. It further provides that all
actions taken with respect to such funding policy and method and the
reasons therefor shall be recorded in the minutes of the trustees'
meetings. Does this procedure comply with section 402(b)(1) of the Act?
A: Yes. The above procedure specifies who is to establish the
funding policy and method for the plan, and provides for a written
record of the actions taken with respect to such funding policy and
method, including the reasons for such actions. The purpose of the
funding policy requirement set forth in section 402(b)(1) is to enable
plan participants and beneficiaries to ascertain that the plan has a
funding policy that meets the requirements of part 3 of title I of the
Act. The procedure set forth above meets that requirement.
FR-5 Q: Must a welfare plan in which the benefits are paid out of
the general assets of the employer have a procedure for establishing and
carrying out a funding policy set forth in the plan instrument?
A: No. Section 402(b)(1) requires that the plan provide for such a
procedure ``consistent with the objectives of the plan'' and
requirements of title I of the Act. In situations in which a plan is
unfunded and title I of the Act does not require the plan to be funded,
there is no need to provide for such a procedure. If the welfare plan
were funded,
[[Page 83]]
a procedure consistent with the objectives of the plan would have to be
established.
FR-6 Q: May an investment adviser which is neither a bank nor an
insurance company, and which is neither registered under the Investment
Advisers Act of 1940 nor registered as an investment adviser in the
State where it maintains its principal office and place of business, be
appointed an investment manager under section 402(c)(3) of the Act?
A: No. The only persons who may be appointed an investment manager
under section 402(c)(3) of the Act are persons who meet the requirements
of section 3(38) of the Act--namely, banks (as defined in the Investment
Advisers Act of 1940), insurance companies qualified under the laws of
more than one state to manage, acquire and dispose of plan assets,
persons registered as investment advisers under the Investment Advisers
Act of 1940, or persons not registered under the Investment Advisers Act
by reason of paragraph 1 of section 203A(a) of that Act who are
registered as investment advisers in the State where they maintain their
principal office and place of business in accordance with ERISA section
3(38) and who have met the filing requirements of 29 CFR 2510.3-38.
FR-7 Q: May an investment adviser that has a registration
application pending for federal registration under the Investment
Advisers Act of 1940, or pending with the appropriate state regulatory
body under State investment adviser registration laws if relying on the
provisions of 29 CFR 2510.3-38 to qualify as a state-registered
investment manager, function as an investment manager under the Act
prior to the effective date of their federal or state registration?
A: No, for the reasons stated in the answer to FR-6 above.
FR-8 Q: Under the temporary bonding regulation set forth in 29 CFR
2550.412-1, must a person who renders investment advice to a plan for a
fee or other compensation, direct or indirect, but who does not exercise
or have the right to exercise discretionary authority with respect to
the assets of the plan, be bonded solely by reason of the provision of
such investment advice?
A: No. A person who renders investment advice, but who does not
exercise or have the right to exercise discretionary authority with
respect to plan assets, is not required to be bonded solely by reason of
the provision of such investment advice. Such a person is not considered
to be ``handling'' funds within the meaning of the temporary bonding
regulation set forth in 29 CFR 2550.412-1, which incorporates by
reference 29 CFR 464.7. For purposes of the temporary bonding
regulation, only those fiduciaries who handle funds must be bonded. If,
in addition to the rendering of investment advice, such person performs
any additional function which constitutes the handling of plan funds
under 29 CFR 464.7, the person would have to be bonded.
FR-9 Q: May an employee benefit plan purchase a bond covering plan
officials?
A: Yes. The bonding requirement, which applies, with certain
exceptions, to every plan official under section 412(a) of the Act, is
for the protection of the plan and does not benefit any plan official or
relieve any plan official of any obligation to the plan. The purchase of
such bond by a plan will not, therefore, be considered to be in
contravention of sections 406(a) or (b) of the Act.
FR-10 Q: An employee benefit plan is considering the construction of
a building to house the administration of the plan. One trustee has
proposed that the building be constructed on a cost plus basis by a
particular contractor without competitive bidding. When the trustee was
questioned by another trustee as to the basis of choice of the
contractor, the impact of the building on the plan's administrative
costs, whether a cost plus contract would yield a better price to the
plan than a fixed price basis, and why a negotiated contract would be
better than letting the contract for competitive bidding, no
satisfactory answers were provided. Several of the trustees have argued
that letting such a contract would be a violation of their general
fiduciary responsibilities. Despite their arguments, a majority of the
trustees appear to be ready to vote to construct the building as
proposed. What should the minority trustees do to protect themselves
from liability under section 409(a) of the Act and section 405(b)(1)(A)
of the Act?
A: Here, where a majority of trustees appear ready to take action
which would clearly be contrary to the prudence requirement of section
404(a)(1)(B) of the Act, it is incumbent on the minority trustees to
take all reasonable and legal steps to prevent the action. Such steps
might include preparations to obtain an injunction from a Federal
District court under section 502(a)(3) of the Act, to notify the Labor
Department, or to publicize the vote if the decision is to proceed as
proposed. If, having taken all reasonable and legal steps to prevent the
imprudent action, the minority trustees have not succeeded, they will
not incur liability for the action of the majority. Mere resignation,
however, without taking steps to prevent the imprudent action, will not
suffice to avoid liability for the minority trustees once they have
knowledge that the imprudent action is under consideration.
More generally, trustees should take great care to document
adequately all meetings where actions are taken with respect to
management and control of fplan assets. Written minutes of all actions
taken should be kept describing the action taken, and stating how each
trustee voted on each matter. If, as in the case above, trustees object
[[Page 84]]
to a proposed action on the grounds of possible violation of the
fiduciary responsibility provisions of the Act, the trustees so
objecting should insist that their objections and the responses to such
objections be included in the record of the meeting. It should be noted
that, where a trustee believes that a cotrustee has already committed a
breach, resignation by the trustee as a protest against such breach will
not generally be considered sufficient to discharge the trustee's
positive duty under section 405(a)(3) to make reasonable efforts under
the circumstances to remedy the breach.
[40 FR 31599, July 28, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976;
69 FR 52125, Aug. 24, 2004]
Sec. 2509.75-6 Interpretive bulletin relating to section 408(c)(2)
of the Employee Retirement Income Security Act of 1974.
The Department of Labor today announced guidelines for determining
when a party in interest with respect to an employee benefit plan may
receive an advance for expenses to be incurred on behalf of the plan
without engaging in a transaction prohibited by section 406 of the
Employee Retirement Income Security Act of 1974. That section prohibits,
among other things, any lending of money from a plan to a party in
interest, or transfer to, or use by or for the benefit of, a party in
interest of any assets of the plan, as well as any act whereby a
fiduciary deals with the assets of a plan in his own interest or for his
own account.
However, section 408(c)(2) of the Act provides that nothing in
section 406 of the Act shall be construed to prohibit the reimbursement
by a plan of expenses properly and actually incurred by a fiduciary in
the performance of his duties with the plan. Questions have arisen under
section 408(c)(2) of the Act as to whether a plan may reimburse a party
in interest in the performance of his duties with the plan and as to
whether a plan might make an advance to a fiduciary or other party in
interest for expenses to be incurred in the future.
The Department of Labor views the relevant provisions of section
408(c)(2) as clarifying the scope of section 406 so as to permit
reimbursement of fiduciaries for expenses incurred in the performance of
their duties with a plan. Similarly, consistent with section 408(c)(2),
section 406 is construed to permit the reimbursement by the plan of
expenses properly and actually incurred by a party in interest in the
performance of his duties with the plan.
If a plan makes an advance to a fiduciary or other party in interest
to cover expenses to be properly and actually incurred by such person in
the performance of his duties with the plan, a prohibited transaction
within the meaning of section 406 shall not occur when the plan makes
the advance if--
(a) The amount of such advance is reasonable with respect to the
amount of the expense which is likely to be properly and actually
incurred in the immediate future (such as during the next month), and
(b) The party in interest accounts to the plan at the end of the
period covered by the advance for the expenses actually incurred
(whether computed on the basis of actual expenses incurred or on the
basis of actual transportation costs plus a reasonable per diem
allowance, where appropriate).
It should be noted, however, that despite the reasonableness of the
amount of the advance and of the expenses underlying it, the question of
whether incurring such expenses was prudent, and thus whether the
advance was for reasonable expenses, is to be judged pursuant to section
404 of the Act (relating to fiduciary responsibilities).
[40 FR 31755, July 29, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]
Sec. 2509.75-8 Questions and answers relating to fiduciary responsibility
under the Employee Retirement Income Security Act of 1974.
The Department of Labor today issued questions and answers relating
to certain aspects of fiduciary responsibility under the Act, thereby
supplementing ERISA IB 75-5 (29 CFR 2555.75-5) which was issued on June
24, 1975, and published in the Federal Register on July 28, 1975 (40 FR
31598).
Pending the issuance of regulations or other guidelines, persons may
rely on the answers to these questions in order to resolve the issues
that are specifically considered. No inferences should be drawn
regarding issues not raised which may be suggested by a particular
question and answer or as to why certain questions, and not others, are
included. Furthermore, in applying the questions and answers, the effect
of subsequent legislation, regulations, court decisions, and
interpretive bulletins must be considered. To the extent that plans
utilize or rely on these answers and the requirements of regulations
subsequently adopted vary from the answers relied on, such plans may
have to be amended.
An index of the questions and answers, relating them to the
appropriate sections of the Act, is also provided.
Index
Key to question prefixes: D--refers to definitions; FR--refers to
fiduciary responsibility.
------------------------------------------------------------------------
Section No. Question No.
------------------------------------------------------------------------
3(21)(A).................................. D-2, D-3, D-4, D-5.
3(38)..................................... FR-15.
[[Page 85]]
402(c)(1)................................. FR-12.
402(c)(2)................................. FR-15.
402(c)(3)................................. FR-15.
403(a)(2)................................. FR-15.
404(a)(1)(B).............................. FR-11, FR-17.
405(a).................................... FR-13, FR-14, FR-16.
405(c)(1)................................. FR-12, FR-15.
405(c)(2)................................. D-4, FR-13, FR-14, FR-16.
412....................................... D-2.
------------------------------------------------------------------------
Note: Questions D-2, D-3, D-4, and D-5 relate to not only section
3(21)(A) of title I of the Act, but also section 4975(e)(3) of the
Internal Revenue Code (section 2003 of the Act). The Internal Revenue
Service has indicated its concurrence with the answers to these
questions.
D-2 Q: Are persons who have no power to make any decisions as to
plan policy, interpretations, practices or procedures, but who perform
the following administrative functions for an employee benefit plan,
within a framework of policies, interpretations, rules, practices and
procedures made by other persons, fiduciaries with respect to the plan:
(1) Application of rules determining eligibility for participation
or benefits;
(2) Calculation of services and compensation credits for benefits;
(3) Preparation of employee communications material;
(4) Maintenance of participants' service and employment records;
(5) Preparation of reports required by government agencies;
(6) Calculation of benefits;
(7) Orientation of new participants and advising participants of
their rights and options under the plan;
(8) Collection of contributions and application of contributions as
provided in the plan;
(9) Preparation of reports concerning participants' benefits;
(10) Processing of claims; and
(11) Making recommendations to others for decisions with respect to
plan administration?
A: No. Only persons who perform one or more of the functions
described in section 3(21)(A) of the Act with respect to an employee
benefit plan are fiduciaries. Therefore, a person who performs purely
ministerial functions such as the types described above for an employee
benefit plan within a framework of policies, interpretations, rules,
practices and procedures made by other persons is not a fiduciary
because such person does not have discretionary authority or
discretionary control respecting management of the plan, does not
exercise any authority or control respecting management or disposition
of the assets of the plan, and does not render investment advice with
respect to any money or other property of the plan and has no authority
or responsibility to do so.
However, although such a person may not be a plan fiduciary, he may
be subject to the bonding requirements contained in section 412 of the
Act if he handles funds or other property of the plan within the meaning
of applicable regulations.
The Internal Revenue Service notes that such persons would not be
considered plan fiduciaries within the meaning of section 4975(e)(3) of
the Internal Revenue Code of 1954.
D-3 Q: Does a person automatically become a fiduciary with respect
to a plan by reason of holding certain positions in the administration
of such plan?
A: Some offices or positions of an employee benefit plan by their
very nature require persons who hold them to perform one or more of the
functions described in section 3(21)(A) of the Act. For example, a plan
administrator or a trustee of a plan must, be the very nature of his
position, have ``discretionary authority or discretionary responsibility
in the administration'' of the plan within the meaning of section
3(21)(A)(iii) of the Act. Persons who hold such positions will therefore
be fiduciaries.
Other offices and positions should be examined to determine whether
they involve the performance of any of the functions described in
section 3(21)(A) of the Act. For example, a plan might designate as a
``benefit supervisor'' a plan employee whose sole function is to
calculate the amount of benefits to which each plan participant is
entitled in accordance with a mathematical formula contained in the
written instrument pursuant to which the plan is maintained. The benefit
supervisor, after calculating the benefits, would then inform the plan
administrator of the results of his calculations, and the plan
administrator would authorize the payment of benefits to a particular
plan participant. The benefit supervisor does not perform any of the
functions described in section 3(21)(A) of the Act and is not,
therefore, a plan fiduciary. However, the plan might designate as a
``benefit supervisor'' a plan employee who has the final authority to
authorize or disallow benefit payments in cases where a dispute exists
as to the interpretation of plan provisions relating to eligibility for
benefits. Under these circumstances, the benefit supervisor would be a
fiduciary within the meaning of section 3(21)(A) of the Act.
The Internal Revenue Service notes that it would reach the same
answer to this question under section 4975(e)(3) of the Internal Revenue
Code of 1954.
D-4 Q: In the case of a plan established and maintained by an
employer, are members of the board of directors of the employer
fiduciaries with respect to the plan?
A: Members of the board of directors of an employer which maintains
an employee benefit plan will be fiduciaries only to the extent that
they have responsibility for the
[[Page 86]]
functions described in section 3(21)(A) of the Act. For example, the
board of directors may be responsible for the selection and retention of
plan fiduciaries. In such a case, members of the board of directors
exercise ``discretionary authority or discretionary control respecting
management of such plan'' and are, therefore, fiduciaries with respect
to the plan. However, their responsibility, and, consequently, their
liability, is limited to the selection and retention of fiduciaries
(apart from co-fiduciary liability arising under circumstances described
in section 405(a) of the Act). In addition, if the directors are made
named fiduciaries of the plan, their liability may be limited pursuant
to a procedure provided for in the plan instrument for the allocation of
fiduciary responsibilities among named fiduciaries or for the
designation of persons other than named fiduciaries to carry out
fiduciary responsibilities, as provided in section 405(c)(2).
The Internal Revenue Service notes that it would reach the same
answer to this question under section 4975(e)(3) of the Internal Revenue
Code of 1954.
D-5 Q: Is an officer or employee of an employer or employee
organization which sponsors an employee benefit plan a fiduciary with
respect to the plan solely by reason of holding such office or
employment if he or she performs none of the functions described in
section 3(21)(A) of the Act?
A: No, for the reasons stated in response to question D-2.
The Internal Revenue Service notes that it would reach the same
answer to this question under section 4975(e)(3) of the Internal Revenue
Code of 1954.
FR-11 Q: In discharging fiduciary responsibilities, may a fiduciary
with respect to a plan rely on information, data, statistics or analyses
provided by other persons who perform purely ministerial functions for
such plan, such as those persons described in D-2 above?
A: A plan fiduciary may rely on information, data, statistics or
analyses furnished by persons performing ministerial functions for the
plan, provided that he has exercised prudence in the selection and
retention of such persons. The plan fiduciary will be deemed to have
acted prudently in such selection and retention if, in the exercise of
ordinary care in such situation, he has no reason to doubt the
competence, integrity or responsibility of such persons.
FR-12 Q: How many fiduciaries must an employee benefit plan have?
A: There is no required number of fiduciaries that a plan must have.
Each plan must, of course, have at least one named fiduciary who serves
as plan administrator and, if plan assets are held in trust, the plan
must have at least one trustee. If these requirements are met, there is
no limit on the number of fiduciaries a plan may have. A plan may have
as few or as many fiduciaries as are necessary for its operation and
administration. Under section 402(c)(1) of the Act, if the plan so
provides, any person or group of persons may serve in more than one
fiduciary capacity, including serving both as trustee and administrator.
Conversely, fiduciary responsibilities not involving management and
control of plan assets may, under section 405(c)(1) of the Act, be
allocated among named fiduciaries and named fiduciaries may designate
persons other than named fiduciaries to carry out such fiduciary
responsibilities, if the plan instrument expressly provides procedures
for such allocation or designation.
FR-13 Q: If the named fiduciaries of an employee benefit plan
allocate their fiduciary responsibilities among themselves in accordance
with a procedure set forth in the plan for the allocation of
responsibilities for operation and administration of the plan, to what
extent will a named fiduciary be relieved of liability for acts and
omissions of other named fiduciaries in carrying out fiduciary
responsibilities allocated to them?
A: If named fiduciaries of a plan allocate responsibilities in
accordance with a procedure for such allocation set forth in the plan, a
named fiduciary will not be liable for acts and omissions of other named
fiduciaries in carrying out fiduciary responsibilities which have been
allocated to them, except as provided in section 405(a) of the Act,
relating to the general rules of co-fiduciary responsibility, and
section 405(c)(2)(A) of the Act, relating in relevant part to standards
for establishment and implementation of allocation procedures.
However, if the instrument under which the plan is maintained does
not provide for a procedure for the allocation of fiduciary
responsibilities among named fiduciaries, any allocation which the named
fiduciaries may make among themselves will be ineffective to relieve a
named fiduciary from responsibility or liability for the performance of
fiduciary responsibilities allocated to other named fiduciaries.
FR-14 Q: If the named fiduciaries of an employee benefit plan
designate a person who is not a named fiduciary to carry out fiduciary
responsibilities, to what extent will the named fiduciaries be relieved
of liability for the acts and omissions of such person in the
performance of his duties?
A: If the instrument under which the plan is maintained provides for
a procedure under which a named fiduciary may designate persons who are
not named fiduciaries to carry out fiduciary responsibilities, named
fiduciaries of the plan will not be liable for acts and omissions of a
person who is not a named fiduciary in carrying out the fiduciary
responsibilities which such person has been designated to carry out,
except as provided in section 405(a) of the Act, relating to
[[Page 87]]
the general rules of co-fiduciary liability, and section 405(c)(2)(A) of
the Act, relating in relevant part to the designation of persons to
carry out fiduciary responsibilities.
However, if the instrument under which the plan is maintained does
not provide for a procedure for the designation of persons who are not
named fiduciaries to carry out fiduciary responsibilities, then any such
designation which the named fiduciaries may make will not relieve the
named fiduciaries from responsibility or liability for the acts and
omissions of the persons so designated.
FR-15 Q: May a named fiduciary delegate responsibility for
management and control of plan assets to anyone other than a person who
is an investment manager as defined in section 3(38) of the Act so as to
be relieved of liability for the acts and omissions of the person to
whom such responsibility is delegated?
A: No. Section 405(c)(1) does not allow named fiduciaries to
delegate to others authority or discretion to manage or control plan
assets. However, under the terms of sections 403(a)(2) and 402(c)(3) of
the Act, such authority and discretion may be delegated to persons who
are investment managers as defined in section 3(38) of the Act. Further,
under section 402(c)(2) of the Act, if the plan so provides, a named
fiduciary may employ other persons to render advice to the named
fiduciary to assist the named fiduciary in carrying out his investment
responsibilities under the plan.
FR-16 Q: Is a fiduciary who is not a named fiduciary with respect to
an employee benefit plan personally liable for all phases of the
management and administration of the plan?
A: A fiduciary with respect to the plan who is not a named fiduciary
is a fiduciary only to the extent that he or she performs one or more of
the functions described in section 3(21)(A) of the Act. The personal
liability of a fiduciary who is not a named fiduciary is generally
limited to the fiduciary functions, which he or she performs with
respect to the plan. With respect to the extent of liability of a named
fiduciary of a plan where duties are properly allocated among named
fiduciaries or where named fiduciaries properly designate other persons
to carry out certain fiduciary duties, see question FR-13 and FR-14.
In addition, any fiduciary may become liable for breaches of
fiduciary responsibility committed by another fiduciary of the same plan
under circumstances giving rise to co-fiduciary liability, as provided
in section 405(a) of the Act.
FR-17 Q: What are the ongoing responsibilities of a fiduciary who
has appointed trustees or other fiduciaries with respect to these
appointments?
A: At reasonable intervals the performance of trustees and other
fiduciaries should be reviewed by the appointing fiduciary in such
manner as may be reasonably expected to ensure that their performance
has been in compliance with the terms of the plan and statutory
standards, and satisfies the needs of the plan. No single procedure will
be appropriate in all cases; the procedure adopted may vary in
accordance with the nature of the plan and other facts and circumstances
relevant to the choice of the procedure.
[40 FR 47491, Oct. 9, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]
Sec. 2509.75-10 Interpretive bulletin relating to the ERISA
Guidelines and the Special Reliance Procedure.
On November 5, 1975, the Department of Labor (the ``Department'')
and the Internal Revenue Service (the ``Service'') announced the
publication of a compendium of authoritative rules (hereinafter referred
to as the ``ERISA Guidelines'') relating to ERISA requirements. See
T.I.R. No. 1415 (November 5, 1975) issued by the Service. These rules
were published in recognition of the need to provide an immediate and
complete set of interim guidelines to facilitate (1) adoption of new
employee pension benefit plans (hereinafter referred to as ``plans''),
and (2) prompt amendment of existing plans, in conformance with the
applicable requirements of the Employee Retirement Income Security Act
of 1974 (``ERISA'') pending the issuance of final regulations or other
rules. These rules govern the application of (1) the qualification
requirements of the Internal Revenue Code of 1954 (the ``Code'') added
or amended by ERISA, and (2) the requirements of the provisions of parts
2 and 3 of title I of ERISA paralleling such qualification requirements
(both such sets of requirements hereinafter referred to collectively as
the ``new qualification requirements'').
The ERISA Guidelines incorporate by reference the documents relating
to the new qualification requirements heretofore published by the
Department and by the Service as temporary or proposed regulations,
revenue rulings, revenue procedures, questions and answers, technical
information releases, and other issuances. The ERISA Guidelines also
incorporate additional documents published on November 5, 1975, or to be
published forthwith, which are necessary to complete the interim
guidelines relating to the new qualification requirements. See the
schedule set forth below for a complete list and brief description of
the documents comprising the ERISA Guidelines.
The Department and the Service emphasized that the ERISA Guidelines
constitute the entire set of interim rules of the Department and the
Service for satisfying the new qualification requirements, and thus
provide authoritative guidance in respect of the new
[[Page 88]]
statutory requirements bearing on qualification. These rules are
applicable to individually designed plans and to multiemployer (or other
multiple employer) plans, and may be relied upon until amended or
supplemented by final regulations or other rules. Moreover, the
Department and the Service announced that any provisions of final
regulations or other rules which amend or supplement the rules contained
in the ERISA Guidelines will generally be prospective only, from the
date of publication. Further, in the case of employee plan provisions
adopted or amended before the date of such publication which satisfy the
ERISA Guidelines, such final regulations or other rules will generally
be made effective for plan years commencing after such date, except in
unusual circumstances.
The Service further announced that the ERISA Guidelines incorporate
the procedures that will enable employers to obtain determination
letters as to the qualification of pension, annuity, profit sharing,
stock bonus and bond purchase plans which satisfy the requirements of
sections 401(a), 403(a) and 405(a) of the Code, as amended by ERISA. The
Service also pointed out that the ERISA Guidelines will enable sponsors
of master and prototype plans (whether newly established or amended) to
obtain opinion letters as to the acceptability of the form of such
plans, and further, that employers who establish plans designed to meet
the requirements of section 301(d) of the Tax Reduction Act of 1975
(relating to employee stock ownership plans) will be able to obtain
determination letters as to the acceptability of such plans (whether or
not such plans are intended to be qualified).
To facilitate further the adoption of new plans and the prompt
amendment of existing plans in conformance with the new qualification
requirements, the Service announced on November 5, 1975, the adoption of
a special procedure (hereinafter referred to as the ``Special Reliance
Procedure'') pursuant to which the adoption, on or before May 30, 1976,
of new plans and amendments of existing plans may be effectuated with
full reliance upon the rules which comprise the ERISA Guidelines and
without regard to any amendment or supplementation of such rules before
such date. Therefore, except in unusual circumstances (described in
Technical Information Release No. 1416 (November 5, 1975)), plans which
comply with the Special Reliance Procedure shall generally be considered
by the Service as satisfying the qualification requirements of the Code
added or amended by ERISA for plan years commencing on or before
December 31, 1976, to which such requirements are applicable,
notwithstanding the date when final regulations or other rules hereafter
published which amend or supplement the rules comprising the ERISA
Guidelines may otherwise be made effective. Reference is hereby made to
Technical Information Release No. 1416 (November 5, 1975) for a
description of the Special Reliance Procedure.
The Department announced that plans which comply with the Special
Reliance Procedure will be considered by the Department as satisfying
the requirements of the provisions of parts 2 and 3 of title I of ERISA
which parallel the qualification requirements of the Code added or
amended by ERISA to the same extent as such plans are considered by the
Service as satisfying, in accordance with the terms of the Special
Reliance Procedure, such qualification requirements.
The availability of the Special Reliance Procedure will
substantially diminish the occasions for plans to avail themselves of
the right to satisfy, for tax purposes, the qualification requirements
of the Code (added or amended by ERISA) by retroactive amendments
adopted during or after the close of a plan year, in accordance with
section 401(b) of the Code and the temporary regulations thereunder. The
Department pointed out that no explicit parallel provision to section
401(b) of the Code is contained in title I of ERISA. Nevertheless, to
the extent retroactive amendments to a plan are made to satisfy the
requirements of parts 2 and 3 of title I of ERISA which parallel the
qualification requirements of the Code added or amended by ERISA, the
Department noted that such plan will be in compliance with such
requirements if such an amendment designed to satisfy such requirements
(1) is adopted by the end of the plan year to which such requirements
are applicable, and (2) is made effective for all purposes for such
entire plan year.
The schedule of documents comprising the ERISA Guidelines follows.
ERISA Guidelines--Schedule of Documents
----------------------------------------------------------------------------------------------------------------
Code and ERISA
Publication date 1975 Document Subject sections
----------------------------------------------------------------------------------------------------------------
Jan. 8............................. TIR 1334.............. Questions and answers 410, 411, et al.
relating to defined
contribution plans subject
to ERISA.
Apr. 21............................ 40 FR 17576........... Notice of proposed 401(c), 401(d),
rulemaking: Qualification 401(e), 46, 50A, 72,
(and other aspects) of HR- 404(e), 901, and
10 plans. 1379.
June 4............................. T.D. 7358............. Temporary regulations: 7476.
Notification of interested
parties.
[[Page 89]]
July 14............................ T.D. 7367............. Temporary regulations: 7476.
Notice of determination of
qualification.
Sept. 8............................ 40 FR 41654........... Department of Labor--Minimum 401(a)(3)(B),
standards for hours of 411(a)(5)(C), and
service, years of service, ERISA secs. 202,
and breaks in service 203, and 204.
relating to participation,
vesting, and accrual of
benefits.
Sept. 17........................... TIR 1403.............. Questions and answers 410, 411, et al.
relating mainly to defined
benefit plans subject to
ERISA (addition to TIR
1334).
Sept. 18........................... 40 FR 43034........... Notice of proposed 414(f) and (g).
rulemaking: Definitions of
multi-employer plan and
plan administrator.
Sept. 29........................... T.D. 7377............. Temporary regulations: 401(b).
Certain retroactive
amendments of employee
plans.
Oct. 3............................. T.D. 7379............. Temporary regulations: 401(a)(11).
Qualified joint and
survivor annuities.
T.D. 7380............. Temporary regulations: 410.
Minimum participation
standards.
Oct. 8............................. T.D. 7381............. Temporary regulations: 401(a)(14).
Commencement of benefits.
Oct. 15............................ T.D. 7382............. Temporary regulations: 401(a)(15).
Requirement that benefits
under a qualified plan are
not decreased on account of
certain social security
increases.
Oct. 16............................ T.D. 7383............. Temporary regulations: 401(d)(1).
Nonbank trustees of pension
and profit sharing trusts
benefiting owner-employees.
40 FR 48517........... Notice of proposed 401(f).
rulemaking: Certain
custodial accounts.
Oct. 30............................ TIR 1408.............. Questions and answers 401(a)(12) and
relating to mergers, 414(1).
consolidations, etc.
Nov. 3............................. Rev. Rul. 75-480, 1975- Updating of Rev. Rul. 71-446 401(a)(5).
44 IRB. to reflect changes mandated
by ERISA.
Rev. Rul. 75-481, 1975- Guidelines for determining 401(a)(16) and 415.
44 IRB. whether contributions or
benefits under plan satisfy
the limitations of sec. 415
of the code.
TIR 1411, Rev. Proc. Vesting and discrimination.. 401(a)(4) and
75-49, 1975-48 IRB. 411(d)(1).
Nov. 4............................. TIR 1413.............. Questions and answers 401, 4975, and sec.
relating to employee stock 301(d) of the Tax
ownership plans. Reduction Act of
1975.
Nov. 5............................. T.D. 7387............. Temporary regulations on 411.
minimum vesting standards.
T.D. 7388............. Controlled groups, 414(b) and (c).
businesses under common
control, etc.
(\1\).............................. TIR................... Nonforfeiture of employee 411(a)(1).
derived accrued benefit
upon death.
(\1\).............................. ...................... Department of Labor-- 410(a)(3)(B),
Interpretive bulletin: 411(a)(5)(C), and
Definition of seasonal ERISA secs.
industries. 202(a)(3)(C),
203(b)(2)(C).
Nov. 7............................. 40 FR 52008........... Department of Labor-- 414(f) and ERISA sec.
additional requirements 3(37).
applicable to definition of
multiemployer plan.
(\1\).............................. ...................... Department of Labor-- 411(a)(3)(B) and
suspension of benefits upon ERISA sec.
reemployment of retiree. 203(a)(3)(A).
Dec. 3............................. TIR 1422.............. Assignment or alienation of 401(a)(13).
plan benefits.
Dec. 9............................. TIR 1424, Rev. Proc. Vesting and discrimination.. 401(a)(4) and
76-1, 1976-1 IRB.. 411(d)(1).
(\1\).............................. TIR, Rev. Rul......... Appropriate conversion 411(c)(2)(B)(ii).
factor.
----------------------------------------------------------------------------------------------------------------
\1\ To be published forthwith.
[41 FR 3289, Jan. 22, 1976]
[[Page 90]]
Sec. 2509.78-1 Interpretive bulletin relating to payments by
certain employee welfare benefit plans.
The Department of Labor today announced its interpretation of
certain provisions of part 4 of title I of the Employee Retirement
Income Security Act of 1974 (ERISA), as those sections apply to a
payment by multiple employer vacation plans of a sum of money to which a
participant of beneficiary of the plan is entitled to a party other than
the participant or beneficiary. \1\
---------------------------------------------------------------------------
\1\ Multiple employer vacation plans generally consist of trust
funds to which employers are obligated to make contributions pursuant to
collective bargaining agreements. Benefits are generally paid at
specified intervals (usually annually or semi-annually) and such
benefits are neither contingent upon the occurrence of a specified event
nor restricted to use for a specified purpose when paid to the
participant.
---------------------------------------------------------------------------
Section 402(b)(4) of ERISA requires every employee benefit plan to
specify the basis on which payments are made to and from the plan.
Section 403(c)(1) of ERISA generally requires the assets of an
employee benefit plan to be held for the exclusive purpose of providing
benefits to participants in the plan and their beneficiaries \2\ and
defraying reasonable expenses of administering the plan. Similarly,
section 404(a)(1)(A) requires a plan fiduciary to discharge his duties
with respect to a plan solely in the interest of the participants and
beneficiaries of the plan and for the exclusive purpose of providing
benefits to participants and their beneficiaries and defraying
reasonable expenses of administering the plan. Section 404(a)(1)(D)
further requires the fiduciary to act in accordance with the documents
and instruments governing the plan insofar as such documents and
instruments are consistent with the provisions of title I of ERISA.
---------------------------------------------------------------------------
\2\ Section 403 (c) and (d) provide certain exceptions to this
requirement, not here relevant.
---------------------------------------------------------------------------
In addition, section 406(a) of ERISA specifically prohibits a
fiduciary with respect to a plan from causing the plan to engage in a
transaction if he knows or should know that such transaction
constitutes, inter alia, a direct or indirect: furnishing of goods,
services or facilities between the plan and a party in interest (section
406(a)(1)(C)); or transfer to, or use by or for the benefit of, a party
in interest of any assets of the plan (section 406(a)(1)(D)). Section
406(b)(2) of ERISA prohibits a plan fiduciary from acting in any
transaction involving the plan on behalf of a party, or representing a
party, whose interests are adverse to the interests of the plan or of
its participants or beneficiaries.
In this regard, however, Prohibited Transaction Exemptions 76-1,
Part C, (41 FR 12740, March 26, 1976) and 77-10 (42 FR 33918, July 1,
1977) exempt from the prohibitions of section 406(a) and 406(b)(2),
respectively, the provision of administrative services by a multiple
employer plan if specified conditions are met. These conditions are: (a)
the plan receives reasonable compensation for the provision of the
services (for purposes of the exemption, ``reasonable compensation''
need not include a profit which would ordinarily have been received in
an arm's length transaction, but must be sufficient to reimburse the
plan for its costs); (b) the arrangement allows any multiple employer
plan which is a party to the transaction to terminate the relationship
on a reasonably short notice under the circumstances; and (c) the plan
complies with certain recordkeeping requirements. It should be noted
that plans not subject to Prohibited Transaction Exemptions 76-1 and 77-
10--i.e., plans that are not multiple employer plans--cannot rely upon
these exemptions.
A payment by a vacation plan of all or any portion of benefits to
which a plan participant or beneficiary is entitled to a party other
than the participant or beneficiary will comply with the above-mentioned
sections of ERISA if the arrangement pursuant to which payments are made
does not constitute a prohibited transaction under ERISA and:
(1) The plan documents expressly state that benefits payable under
the plan to a participant or beneficiary may, at the direction of the
participant or beneficiary, be paid to a third party rather than to the
participant or beneficiary;
(2) The participant or beneficiary directs in writing that the plan
trustee(s) shall pay a named third party all or a specified portion of
the sum of money which would otherwise be paid under the plan to him or
her; and
(3) A payment is made to a third party only when or after the money
would otherwise be payable to the plan participant or beneficiary.
In the case of a multiple employer plan (as defined in Prohibited
Transaction Exemption 76-1, Part C, Section III), if the arrangement to
make payments to a third party is a prohibited transaction under ERISA,
the arrangement will comply with the above-mentioned sections of ERISA
if the conditions of Prohibited Transaction Exemptions 76-1, Part C, and
77-10 and the above three paragraphs are met. In this regard, it is the
view of the Department that the mere payment of money to which a
participant or beneficiary is entitled, at the direction of the
participant or beneficiary, to a third party who is a party in interest
would not constitute a transfer of plan assets prohibited under section
406(a)(1)(D). It is also the view of the Department that if a trustee or
[[Page 91]]
other fudiciary of a plan, in addition to his duties with respect to the
plan, serves in a decisionmaking capacity with another party, the mere
fact that the fiduciary effects payments to such party of money to which
a participant is entitled at the direction of the participant and in
accordance with specific provisions of governing plan documents and
instruments, does not amount to a prohibited transaction under section
406(b)(2).
It should be noted that the interpretation set forth herein deals
solely with the application of the provisions of title I of ERISA to the
arrangements described herein. It does not deal with the application of
any other statute to such arrangements. Specifically, no opinion is
expressed herein as to the application of section 302 of the Labor
Management Relations Act, 1947 or the Internal Revenue Code of 1954
(particularly the provisions of section 501(c)(9) of the Code).
[43 FR 58565, Dec. 15, 1978]
Sec. 2509.94-3 Interpretive bulletin relating to in-kind
contributions to employee benefit plans.
(a) General. This bulletin sets forth the views of the Department of
Labor (the Department) concerning in-kind contributions (i.e.,
contributions of property other than cash) in satisfaction of an
obligation to contribute to an employee benefit plan to which part 4 of
title I of the Employee Retirement Income Security Act of 1974 (ERISA)
or a plan to which section 4975 of the Internal Revenue Code (the Code)
applies. (For purposes of this document the term ``plan'' shall refer to
either or both types of such entities as appropriate). Section
406(a)(1)(A) of ERISA provides that a fiduciary with respect to a plan
shall not cause the plan to engage in a transaction if the fiduciary
knows or should know that the transaction constitutes a direct or
indirect sale or exchange of any property between a plan and a ``party
in interest'' as defined in section 3(14) of ERISA. The Code imposes a
two-tier excise tax under section 4975(c)(1)(A) an any direct or
indirect sale or exchange of any property between a plan and a
``disqualified person'' as defined in section 4975(e)(2) of the Code. An
employer or employee organization that maintains a plan is included
within the definitions of ``party in interest'' and ``disqualified
person.'' \1\
---------------------------------------------------------------------------
\1\ Under Reorganization Plan No. 4 of 1978 (43 FR 47713, October
17, 1978), the authority of the Secretary of the Treasury to issue
rulings under the prohibited transactions provisions of section 4975 of
the Code has been transferred, with certain exceptions not here
relevant, to the Secretary of Labor. Except with respect to the types of
plans covered, the prohibited transaction provisions of section 406 of
ERISA generally parallel the prohibited transaction of provisions of
section 4975 of the Code.
---------------------------------------------------------------------------
In Commissioner of Internal Revenue v. Keystone Consolidated
Industries, Inc., ____ U.S. ____, 113 S. Ct. 2006 (1993), the Supreme
Court held that an employer's contribution of unencumbered real property
to a tax-qualified defined benefit pension plan was a sale or exchange
prohibited under section 4975 of the Code where the stated fair market
value of the property was credited against the employer's obligation to
the defined benefit pension plan. The parties stipulated that the
property was contributed to the plan free of encumbrances and the stated
fair market value of the property was not challenged. 113 S. Ct. at
2009. In reaching its holding the Court construed section 4975(f)(3) of
the Code (and therefore section 406(c) of ERISA), regarding transfers of
encumbered property, not as a limitation but rather as extending the
reach of section 4975(c)(1)(A) of the Code (and thus section
406(a)(1)(A) of ERISA) to include contributions of encumbered property
that do not satisfy funding obligations. Id. at 2013. Accordingly, the
Court concluded that the contribution of unencumbered property was
prohibited under section 4975(c)(1)(A) of the Code (and thus section
406(a)(1)(A) of ERISA) as ``at least both an indirect type of sale and a
form of exchange, since the property is exchanged for diminution of the
employer's funding obligation.'' 113 S. Ct. at 2012.
(b) Defined benefit plans. Consistent with the reasoning of the
Supreme Court in Keystone, because an employer's or plan sponsor's in-
kind contribution to a defined benefit pension plan is credited to the
plan's funding standard account it would constitute a transfer to reduce
an obligation of the sponsor or employer to the plan. Therefore, in the
absence of an applicable exemption, such a contribution would be
prohibited under section 406(a)(1)(A) of ERISA and section 4975(c)(1)(A)
of the Code. Such an in-kind contribution would constitute a prohibited
transaction even if the value of the contribution is in excess of the
sponsor's or employer's funding obligation for the plan year in which
the contribution is made and thus is not used to reduce the plan's
accumulated funding deficiency for that plan year because the
contribution would result in a credit against funding obligations which
might arise in the future.
(c) Defined contribution and welfare plans. In the context of
defined contribution pension plans and welfare plans, it is the view of
the Department that an in-kind contribution to a plan that reduces an
obligation of a plan sponsor or employer to make a contribution measured
in terms of cash amounts would constitute a prohibited transaction under
[[Page 92]]
section 406(a)(1)(A) of ERISA (and section 4975(c)(1)(A) of the Code)
unless a statutory or administrative exemption under section 408 of
ERISA (or sections 4975(c)(2) or (d) of the Code) applies. For example,
if a profit sharing plan required the employer to make annual
contributions ``in cash or in kind'' equal to a given percentage of the
employer's net profits for the year, an in-kind contribution used to
reduce this obligation would constitute a prohibited transaction in the
absence of an exemption because the amount of the contribution
obligation is measured in terms of cash amounts (a percentage of
profits) even though the terms of the plan purport to permit in-kind
contributions.
Conversely, a transfer of unencumbered property to a welfare benefit
plan that does not relieve the sponsor or employer of any present or
future obligation to make a contribution that is measured in terms of
cash amounts would not constitute a prohibited transaction under section
406(a)(1)(A) of ERISA or section 4975(c)(1)(A) of the Code. The same
principles apply to defined contribution plans that are not subject to
the minimum funding requirements of section 302 of ERISA or section 412
of the Code. For example, where a profit sharing or stock bonus plan, by
its terms, is funded solely at the discretion of the sponsoring
employer, and the employer is not otherwise obligated to make a
contribution measured in terms of cash amounts, a contribution of
unencumbered real property would not be a prohibited sale or exchange
between the plan and the employer. If, however, the same employer had
made an enforceable promise to make a contribution measured in terms of
cash amounts to the plan, a subsequent contribution of unencumbered real
property made to offset such an obligation would be a prohibited sale or
exchange.
(d) Fiduciary standards. Independent of the application of the
prohibited transaction provisions, fiduciaries of plans covered by part
4 of title I of ERISA must determine that acceptance of an in-kind
contribution is consistent with ERISA's general standards of fiduciary
conduct. It is the view of the Department that acceptance of an in-kind
contribution is a fiduciary act subject to section 404 of ERISA. In this
regard, sections 406(a)(1)(A) and (B) of ERISA require that fiduciaries
discharge their duties to a plan solely in the interests of the
participants and beneficiaries, for the exclusive purpose of providing
benefits and defraying reasonable administrative expenses, and with the
care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar
with such matters would use in the conduct of an enterprise of a like
character and with like aims. In addition, section 406(a)(1)(C) requires
generally that fiduciaries diversify plan assets so as to minimize the
risk of large losses. Accordingly, the fiduciaries of a plan must act
``prudently,'' ``solely in the interest'' of the plan's participants and
beneficiaries and with a view to the need to diversify plan assets when
deciding whether to accept in-kind contributions. If accepting an in-
kind contribution is not ``prudent,'' not ``solely in the interest'' of
the participants and beneficiaries of the plan, or would result in an
improper lack of diversification of plan assets, the responsible
fiduciaries of the plan would be liable for any losses resulting from
such a breach of fiduciary responsibility, even if a contribution in
kind does not constitute a prohibited transaction under section 406 of
ERISA. In this regard, a fiduciary should consider any liabilities
appurtenant to the in-kind contribution to which the plan would be
exposed as a result of acceptance of the contribution.
[59 FR 66736, Dec. 28, 1994]
Sec. 2509.95-1 Interpretive bulletin relating to the fiduciary
standards under ERISA when selecting an annuity provider for
a defined benefit pension plan.
(a) Scope. This Interpretive Bulletin provides guidance concerning
certain fiduciary standards under part 4 of title I of the Employee
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1104-1114,
applicable to the selection of an annuity provider for the purpose of
benefit distributions from a defined benefit pension plan (hereafter
``pension plan'') when the pension plan intends to transfer liability
for benefits to an annuity provider. For guidance applicable to the
selection of an annuity provider for benefit distributions from an
individual account plan see 29 CFR 2550.404a-4.
(b) In General. Generally, when a pension plan purchases an annuity
from an insurer as a distribution of benefits, it is intended that the
plan's liability for such benefits is transferred to the annuity
provider. The Department's regulation defining the term ``participant
covered under the plan'' for certain purposes under title I of ERISA
recognizes that such a transfer occurs when the annuity is issued by an
insurance company licensed to do business in a State. 29 CFR 2510.3-
3(d)(2)(ii). Although the regulation does not define the term
``participant'' or ``beneficiary'' for purposes of standing to bring an
action under ERISA Sec. 502(a), 29 U.S.C. 1132(a), it makes clear that
the purpose of a benefit distribution annuity is to transfer the plan's
liability with respect to the individual's benefits to the annuity
provider.
Pursuant to ERISA section 404(a)(1), 29 U.S.C. 1104(a)(1),
fiduciaries must discharge their duties with respect to the plan solely
in the interest of the participants and beneficiaries. Section
404(a)(1)(A), 29 U.S.C.
[[Page 93]]
1104(a)(1)(A), states that the fiduciary must act for the exclusive
purpose of providing benefits to the participants and beneficiaries and
defraying reasonable plan administration expenses. In addition, section
404(a)(1)(B), 29 U.S.C. 1104(a)(1)(B), requires a fiduciary to act with
the care, skill, prudence and diligence under the prevailing
circumstances that a prudent person acting in a like capacity and
familiar with such matters would use.
(c) Selection of Annuity Providers. The selection of an annuity
provider for purposes of a pension benefit distribution, whether upon
separation or retirement of a participant or upon the termination of a
plan, is a fiduciary decision governed by the provisions of part 4 of
title I of ERISA. In discharging their obligations under section
404(a)(1), 29 U.S.C. 1104(a)(1), to act solely in the interest of
participants and beneficiaries and for the exclusive purpose of
providing benefits to the participants and beneficiaries as well as
defraying reasonable expenses of administering the plan, fiduciaries
choosing an annuity provider for the purpose of making a benefit
distribution must take steps calculated to obtain the safest annuity
available, unless under the circumstances it would be in the interests
of participants and beneficiaries to do otherwise. In addition, the
fiduciary obligation of prudence, described at section 404(a)(1)(B), 29
U.S.C. 1104(a)(1)(B), requires, at a minimum, that plan fiduciaries
conduct an objective, thorough and analytical search for the purpose of
identifying and selecting providers from which to purchase annuities. In
conducting such a search, a fiduciary must evaluate a number of factors
relating to a potential annuity provider's claims paying ability and
creditworthiness. Reliance solely on ratings provided by insurance
rating services would not be sufficient to meet this requirement. In
this regard, the types of factors a fiduciary should consider would
include, among other things:
(1) The quality and diversification of the annuity provider's
investment portfolio;
(2) The size of the insurer relative to the proposed contract;
(3) The level of the insurer's capital and surplus;
(4) The lines of business of the annuity provider and other
indications of an insurer's exposure to liability;
(5) The structure of the annuity contract and guarantees supporting
the annuities, such as the use of separate accounts;
(6) The availability of additional protection through state guaranty
associations and the extent of their guarantees. Unless they possess the
necessary expertise to evaluate such factors, fiduciaries would need to
obtain the advice of a qualified, independent expert. A fiduciary may
conclude, after conducting an appropriate search, that more than one
annuity provider is able to offer the safest annuity available.
(d) Costs and Other Considerations. The Department recognizes that
there are situations where it may be in the interest of the participants
and beneficiaries to purchase other than the safest available annuity.
Such situations may occur where the safest available annuity is only
marginally safer, but disproportionately more expensive than competing
annuities, and the participants and beneficiaries are likely to bear a
significant portion of that increased cost. For example, where the
participants in a terminating pension plan are likely to receive, in the
form of increased benefits, a substantial share of the cost savings that
would result from choosing a competing annuity, it may be in the
interest of the participants to choose the competing annuity. It may
also be in the interest of the participants and beneficiaries to choose
a competing annuity of the annuity provider offering the safest
available annuity is unable to demonstrate the ability to administer the
payment of benefits to the participants and beneficiaries. The
Department notes, however, that increased cost or other considerations
could never justify putting the benefits of annuitized participants and
beneficiaries at risk by purchasing an unsafe annuity.
In contrast to the above, a fiduciary's decision to purchase more
risky, lower-priced annuities in order to ensure or maximize a reversion
of excess assets that will be paid solely to the employer-sponsor in
connection with the termination of an over-funded pension plan would
violate the fiduciary's duties under ERISA to act solely in the interest
of the plan participants and beneficiaries. In such circumstances, the
interests of those participants and beneficiaries who will receive
annuities lies in receiving the safest annuity available and other
participants and beneficiaries have no countervailing interests. The
fiduciary in such circumstances must make diligent efforts to assure
that the safest available annuity is purchased.
Similarly, a fiduciary may not purchase a riskier annuity solely
because there are insufficient assets in a defined benefit plan to
purchase a safer annuity. The fiduciary may have to condition the
purchase of annuities on additional employer contributions sufficient to
purchase the safest available annuity.
(e) Conflicts of Interest. Special care should be taken in reversion
situations where fiduciaries selecting the annuity provider have an
interest in the sponsoring employer which might affect their judgment
and therefore create the potential for a violation of ERISA Sec.
406(b)(1). As a practical matter, many fiduciaries have this conflict of
interest and therefore will need to obtain and follow independent expert
advice calculated to identify those insurers with the
[[Page 94]]
highest claims-paying ability willing to write the business.
[60 FR 12329, Mar. 6, 1995, as amended at 72 FR 52006, Sept. 12, 2007;
73 FR 58447, Oct. 7, 2008]
Sec. 2509.96-1 Interpretive bulletin relating to participant
investment education.
(a) Scope. This interpretive bulletin sets forth the Department of
Labor's interpretation of section 3(21)(A)(ii) of the Employee
Retirement Income Security Act of 1974, as amended (ERISA), and 29 CFR
2510.3-21(c) as applied to the provision of investment-related
educational information to participants and beneficiaries in
participant-directed individual account pension plans (i.e., pension
plans that permit participants and beneficiaries to direct the
investment of assets in their individual accounts, including plans that
meet the requirements of the Department's regulations at 29 CFR
2550.404c-1).
(b) General. Fiduciaries of an employee benefit plan are charged
with carrying out their duties prudently and solely in the interest of
participants and beneficiaries of the plan, and are subject to personal
liability to, among other things, make good any losses to the plan
resulting from a breach of their fiduciary duties. ERISA sections 403,
404 and 409, 29 U.S.C. 1103, 1104, and 1109. Section 404(c) of ERISA
provides a limited exception to these rules for a pension plan that
permits a participant or beneficiary to exercise control over the assets
in his or her individual account. The Department of Labor's regulation,
at 29 CFR 2550.404c-1, describes the kinds of plans to which section
404(c) applies, the circumstances under which a participant or
beneficiary will be considered to have exercised independent control
over the assets in his or her account, and the consequences of a
participant's or beneficiary's exercise of such control. \1\ With both
an increase in the number of participant-directed individual account
plans and the number of investment options available to participants and
beneficiaries under such plans, there has been an increasing recognition
of the importance of providing participants and beneficiaries whose
investment decisions will directly affect their income at retirement,
with information designed to assist them in making investment and
retirement-related decisions appropriate to their particular situations.
Concerns have been raised, however, that the provision of such
information may in some situations be viewed as rendering ``investment
advice for a fee or other compensation,'' within the meaning of ERISA
section 3(21)(A)(ii), thereby giving rise to fiduciary status and
potential liability under ERISA for investment decisions of plan
participants and beneficiaries. In response to these concerns, the
Department of Labor is clarifying herein the applicability of ERISA
section 3(21)(A)(ii) and 29 CFR 2510.3-21(c) to the provision of
investment-related educational information to participants and
beneficiaries in participant directed individual account plans. \2\ In
providing this clarification, the Department does not address the ``fee
or other compensation, direct or indirect,'' which is
[[Page 95]]
a necessary element of fiduciary status under ERISA section
3(21)(A)(ii). \3\
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\1\ The section 404(c) regulation conditions relief from fiduciary
liability on, among other things, the participant or beneficiary being
provided or having the opportunity to obtain sufficient investment
information regarding the investment alternatives available under the
plan in order to make informed investment decisions. Compliance with
this condition, however, does not require that participants and
beneficiaries be offered or provided either investment advice or
investment education, e.g. regarding general investment principles and
strategies, to assist them in making investment decisions. 29 CFR
2550.404c-1(c)(4).
\2\ Issues relating to the circumstances under which information
provided to participants and beneficiaries may affect a participant's or
beneficiary's ability to exercise independent control over the assets in
his or her account for purposes of relief from fiduciary liability under
ERISA section 404(c) are beyond the scope of this interpretive bulletin.
Accordingly, no inferences should be drawn regarding such issues. See 29
CFR 2550.404c-1(c)(2). It is the view of the Department, however, that
the provision of investment-related information and material to
participants and beneficiaries in accordance with paragraph (d) of this
interpretive bulletin will not, in and of itself, affect the
availability of relief under section 404(c).
\3\ The Department has expressed the view that, for purposes of
section 3(21)(A)(ii), such fees or other compensation need not come from
the plan and should be deemed to include all fees or other compensation
incident to the transaction in which the investment advise has been or
will be rendered. See A.O. 83-60A (Nov. 21, 1983); Reich v. McManus, 883
F. Supp. 1144 (N.D. Ill. 1995).
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(c) Investment advice. Under ERISA section 3(21)(A)(ii), a person is
considered a fiduciary with respect to an employee benefit plan to the
extent that person ``renders investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys or other
property of such plan, or has any authority to do so . . . .'' The
Department issued a regulation, at 29 CFR 2510.3-21(c), describing the
circumstances under which a person will be considered to be rendering
``investment advice'' within the meaning of section 3(21)(A)(ii).
Because section 3(21)(A)(ii) applies to advice with respect to ``any
moneys or other property'' of a plan and 29 CFR 2510.3-21(c) is intended
to clarify the application of that section, it is the view of the
Department of Labor that the criteria set forth in the regulation apply
to determine whether a person renders ``investment advice'' to a pension
plan participant or beneficiary who is permitted to direct the
investment of assets in his or her individual account. Applying 29 CFR
2510.3-21(c) in the context of providing investment-related information
to participants and beneficiaries of participant-directed individual
account pension plans, a person will be considered to be rendering
``investment advice,'' within the meaning of ERISA section 3(21)(A)(ii),
to a participant or beneficiary only if:
(1)(i) The person renders advice to the participant or beneficiary
as to the value of securities or other property, or makes
recommendations as to the advisability of investing in, purchasing, or
selling securities or other property (2510.3-21(c)(1)(i); and
(ii) The person, either directly or indirectly,
(A) Has discretionary authority or control with respect to
purchasing or selling securities or other property for the participant
or beneficiary (2510.3-21(c)(1)(ii)(A)), or
(B) Renders the advice on a regular basis to the participant or
beneficiary, pursuant to a mutual agreement, arrangement or
understanding (written or otherwise) with the participant or beneficiary
that the advice will serve as a primary basis for the participant's or
beneficiary's investment decisions with respect to plan assets and that
such person will render individualized advice based on the particular
needs of the participant or beneficiary (2510.3-21(c)(1)(ii)(B)). \4\
Whether the provision of particular investment-related information or
materials to a participant or beneficiary constitutes the rendering of
``investment advice,'' within the meaning of 29 CFR 2510.3-21(c)(1),
generally can be determined only by reference to the facts and
circumstances of the particular case with respect to the individual plan
participant or beneficiary. To facilitate such determinations, however,
the Department of Labor has identified, in paragraph (d), below,
examples of investment-related information and materials which if
provided to plan participants and beneficiaries would not, in the view
of the Department, result in the rendering of ``investment advice''
under ERISA section 3(21)(A)(ii) and 29 CFR 2510.3-21(c).
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\4\ This IB does not address the application of 29 CFR 2510.3-21(c)
to communications with fiduciaries of participant-directed individual
account pension plan plans.
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(d) Investment education. For purposes of ERISA section 3(21)(A)(ii)
and 29 CFR 2510.3-21(c), the Department of Labor has determined that the
furnishing of the following categories of information and materials to a
participant or beneficiary in a participant-directed individual account
pension plan will not constitute the rendering of ``investment advice,''
irrespective of who provides the information (e.g., plan sponsor,
fiduciary or service provider), the frequency with which the information
is shared, the form in which the information and materials are provided
(e.g., on an individual or group basis, in writing or orally, or via
video or computer software), or whether an identified category of
information and materials is furnished alone or
[[Page 96]]
in combination with other identified categories of information and
materials.
(1) Plan information. (i) Information and materials that inform a
participant or beneficiary about the benefits of plan participation, the
benefits of increasing plan contributions, the impact of preretirement
withdrawals on retirement income, the terms of the plan, or the
operation of the plan; or
(ii) Information such as that described in 29 CFR 2550.404c-
1(b)(2)(i) on investment alternatives under the plan (e.g., descriptions
of investment objectives and philosophies, risk and return
characteristics, historical return information, or related
prospectuses). \5\ The information and materials described above relate
to the plan and plan participation, without reference to the
appropriateness of any individual investment option for a particular
participant or beneficiary under the plan. The information, therefore,
does not contain either ``advice'' or ``recommendations'' within the
meaning of 29 CFR 2510.3-21(c)(1)(i). Accordingly, the furnishing of
such information would not constitute the rendering of ``investment
advice'' for purposes of section 3(21)(A)(ii) of ERISA.
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\5\ Descriptions of investment alternatives under the plan may
include information relating to the generic asset class (e,g., equities,
bonds, or cash) of the investment alternatives. 29 CFR 2550.404c-
1(b)(2)(i)(B)(1)(ii).
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(2) General financial and investment information. Information and
materials that inform a participant or beneficiary about: (i) General
financial and investment concepts, such as risk and return,
diversification, dollar cost averaging, compounded return, and tax
deferred investment; (ii) historic differences in rates of return
between different asset classes (e.g., equities, bonds, or cash) based
on standard market indices; (iii) effects of inflation; (iv) estimating
future retirement income needs; (v) determining investment time
horizons; and (vi) assessing risk tolerance. The information and
materials described above are general financial and investment
information that have no direct relationship to investment alternatives
available to participants and beneficiaries under a plan or to
individual participants or beneficiaries. The furnishing of such
information, therefore, would not constitute rendering ``advice'' or
making ``recommendations'' to a participant or beneficiary within the
meaning of 29 CFR 2510.3-21(c)(1)(i). Accordingly, the furnishing of
such information would not constitute the rendering of ``investment
advice'' for purposes of section 3(21)(A)(ii) of ERISA.
(3) Asset allocation models. Information and materials (e.g., pie
charts, graphs, or case studies) that provide a participant or
beneficiary with models, available to all plan participants and
beneficiaries, of asset allocation portfolios of hypothetical
individuals with different time horizons and risk profiles, where: (i)
Such models are based on generally accepted investments theories that
take into account the historic returns of different asset classes (e.g.,
equities, bonds, or cash) over define periods of time; (ii) all material
facts and assumptions on which such models are based (e.g., retirement
ages, life expectancies, income levels, financial resources, replacement
income ratios, inflation rates, and rates of return) accompany the
models; (iii) to the extent that an asset allocation model identifies
any specific investment alternative available under the plan, the model
is accompanied by a statement indicating that other investment
alternatives having similar risk and return characteristics may be
available under the plan and identifying where information on those
investment alternatives may be obtained; and (iv) the asset allocation
models are accompanied by a statement indicating that, in applying
particular asset allocation models to their individual situations,
participants or beneficiaries should consider their other assets,
income, and investments (e.g., equity in a home, IRA investments,
savings accounts, and interests in other qualified and non-qualified
plans) in addition to their interests in the plan. Because the
information and materials described above would enable a participant or
beneficiary to assess the relevance of an asset allocation model to his
or her individual situation, the furnishing of such information would
not constitute a ``recommendation'' within the meaning of
[[Page 97]]
29 CFR 2510.3-21(c)(1)(i) and, accordingly, would not constitute
``investment advice'' for purposes of section 3(21)(A)(ii) of ERISA.
This result would not, in the view of the Department, be affected by the
fact that a plan offers only one investment alternative in a particular
asset class identified in an asset allocation model.
(4) Interactive investment materials. Questionnaires, worksheets,
software, and similar materials which provide a participant or
beneficiary the means to estimate future retirement income needs and
assess the impact of different asset allocations on retirement income,
where: (i) Such materials are based on generally accepted investment
theories that take into account the historic returns of different asset
classes (e.g., equities, bonds, or cash) over defined periods of time;
(ii) there is an objective correlation between the asset allocations
generated by the materials and the information and data supplied by the
participant or beneficiary; (iii) all material facts and assumptions
(e.g., retirement ages, life expectancies, income levels, financial
resources, replacement income ratios, inflation rates, and rates of
return) which may affect a participant's or beneficiary's assessment of
the different asset allocations accompany the materials or are specified
by the participant or beneficiary; (iv) to the extent that an asset
allocation generated by the materials identifies any specific investment
alternative available under the plan, the asset allocation is
accompanied by a statement indicating that other investment alternatives
having similar risk and return characteristics may be available under
the plan and identifying where information on those investment
alternatives may be obtained; and (v) the materials either take into
account or are accompanied by a statement indicating that, in applying
particular asset allocations to their individual situations,
participants or beneficiaries should consider their other assets,
income, and investments (e.g., equity in a home, IRA investments,
savings accounts, and interests in other qualified and non-qualified
plans) in addition to their interests in the plan. The information
provided through the use of the above-described materials enables
participants and beneficiaries independently to design and assess
multiple asset allocation models, but otherwise these materials do not
differ from asset allocation models based on hypothetical assumptions.
Such information would not constitute a ``recommendation'' within the
meaning of 29 CFR 2510.3-21(c)(1)(i) and, accordingly, would not
constitute ``investment advice'' for purposes of section 3(21)(A)(ii) of
ERISA. The Department notes that the information and materials described
in subparagraphs (1)-(4) above merely represent examples of the type of
information and materials which may be furnished to participants and
beneficiaries without such information and materials constituting
``investment advice.'' In this regard, the Department recognizes that
there may be many other examples of information, materials, and
educational services which, if furnished to participants and
beneficiaries, would not constitute ``investment advice.'' Accordingly,
no inferences should be drawn from subparagraphs (1)-(4), above, with
respect to whether the furnishing of any information, materials or
educational services not described therein may constitute ``investment
advice.'' Determinations as to whether the provision of any information,
materials or educational services not described herein constitutes the
rendering of ``investment advice'' must be made by reference to the
criteria set forth in 29 CFR 2510. 3-21(c)(1).
(e) Selection and monitoring of educators and advisors. As with any
designation of a service provider to a plan, the designation of a
person(s) to provide investment educational services or investment
advice to plan participants and beneficiaries is an exercise of
discretionary authority or control with respect to management of the
plan; therefore, persons making the designation must act prudently and
solely in the interest of the plan participants and beneficiaries, both
in making the designation(s) and in continuing such designation(s). See
ERISA sections 3(21)(A)(i) and 404(a), 29 U.S.C. 1002 (21)(A)(i) and
1104(a). In addition, the designation of an investment advisor to serve
as a fiduciary may give rise to co-fiduciary liability if the person
[[Page 98]]
making and continuing such designation in doing so fails to act
prudently and solely in the interest of plan participants and
beneficiaries; or knowingly participates in, conceals or fails to make
reasonable efforts to correct a known breach by the investment advisor.
See ERISA section 405(a), 29 U.S.C. 1105(a). The Department notes,
however, that, in the context of an ERISA section 404(c) plan, neither
the designation of a person to provide education nor the designation of
a fiduciary to provide investment advice to participants and
beneficiaries would, in itself, give rise to fiduciary liability for
loss, or with respect to any breach of part 4 of title I of ERISA, that
is the direct and necessary result of a participant's or beneficiary's
exercise of independent control. 29 CFR 2550.404c-1(d). The Department
also notes that a plan sponsor or fiduciary would have no fiduciary
responsibility or liability with respect to the actions of a third party
selected by a participant or beneficiary to provide education or
investment advice where the plan sponsor or fiduciary neither selects
nor endorses the educator or advisor, nor otherwise makes arrangements
with the educator or advisor to provide such services.
[85 FR 40590, July 7, 2020]
Sec. 2509.99-1 Interpretive Bulletin Relating to Payroll Deduction IRAs.
(a) Scope. This interpretive bulletin sets forth the Department of
Labor's (the Department's) interpretation of section 3(2)(A) of the
Employee Retirement Income Security Act of 1974, as amended, (ERISA) and
29 CFR 2510.3-2(d), as applied to payroll deduction programs established
by employers \1\ for the purpose of enabling employees to make voluntary
contributions to individual retirement accounts or individual retirement
annuities (IRAs) described in section 408(a) or (b) or section 408A of
the Internal Revenue Code (the Code).
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\1\ The views expressed in this Interpretive Bulletin with respect
to payroll deduction programs of employers are also generally applicable
to dues checkoff programs of employee organizations.
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(b) General. It has been the Department's long-held view that an
employer who simply provides employees with the opportunity for making
contributions to an IRA through payroll deductions does not thereby
establish a ``pension plan'' within the meaning of section 3 (2) (A) of
ERISA. In this regard, 29 CFR 2510.3-2 (d) sets forth a safe harbor
under which IRAs will not be considered to be pension plans when the
conditions of the regulation are satisfied. Thus, an employer may, with
few constraints, provide to its employees an opportunity for saving for
retirement, under terms and conditions similar to those of certain other
optional payroll deduction programs, such as for automatic savings
deposits or purchases of United States savings bonds, without thereby
creating a pension plan under Title I of ERISA. The guidance provided
herein is intended to clarify the application of the IRA safe harbor set
forth at 29 CFR 2510.3-2 (d) and, thereby, facilitate the establishment
of payroll deduction IRAs.
(c) Employee communications. (1) It is the Department's view that,
so long as an employer maintains neutrality with respect to an IRA
sponsor in its communications with its employees, the employer will not
be considered to ``endorse'' an IRA payroll deduction program for
purposes of 29 CFR 2510.3-2(d). \2\ An employer may encourage its
employees to save for retirement by providing
[[Page 99]]
general information on the IRA payroll deduction program and other
educational materials that explain the advisability of retirement
savings, including the advantages of contributing to an IRA, without
thereby converting the program under which the employees' wages are
withheld for contribution into the IRAs into an ERISA covered plan.
However, the employer must make clear that its involvement in the
program is limited to collecting the deducted amounts and remitting them
promptly to the IRA sponsor and that it does not provide any additional
benefit or promise any particular investment return on the employee's
savings.
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\2\ The Department has specifically stated, in its Advisory
Opinions, that an employer may demonstrate its neutrality with respect
to an IRA sponsor in a variety of ways, including (but not limited to)
by ensuring that any materials distributed to employees in connection
with an IRA payroll deduction program clearly and prominently state, in
language reasonably calculated to be understood by the average employee,
that the IRA payroll deduction program is completely voluntary; that the
employer does not endorse or recommend either the sponsor or the funding
media; that other IRA funding media are available to employees outside
the payroll deduction program; that an IRA may not be appropriate for
all individuals; and that the tax consequences of contributing to an IRA
through the payroll deduction program are generally the same as the
consequences of contributing to an IRA outside the program. The employer
would not be considered neutral, in the Department's view, to the extent
that the materials distributed to employees identified the funding
medium as having as one of its purposes investing in securities of the
employer or its affiliates or the funding medium in fact has any
significant investments in such securities. If the IRA program were a
result of an agreement between the employer and an employee
organization, the Department would view informational materials that
identified the funding medium as having as one of its purposes investing
in an investment vehicle that is designed to benefit an employee
organization by providing more jobs for its members, loans to its
members, or similar direct benefits (or the funding medium's actual
investments in any such investment vehicles) as indicating the employee
organization's involvement in the program in excess of the limitations
of 29 CFR 2510.3-2 (d).
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(2) The employer may also do the following without converting a
payroll deduction IRA program into an ERISA plan: An employer may answer
employees' specific inquiries about the mechanics of the IRA payroll
deduction program and may refer other inquiries to the appropriate IRA
sponsor. An employer may provide to employees informational materials
written by the IRA sponsor describing the sponsor's IRA programs or
addressing topics of general interest regarding investments and
retirement savings, provided that the material does not itself suggest
that the employer is other than neutral with respect to the IRA sponsor
and its products; the employer may request that the IRA sponsor prepare
such informational materials and it may review such materials for
appropriateness and completeness. The fact that the employer's name or
logo is displayed in the informational materials in connection with
describing the payroll deduction program would not in and of itself, in
the Department's view, suggest that the employer has ``endorsed'' the
IRA sponsor or its products, provided that the specific context and
surrounding facts and circumstances make clear to the employees that the
employer's involvement is limited to facilitating employee contributions
through payroll deductions. \3\
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\3\ For example, if the employer whose logo appeared on the
promotional materials provided a statement along the lines of in the
first sentence of footnote 5, the employer would not be considered to
have endorsed the IRA product.
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(d) Employer Limitations on the number of IRA sponsors offered under
the program. The Department recognizes that the cost of permitting
employees to make IRA contributions through payroll deductions may be
significantly affected by the number of IRA sponsors to which the
employer must remit contributions. It is the view of the Department that
an employer may limit the number of IRA sponsors to which employees may
make payroll deduction contributions without exceeding the limitations
of 29 CFR 2510.3-2(d), provided that any limitations on, or costs or
assessments associated with an employee's ability to transfer or roll
over IRA contributions to another IRA sponsor is fully disclosed in
advance of the employee's decision to participate in the program. The
employer may select one IRA sponsor as the designated recipient for
payroll deduction contributions, or it may establish criteria by which
to select IRA sponsors, e.g., standards relating to the sponsor's
provision of investment education, forms, availability to answer
employees' questions, etc., and may periodically review its selectees to
determine whether to continue to designate them. However, an employer
may be considered to be involved in the program beyond the limitations
set forth in 29 CFR 2510.3-2(d) if the employer negotiates with an IRA
sponsor and thereby obtains special terms and conditions for its
employees that are not generally available to similar purchasers of the
IRA. The employer's involvement in the IRA program would also be in
excess of the limitations of the regulation if the employer exercises
any influence over the investments made or permitted by the IRA sponsor.
(e) Administrative fees. The employer may pay any fee the IRA
sponsor imposes on employers for services the sponsor provides in
connection with the establishment and maintenance of the payroll
deduction process itself, without exceeding the limitations of 29 CFR
2510.3-2(d). Further, the employer may assume the internal costs (such
as for overhead, bookkeeping, etc) of implementing and maintaining the
payroll deduction program without reimbursement from either employees or
the IRA sponsor without exceeding the limits of the regulation. However,
if an employer pays, in connection with operating an IRA payroll
deduction program, any administrative, investment management, or other
fee that the IRA sponsor would require employees to pay for establishing
or maintaining the IRA, the employer would, in the view of the
Department, fall outside the safe harbor and, as a result, may be
considered to have established a ``pension plan'' for its employees.
(f) Reasonable Compensation for Services. 29 CFR 2510.3-2(d)
provides that an employer may not receive any consideration in
connection with operating an IRA payroll deduction program, but may be
paid ``reasonable compensation for services actually rendered in
connection with payroll deductions or dues checkoffs.'' Employers have
asked whether ``reasonable compensation'' under section 2510.3-2(d)
includes payments from an
[[Page 100]]
IRA sponsor to an employer for the employer's cost of operating the IRA
payroll deduction program. It is the Department's view that the IRA
sponsor may make such payments, to the extent that they constitute
compensation for the actual costs of the program to the employer.
However, ``reasonable compensation'' does not include any profit to the
employer. See 29 CFR 2510.3-1(j), relating to group or group-type
insurance programs. For example, if an IRA sponsor offers to pay an
employer an amount equal to a percentage of the assets contributed by
employees to IRAs through payroll deduction, such an arrangement might
exceed ``reasonable compensation'' for the services actually rendered by
the employer in connection with the IRA payroll deduction program. An
employer will also be considered to have received consideration that is
not ``reasonable compensation'' if the IRA sponsor agrees to make or to
permit particular investments of IRA contributions in consideration for
the employer's agreement to make a payroll deduction program available
to its employees, or if the IRA sponsor agrees to extend credit to or
for the benefit of the employer in return for the employer's making
payroll deduction available to the employees.
(g) Additional rules when employer is IRA sponsor or affiliate of
IRA sponsor. Under certain circumstances, an employer that offers IRAs
in the normal course of its business to the general public or that is an
affiliate \4\ of an IRA sponsor may provide its employees with the
opportunity to make contributions to IRAs sponsored by the employer or
the affiliate through a payroll deduction program, without exceeding the
limitations of Sec. 2510.3-2(d). If the IRA products offered to the
employees for investment of the payroll deduction contributions are
identical to IRA products the sponsor offers the general public in the
ordinary course of its business, and any management fees, sales
commissions, and the like charged by the IRA sponsor to employees
participating in the payroll deduction program are the same as those
charged by the sponsor to employees of non-affiliated employers that
establish an IRA payroll deduction program, the Department has generally
taken the position that this alone will not cause the employer to be
sufficiently involved in the IRA program as an employer or to have
received consideration of the type prohibited under Sec. 2510.2(d)(iv)
to warrant the program being considered outside the safe harbor of the
regulation. \5\ Under such circumstances, the employer, in offering
payroll deduction contribution opportunities to its employees, would
appear to be acting generally as an IRA sponsor, rather than as the
employer of the individuals who make the contributions. \6\
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\4\ For purposes of this interpretive bulletin, the definition of
``affiliate'' in ERISA section 407(d)(7) applies.
\5\ While the funding medium offered by an employer that is an IRA
sponsor or an affiliate of an IRA sponsor might be considered an
employer security when offered to its own employees, the fact that
informational materials provided to employees identify the funding
medium as having as one of its purposes investing in securities of the
employer would not, in the Department's view, involve the employer
beyond the limits of 29 CFR 2510.3-2(d). Neither would the fact that the
funding medium may actually be so invested. However, the Department
would consider that an employer may have exceeded the limitation of
2510.3-2(d) if the informational materials the employer provides to
employees suggest that the employer, in providing the IRA payroll
deduction program for purposes of investing in employer securities, is
acting as an employer in relation to persons who participate in the
program, rather than as an IRA sponsor acting in the course of its
ordinary business of making IRA products available to the public.
\6\ However, if an employer that is an IRA sponsor waives enrollment
and management fees for its employees' IRAs, and it normally charges
those fees to members of the public who purchase IRAs, the employer
would be considered to be so involved in the program as to be outside
the safe harbor of the regulation.
[64 FR 33001, June 18, 1999]
Sec. 2509.2015-02 Interpretive bulletin relating to state savings
programs that sponsor or facilitate plans covered by the Employee
Retirement Income Security
Act of 1974.
(a) Scope. This document sets forth the views of the Department of
Labor (Department) concerning the application of the Employee Retirement
Income Security Act of 1974 (ERISA) to certain state laws designed to
expand the retirement savings options available to private sector
workers through ERISA-covered retirement plans. Concern over adverse
social and economic consequences of inadequate retirement savings levels
has prompted several states to adopt or consider legislation to address
this problem.\1\ An impediment to state adoption of such measures is
uncertainty about the effect of
[[Page 101]]
ERISA's broad preemption of state laws that ``relate to'' private sector
employee benefit plans. In the Department's view, ERISA preemption
principles leave room for states to sponsor or facilitate ERISA-based
retirement savings options for private sector employees, provided
employers participate voluntarily and ERISA's requirements, liability
provisions, and remedies fully apply to the state programs.
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\1\ For information on the problem of inadequate retirement savings,
see the May 2015 Report of the United States Government Accountability
Office (GAO), RETIREMENT SECURITY--Most Households Approaching
Retirement Have Low Savings (GAO Report-15-419) (available at
www.gao.gov/assets/680/670153.pdf). Also see GAO's September 2015
Report-15-566, RETIREMENT SECURITY--Federal Action Could Help State
Efforts to Expand Private Sector Coverage (available at www.gao.gov/
assets/680/672419.pdf).
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(b) In general. There are advantages to utilizing an ERISA plan
approach. Employers as well as employees can make contributions to ERISA
plans, contribution limits are higher than for other state approaches
that involve individual retirement plans (IRAs) that are not intended to
be ERISA-covered plans,\2\ and ERISA plan accounts have stronger
protection from creditors. Tax credits may also allow small employers to
offset part of the costs of starting certain types of retirement
plans.\3\ Utilizing ERISA plans also provides a well-established uniform
regulatory structure with important consumer protections, including
fiduciary obligations, automatic enrollment rules, recordkeeping and
disclosure requirements, legal accountability provisions, and spousal
protections.
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\2\ Some states are developing programs to encourage employees to
establish tax-favored IRAs funded by payroll deductions rather than
encouraging employers to adopt ERISA plans. Oregon, Illinois, and
California, for example, have adopted laws along these lines. Oregon
2015 Session Laws, Ch. 557 (H.B. 2960) (June 2015); Illinois Secure
Choice Savings Program Act, 2014 Ill. Legis. Serv. P.A. 98-1150 (S.B.
2758) (West); California Secure Choice Retirement Savings Act, 2012 Cal.
Legis. Serv. Ch. 734 (S.B. 1234) (West). These IRA-based initiatives
generally require specified employers to deduct amounts from their
employees' paychecks, unless the employee affirmatively elects not to
participate, in order that those amounts may be remitted to state-
administered IRAs for the employees. The Department is addressing these
state ``payroll deduction IRA'' initiatives separately through a
proposed regulation that describes safe-harbor conditions for employers
to avoid creation of ERISA-covered plans when they comply with state
laws that require payroll deduction IRA programs. This Interpretive
Bulletin does not address those laws.
\3\ For more information, see Choosing a Retirement Solution for
Your Small Business, a joint project of the U.S. Department of Labor's
Employee Benefits Security Administration (EBSA) and the Internal
Revenue Service. Available at www.irs.gov/pub/irs-pdf/p3998.pdf.
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The Department is not aware of judicial decisions or other ERISA
guidance directly addressing the application of ERISA to state programs
that facilitate or sponsor ERISA plans, and, therefore, believes that
the states, employers, other plan sponsors, workers, and other
stakeholders would benefit from guidance setting forth the general views
of the Department on the application of ERISA to these state
initiatives. The application of ERISA in an individual case would
present novel preemption questions and, if decided by a court, would
turn on the particular features of the state-sponsored program at issue,
but, as discussed below, the Department believes that neither ERISA
section 514 specifically, nor federal preemption generally, are
insurmountable obstacles to all state programs that promote retirement
saving among private sector workers through the use of ERISA-covered
plans.
Marketplace Approach
One state approach is reflected in the 2015 Washington State Small
Business Retirement Savings Marketplace Act.\4\ This law requires the
state to contract with a private sector entity to establish a program
that connects eligible employers with qualifying savings plans available
in the private sector market. Only products that the state determines
are suited to small employers, provide good quality, and charge low fees
would be included in the state's ``marketplace.'' Washington State
employers would be free to use the marketplace or not and would not be
required to establish any savings plans for their employees. Washington
[[Page 102]]
would merely set standards for arrangements marketed through the
marketplace. The marketplace arrangement would not itself be an ERISA-
covered plan, and the arrangements available to employers through the
marketplace could include ERISA-covered plans and other non-ERISA
savings arrangements. The state would not itself establish or sponsor
any savings arrangement. Rather, the employer using the state
marketplace would establish the savings arrangement, whether it is an
ERISA-covered employee pension benefit plan or a non-ERISA savings
program. ERISA's reporting and disclosure requirements, protective
standards and remedies would apply to the ERISA plans established by
employers using the marketplace. On the other hand, if the plan or
arrangement is of a type that would otherwise be exempt from ERISA (such
as a payroll deduction IRA arrangement that satisfies the conditions of
the existing safe harbor at 29 CFR 2510.3-2(d)), the state's involvement
as organizer or facilitator of the marketplace would not by itself cause
that arrangement to be covered by ERISA. Similarly, if, as in Washington
State, a marketplace includes a type of plan that is subject to special
rules under ERISA, such as the SIMPLE-IRA under section 101(h) of ERISA,
the state's involvement as organizer or facilitator of the marketplace
would not by itself affect the application of the special rules.
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\4\ 2015 Wash. Sess. Laws chap. 296 (SB 5826) (available at http://
app.leg.wa.gov/billinfo/summary.aspx?bill=5826&year=2015).
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Prototype Plan Approach
Another potential approach is a state sponsored ``prototype plan.''
At least one state, Massachusetts, has enacted a law to allow nonprofit
organizations with fewer than 20 employees to adopt a contributory
retirement plan developed and administered by the state.\5\ Banks,
insurance companies and other regulated financial institutions commonly
market prototype plans to employers as simple means for them to
establish and administer employee pension benefit plans.\6\ The
financial institutions develop standard form 401(k) or other tax-favored
retirement plans (such as SIMPLE-IRA plans) and secure IRS approval.
Typically, employers may choose features such as contribution rates to
meet their specific needs. Each employer that adopts the prototype
sponsors an ERISA plan for its employees. The individual employers would
assume the same fiduciary obligations associated with sponsorship of any
ERISA-covered plans. For example, the prototype plan documents often
specify that the employer is the plan's ``named fiduciary'' and ``plan
administrator'' responsible for complying with ERISA, but they may allow
the employer to delegate these responsibilities to others. The plan
documents for a state-administered prototype plan could designate the
state or a state designee to perform these functions. Thus, the state or
a designated third-party could assume responsibility for most
administrative and asset management functions of an employer's prototype
plan. The state could also designate low-cost investment options and a
third-party administrative service provider for its prototype plans.
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\5\ The retirement plan will be overseen by the Massachusetts State
Treasurer's Office. Mass. Gen. Laws ch.29, Sec. 64E (2012). In June
2014, the Massachusetts Treasurer's Office announced that the IRS had
issued a favorable ruling on the proposal, but noted that additional
approval from the IRS is still needed (see www.massnonprofitnet.org/
blog/nonprofitretirement/). See also GAO's Report 2015 Report-15-566,
RETIREMENT SECURITY--Federal Action Could Help State Efforts to Expand
Private Sector Coverage, which included the following statement at
footnote 93 regarding the Massachusetts program: ``The Massachusetts
official told us that each participating employer would be considered to
have created its own plan, characterizing the state's effort as
development of a volume submitter 401(k) plan, which is a type of
employee benefit plan that is typically pre-approved by the Internal
Revenue Service.'' (GAO report is available at www.gao.gov/assets/680/
672419.pdf).
\6\ See IRS Online Publication, Types of Pre-Approved Retirement
Plans at www.irs.gov/Retirement-Plans/Types-of-Pre-Approved-Retirement-
Plans.
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[[Page 103]]
Multiple Employer Plan (MEP) Approach
A third approach, (referenced, for example, in the ``Report of the
Governor's Task Force to Ensure Retirement Security for All
Marylanders''),\7\ involves a state establishing and obtaining IRS tax
qualification for a ``multiple employer'' 401(k)-type plan, defined
benefit plan, or other tax-favored retirement savings program. The
Department anticipates that such an approach would generally involve
permitting employers that meet specified eligibility criteria to join
the state multiple employer plan. The plan documents would provide that
the plan is subject to Title I of ERISA and is intended to comply with
Internal Revenue Code tax qualification requirements. The plan would
have a separate trust holding contributions made by the participating
employers, the employer's employees, or both. The state, or a designated
governmental agency or instrumentality, would be the plan sponsor under
ERISA section 3(16)(B) and the named fiduciary and plan administrator
responsible (either directly or through one or more contract agents,
which could be private-sector providers) for administering the plan,
selecting service providers, communicating with employees, paying
benefits, and providing other plan services. A state could take
advantage of economies of scale to lower administrative and other costs.
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\7\ Governor's Task Force to Ensure Retirement Security for All
Marylanders, 1,000,000 of Our Neighbors at Risk: Improving Retirement
Security for Marylanders (February 2015) (available at
www.dllr.state.md.us/retsecurity/).
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As a state-sponsored multiple employer plan (``state MEP''), this
type of arrangement could also reduce overall administrative costs for
participating employers in large part because the Department would
consider this arrangement as a single ERISA plan. Consequently, only a
single Form 5500 Annual Return/Report would be filed for the whole
arrangement. In order to participate in the plan, employers simply would
be required to execute a participation agreement. Under a state MEP,
each employer that chose to participate would not be considered to have
established its own ERISA plan, and the state could design its defined
contribution MEP so that the participating employers could have limited
fiduciary responsibilities (the duty to prudently select the arrangement
and to monitor its operation would continue to apply). The continuing
involvement by participating employers in the ongoing operation and
administration of a 401(k)-type individual account MEP, however,
generally could be limited to enrolling employees in the state plan and
forwarding voluntary employee and employer contributions to the plan.
When an employer joins a carefully structured MEP, the employer is not
the ``sponsor'' of the plan under ERISA, and also would not act as a
plan administrator or named fiduciary. Those fiduciary roles, and
attendant fiduciary responsibilities, would be assigned to other parties
responsible for administration and management of the state MEP.\8\
Adoption of a defined benefit plan structure would involve additional
funding and other employer obligations.\9\
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\8\ A state developing a state sponsored MEP could submit an
advisory opinion request to the Department under ERISA Procedure 76-1 to
confirm that the MEP at least in form has assigned those fiduciary
functions to persons other than the participating employers. ERISA
Procedure 76-1 is available at www.dol.gov/ebsa/regs/aos/
ao_requests.html.
\9\ State laws authorizing defined benefit plans for private sector
employers (as prototypes or as multiple employer plans) might create
plans covered by Title IV of ERISA and subject to the jurisdiction of
the Pension Benefit Guaranty Corporation (PBGC). Subject to some
exceptions, the PBGC protects the retirement incomes of workers in
private-sector defined benefit pension plans. A defined benefit plan
provides a specified monthly benefit at retirement, often based on a
combination of salary and years of service. PBGC was created by ERISA to
encourage the continuation and maintenance of private-sector defined
benefit pension plans, provide timely and uninterrupted payment of
pension benefits, and keep pension insurance premiums at a minimum. More
information is available on the PBGC's Web site at www.pbgc.gov.
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For a person (other than an employee organization) to sponsor an
employee benefit plan under Title I of ERISA,
[[Page 104]]
such person must either act directly as the employer of the covered
employees or ``indirectly in the interest of an employer'' in relation
to a plan.\10\ ERISA sections 3(2), 3(5). A person will be considered to
act ``indirectly in the interest of an employer, in relation to a
plan,'' if such person is tied to the contributing employers or their
employees by genuine economic or representational interests unrelated to
the provision of benefits.\11\ In the Department's view, a state has a
unique representational interest in the health and welfare of its
citizens that connects it to the in-state employers that choose to
participate in the state MEP and their employees, such that the state
should be considered to act indirectly in the interest of the
participating employers.\12\ Having this unique nexus distinguishes the
state MEP from other business enterprises that underwrite benefits or
provide administrative services to several unrelated employers.\13\
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\10\ Different rules may apply under the Internal Revenue Code for
purposes of determining the plan sponsor of a tax-qualified retirement
plan.
\11\ See, e.g., Advisory Opinion 2012-04A. See also MDPhysicians &
Associates, Inc. v. State Bd. Ins., 957 F.2d 178,185 (5th Cir.), cert.
denied, 506 U.S. 861 (1992) (``the entity that maintains the plan and
the individuals that benefit from the plan [must be] tied by a common
economic or representation interest, unrelated to the provision of
benefits.'' (quoting Wisconsin Educ. Assoc. Ins. Trust v. Iowa State
Bd., 804 F.2d 1059, 1063 (8th Cir. 1986)).
\12\ The Department has also recognized other circumstances when a
person sponsoring a plan is acting as an ``employer'' indirectly rather
than as an entity that underwrites benefits or provides administrative
services. See Advisory Opinion 89-06A (Department would consider a
member of a controlled group which establishes a benefit plan for its
employees and/or the employees of other members of the controlled group
to be an employer within the meaning of section 3(5) of ERISA); Advisory
Opinion 95-29A (employee leasing company may act either directly or
indirectly in the interest of an employer in establishing and
maintaining employee benefit plan).
\13\ See Advisory Opinion 2012-04A (holding that a group of
employers can collectively act as the ``employer'' in sponsoring a
multiple employer plan only if the employers group was formed for
purposes other than the provision of benefits, the employers have a
basic level of commonality (such as the participating employers all
being in the same industry), and the employers participating in the plan
in fact act as the ``employer'' by controlling the plan).
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(c) ERISA Preemption. The Department is aware that a concern for
states adopting an ERISA plan approach is whether or not those state
laws will be held preempted. ERISA preemption analysis begins with the
``presumption that Congress does not intend to supplant state law.'' New
York State Conference of Blue Cross & Blue Shield Plans v. Travelers
Ins. Co., 514 U.S. 645, 654 (1995). The question turns on Congress's
intent ``to avoid a multiplicity of regulation in order to permit
nationally uniform administration of employee benefit plans.'' Id. at
654, 657. See also Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11
(1987) (goal of ERISA preemption is to ``ensure . . . that the
administrative practices of a benefit plan will be governed by only a
single set of regulations.'').
Section 514 of ERISA provides that Title I ``shall supersede any and
all State laws insofar as they . . . relate to any employee benefit
plan'' covered by the statute. The U.S. Supreme Court has held that
``[a] law `relates to' an employee benefit plan, in the normal sense of
the phrase, if it has a connection with or reference to such a plan.''
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983) (footnote
omitted); see, e.g., Travelers, 514 U.S. at 656. A law has a ``reference
to'' ERISA plans if the law ``acts immediately and exclusively upon
ERISA plans'' or ``the existence of ERISA plans is essential to the
law's operation.'' California Div. of Labor Standards Enforcement v.
Dillingham Constr., N.A., 519 U.S. 316, 325-326 (1997). In determining
whether a state law has a ``connection with ERISA plans,'' the U.S.
Supreme Court ``look[s] both to `the objectives of the ERISA statute as
a guide to the scope of the state laws that Congress understood would
survive,' as well as to the nature of the effect of the state law on
ERISA plans,'' to ``determine whether [the] state law has the forbidden
connection'' with ERISA plans. Egelhoff v. Egelhoff, 532 U.S. 141, 147
(2001) (quoting Dillingham, 519 U.S. at 325). In various decisions, the
Court has concluded that ERISA
[[Page 105]]
preempts state laws that: (1) Mandate employee benefit structures or
their administration; (2) provide alternative enforcement mechanisms; or
(3) bind employers or plan fiduciaries to particular choices or preclude
uniform administrative practice, thereby functioning as a regulation of
an ERISA plan itself.\14\
---------------------------------------------------------------------------
\14\ Travelers, 514 U.S. at 658 (1995); Ingersoll-Rand Co. v.
McClendon, 498 U.S. 133, 142 (1990); Egelhoff v. Egelhoff, 532 U.S. 141,
148 (2001); Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 14 (1987).
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In the Department's view, state laws of the sort outlined above
interact with ERISA in such a way that section 514 preemption principles
and purposes would not appear to come into play in the way they have in
past preemption cases. Although the approaches described above involve
ERISA plans, they do not appear to undermine ERISA's exclusive
regulation of ERISA-covered plans. The approaches do not mandate
employee benefit structures or their administration, provide alternative
regulatory or enforcement mechanisms, bind employers or plan fiduciaries
to particular choices, or preclude uniform administrative practice in
any way that would regulate ERISA plans.
Moreover, the approaches appear to contemplate a state acting as a
participant in a market rather than as a regulator. The U.S. Supreme
Court has found that, when a state or municipality acts as a participant
in the market and does so in a narrow and focused manner consistent with
the behavior of other market participants, such action does not
constitute state regulation. Compare Building and Construction Trades
Council v. Associated Builders and Contractors of Massachusetts/Rhode
Island, Inc., 507 U.S. 218 (1993); Wisconsin Department of Industry,
Labor and Human Relations v. Gould, 475 U.S. 282 (1986); see also
American Trucking Associations, Inc. v. City of Los Angeles, 133 S. Ct.
2096, 2102 (2013) (Section 14501(c)(1) of the Federal Aviation
Administration Authorization Act, which preempts a state ``law,
regulation, or other provision having the force and effect of law
related to a price, route, or service of any motor carrier,'' 49 U.S.C.
14501(c)(1), ``draws a rough line between a government's exercise of
regulatory authority and its own contract-based participation in a
market''); Associated General Contractors of America v. Metropolitan
Water District of Southern California, 159 F.3d 1178, 1182-84 (9th Cir.
1998) (recognizing a similar distinction between state regulation and
state market participation). By merely offering employers particular
ERISA-covered plan options \15\ (or non-ERISA plan options), these
approaches (whether used separately or together as part of a multi-
faceted state initiative) do not dictate how an employer's plan is
designed or operated or make offering a plan more costly for employers
or employees. Nor do they make it impossible for employers operating
across state lines to offer uniform benefits to their employees.\16\
Rather than impair federal regulation of employee benefit plans, the
state laws would leave the plans wholly subject to ERISA's regulatory
requirements and protections.
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\15\ In the Department's view, a state law that required employers
to participate in a state prototype plan or state sponsored multiple
employer plan unless they affirmatively opted out would effectively
compel the employer to decide whether to sponsor an ERISA plan in a way
that would be preempted by ERISA.
\16\ The Court in Travelers approved a New York statute that gave
employers a strong incentive to provide health care benefits through
Blue Cross and Blue Shield as opposed to other providers. The Court
noted that the law did not ``mandate'' employee benefit plans or their
administration, or produce such acute economic effects, either directly
or indirectly, by intent or otherwise ``as to force an ERISA plan to
adopt a certain scheme of substantive coverage or effectively restrict
its choice of insurers.'' Travelers, 514 U.S. at 668. See also De Buono
v. NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806, 816
(1997).
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Of course, a state must implement these approaches without
establishing standards inconsistent with ERISA or providing its own
regulatory or judicial remedies for conduct governed exclusively by
ERISA. ERISA's system of rules and remedies would apply to these
arrangements. A contractor retained by a state using the marketplace
approach would be subject to the same ERISA standards and remedies that
apply to any company offering the same services to employers. Similarly,
[[Page 106]]
a prototype plan or multiple employer plan program that a state offers
to employers would have to comply with the same ERISA requirements and
would have to be subject to the same remedies as any private party
offering such products and services.\17\
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\17\ State laws relating to sovereign immunity for state governments
and their employees would have to be evaluated carefully to ensure they
do not conflict with ERISA's remedial provisions.
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Even if the state laws enacted to establish programs of the sort
described above ``reference'' employee benefit plans in a literal sense,
they should not be seen as laws that ``relate to'' ERISA plans in the
sense ERISA section 514(a) uses that statutory term because they are
completely voluntary from the employer's perspective, the state program
would be entirely subject to ERISA, and state law would not impose any
outside regulatory requirements beyond ERISA. They do not require
employers to establish ERISA-covered plans, forbid any type of plan or
restrict employers' choices with respect to benefit structures or their
administration. These laws would merely offer a program that employers
could accept or reject. See Dillingham, 519 U.S. at 325-28.
In addition, none of the state approaches described above resemble
the state laws that the Court held preempted in its pre-Travelers
``reference to'' cases. Those laws targeted ERISA plans as a class with
affirmative requirements or special exemptions. See, e.g., District of
Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 128, 129-133
(1992) (workers' compensation law that required employee benefits ``set
by reference to [ERISA] plans'') (citation omitted); Ingersoll-Rand Co.
v. McClendon, 498 U.S. 133, 135-136, 140 (1990) (common law claim for
wrongful discharge to prevent attainment of ERISA benefits); Mackey v.
Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 828 & n.2, 829-830
(1988) (exemption from garnishment statute for ERISA plans). In the case
of the state actions outlined above, any restriction on private economic
activity arises, not from state regulatory actions, but from the
application of ERISA requirements to the plans, service providers, and
investment products, that the state, as any other private sector
participant in the market, selects in deciding what it is willing to
offer.
Finally, it is worth noting that even if the state laws implementing
these approaches ``relate to'' ERISA plans in some sense of that term,
it is only because they create or authorize arrangements that are fully
governed by ERISA's requirements. By embracing ERISA in this way, the
state would not on that basis be running afoul of section 514(a) because
ERISA fully applies to the arrangement and there is nothing in the state
law for ERISA to ``supersede.'' In this regard, section 514(a) of ERISA,
in relevant part, provides that Title I of ERISA ``shall supersede any
and all state laws insofar as they may now or hereafter relate to any
employee benefit plan . . . .'' To the extent that the state makes plan
design decisions in fashioning its prototype plan or state sponsored
plan, or otherwise adopts rules necessary to run the plan, those actions
would be the same as any other prototype plan provider or employer
sponsor of any ERISA-covered plan, and the arrangement would be fully
and equally subject to ERISA.
This conclusion is supported by the Department's position regarding
state governmental participation in ERISA plans in another context.
Pursuant to section 4(b)(1) of ERISA, the provisions of Title I of ERISA
do not apply to a plan that a state government establishes for its own
employees, which ERISA section 3(32) defines as a ``governmental plan.''
The Department has long held the view, however, that if a plan covering
governmental employees fails to qualify as a governmental plan, it would
still be subject to Title I of ERISA.\18\ In these circumstances, the
failure to qualify as a governmental plan does not prohibit a
governmental employer from providing benefits through, and making
contributions to, an ERISA-covered employee benefit plan.\19\ Thus, the
effect of ERISA is not to prohibit the state from offering benefits, but
rather to make those benefits
[[Page 107]]
subject to ERISA. Here too, ERISA does not supersede state law to the
extent it merely creates an arrangement that is fully governed by ERISA.
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\18\ See, e.g., Advisory Opinion 2004-04A.
\19\ See Information Letter to Michael T. Scaraggi and James M.
Steinberg from John J. Canary (April 12, 2004).
[80 FR 71937, Nov. 18, 2015]
Sec. 2509.2022-01 Interpretive bulletin relating to guidance on
independence of accountant retained by employee benefit plan.
This section provides guidance for determining when a qualified
public accountant is independent for purposes of auditing and rendering
an opinion on the financial information required to be included in the
annual report (Form 5500 Annual Return/Report of Employee Benefit Plan)
filed with the Department of Labor (Department).
(a) In general. Section 103(a)(3)(A) of the Employee Retirement
Income Security Act of 1974 (ERISA) and 29 CFR 2520.103-1(b)(5) of the
Department's implementing regulations require that the accountant
retained by an employee benefit plan be ``independent'' for purposes of
examining plan financial information and rendering an opinion on the
financial statements and schedules required to be contained in the
annual report. Under section 103(a)(3)(A) of ERISA the Department will
not recognize any person as an independent qualified public accountant
who is in fact not independent with respect to the employee benefit plan
upon which that accountant renders an opinion in the annual report filed
with the Department. In determining whether an accountant or accounting
firm is not independent, the Department will give appropriate
consideration to all relevant circumstances, including evidence bearing
on all relationships between the accountant or accounting firm and that
of the plan sponsor or any affiliate thereof, and will not confine
itself to the relationships existing in connection with the filing of
annual reports with the Department of Labor.
(b) Examples. The following examples are intended to illustrate how
the Department would apply paragraph (a) of this section in certain
common financial and business relationships. The Department in enforcing
the Form 5500 annual reporting requirements will not consider an
accountant to be independent with respect to a plan if:
(1)(i) During the period of professional engagement to examine the
financial statements being reported, at the date of the opinion, or
during the period covered by the financial statements, the accountant,
the accountant's firm or a member thereof had, or was committed to
acquire, any direct financial interest or any material indirect
financial interest in such plan, or the plan sponsor as that term is
defined in section 3(16)(B) of ERISA;
(ii) An accountant will not be deemed to have failed the
independence requirement under paragraph (b)(1)(i) of this section as a
result of any holding of publicly traded securities of the plan sponsor
during the period covered by the financial statements if:
(A) The accountant did not audit the client's financial statements
for the immediately preceding fiscal year; and
(B) The accountant, the accounting firm, a partner, shareholder
employee, or professional employee of the accounting firm, and their
immediate family disposed of any holding of publicly traded securities
of the plan sponsor before the earlier of:
(1) Signing an initial engagement letter or other agreement to
provide audit, review, or attest services to the audit client; or
(2) Commencing any audit, review, or attest procedures (including
planning the audit of the client's financial statements); and
(iii) For purposes of paragraph (b)(1)(ii) of this section, publicly
traded securities are securities listed on a registered stock exchange
in which quotations are published on a daily basis, securities regularly
traded in a national or regional over-the-counter market for which
published quotations are available, or securities traded on a foreign
national securities exchange that is officially recognized, sanctioned,
or supervised by a governmental authority and where the security is
deemed by the U.S. Securities and Exchange Commission (SEC) as having a
ready market under applicable SEC rules;
(2) During the period of professional engagement to examine the
financial statements being reported, at the date of the opinion, or
during the period covered by the financial statements,
[[Page 108]]
the accountant, the accountant's firm, or a member thereof was connected
as a promoter, underwriter, investment advisor, voting trustee,
director, officer, or employee of the plan or plan sponsor, except that
a firm will not be deemed not independent in regard to a particular plan
if a former officer or employee of such plan or plan sponsor is employed
by the firm and such individual has completely disassociated himself
from the plan or plan sponsor and does not participate in auditing
financial statements of the plan covering any period of his or her
employment by the plan or plan sponsor; or
(3) An accountant or a member of an accounting firm maintains
financial records for the employee benefit plan.
(c) Effect of certain other services to the plan or plan sponsors.
(1) Subject to paragraph (c)(2) of this section, an accountant will not
fail to be recognized as independent solely on the basis that at or
during the period of the accountant's professional engagement with the
employee benefit plan:
(i) The accountant or the accountant's firm is retained or engaged
on a professional basis by the plan sponsor, as that term is defined in
section 3(16)(B) of ERISA; or
(ii) An actuary associated with the accountant or accounting firm
renders actuarial services to the plan or plan sponsor.
(2) However, to retain recognition of independence, the prohibitions
against recognition of independence in paragraph (b)(1), (2), or (3) of
this section must not be violated. Further, the rendering of multiple
services to a plan by a firm may give rise to circumstances indicating a
lack of independence with respect to the employee benefit plan (e.g.,
result in the accountant or firm providing services that are subject to
audit procedures as part of the plan's audit), and, in accordance with
paragraph (a) of this section, in determining whether an accountant or
accounting firm is not, in fact, independent with respect to a
particular plan, the Department will give appropriate consideration to
all relevant circumstances, including evidence bearing on all
relationships between the accountant or accounting firm and that of the
plan sponsor or any affiliate thereof.
(3) Rendering multiple services to a plan by a firm also may involve
prohibited transactions under ERISA and requirements to comply with
conditions in prohibited transaction exemptions such as prohibited
transaction exemption in ERISA section 408(b)(2) for ERISA section
406(a)(1)(C) service provider transactions.
(d) Definitions. For purposes of this section:
(1) Member means all partners or shareholder employees in the firm
and all professional employees participating in the audit or located in
an office of the firm participating in a significant portion of the
audit; the firm's employee benefit plans; or an entity whose operating,
financial, or accounting policies can be controlled by any of the
individuals or entities described in this paragraph (d)(1) or by two or
more such individuals or entities acting together.
(2) Office means a reasonably distinct subgroup within a firm,
whether constituted by formal organization or informal practice, in
which personnel who make up the subgroup generally serve the same group
of clients or work on the same categories of matters regardless of the
physical location of the individuals who comprise such subgroup.
Substance should govern the office classification, and the expected
regular personnel interactions and assigned reporting channels of an
individual may well be more important than an individual's physical
location.
(3) Period of professional engagement means the period beginning
when an accountant either signs an initial engagement letter or other
agreement to perform the audit or begins to perform any audit, review or
attest procedures (including planning the audit of the plan's financial
statements), whichever is earlier, and ending with the formal
notification, either by the member or client, of the termination of the
professional relationship or the issuance of the audit report for which
the accountant was engaged, whichever is later. In the case of an
auditor that performs a plan's audit for two or more years, in
[[Page 109]]
evaluating independence, the Department would not view the period of
professional engagement as ending with the issuance of each year's audit
report and recommencing with the beginning of the following year's audit
engagement.
[87 FR 54372, Sept. 6, 2022]
[[Page 110]]
SUBCHAPTER B_DEFINITIONS AND COVERAGE UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
PART 2510_DEFINITION OF TERMS USED IN SUBCHAPTERS C, D,
E, F, G, AND L OF THIS CHAPTER--Table of Contents
Sec.
2510.3-1 Employee welfare benefit plan.
2510.3-2 Employee pension benefit plan.
2510.3-3 Employee benefit plan.
2510.3-5 Definition of employer--Association Health Plans.
2510.3-16 Definition of ``plan administrator.''
2510.3-21 Definition of ``Fiduciary''.
2510.3-37 Multiemployer plan.
2510.3-38 Filing requirements for State registered investment advisers
to be investment managers.
2510.3-40 Plans Established or Maintained Under or Pursuant to
Collective Bargaining Agreements Under Section 3(40)(A) of
ERISA.
2510.3-44 Registration requirement to serve as a pooled plan provider to
pooled employer plans.
2510.3-55 Definition of employer--Association Retirement Plans and other
multiple employer pension benefit plans.
2510.3-101 Definition of ``plan assets''--plan investments.
2510.3-102 Definition of ``plan assets''--participant contributions.
Authority: 29 U.S.C. 1002(1), 1002(2), 1002(3), 1002(5), 1002(16),
1002(21), 1002(37), 1002(38), 1002(40), 1002(42), 1002(43), 1002(44),
1031, and 1135; Secretary of Labor's Order No. 1-2011, 77 FR 1088 (Jan.
9, 2012); Sec. 2510.3-101 and 2510.3-102 also issued under sec. 102 of
Reorganization Plan No. 4 of 1978, 5 App. (E.O. 12108, 44 FR 1065 (Jan.
3, 1979)) and 29 U.S.C. 1135 note. Sec. 2510.3-38 is also issued under
sec. 1, Pub. L. 105-72, 111 Stat. 1457 (1997).
Sec. 2510.3-1 Employee welfare benefit plan.
(a) General. (1) The purpose of this section is to clarify the
definition of the terms ``employee welfare benefit plan'' and ``welfare
plan'' for purposes of title I of the Act and this chapter by
identifying certain practices which do not constitute employee welfare
benefit plans for those purposes. In addition, the practices listed in
this section do not constitute employee pension benefit plans within the
meaning of section 3(2) of the Act, and, therefore, do not constitute
employee benefit plans within the meaning of section 3(3). Since under
section 4(a) of the Act, only employee benefit plans within the meaning
of section 3(3) are subject to title I of the Act, the practices listed
in this section are not subject to title I.
(2) The terms ``employee welfare benefit plan'' and ``welfare plan''
are defined in section 3(1) of the Act to include plans providing ``(i)
medical, surgical, or hospital care or benefits, or benefits in the
event of sickness, accident, disability, death or unemployment, or
vacation benefits, apprenticeship or other training programs, or day
care centers, scholarship funds, or prepaid legal services, or (ii) any
benefit described in section 302(c) of the Labor Management Relations
Act, 1947 (other than pensions on retirement or death, and insurance to
provide such pensions).'' Under this definition, only plans which
provide benefits described in section 3(1)(A) of the Act or in section
302(c) of the Labor-Management Relations Act, 1947 (hereinafter ``the
LMRA'') (other than pensions on retirement or death) constitute welfare
plans. For example, a system of payroll deductions by an employer for
deposit in savings accounts owned by its employees is not an employee
welfare benefit plan within the meaning of section 3(1) of the Act
because it does not provide benefits described in section 3(1)(A) of the
Act or section 302(c) of the LMRA. (In addition, if each employee has
the right to withdraw the balance in his or her account at any time,
such a payroll savings plan does not meet the requirements for a pension
plan set forth in section 3(2) of the Act and, therefore, is not an
employee benefit plan within the meaning of section 3(3) of the Act).
(3) Section 302(c) of the LMRA lists exceptions to the restrictions
contained in subsections (a) and (b) of that section on payments and
loans made by an employer to individuals and groups representing
employees of the employer. Of these exceptions, only those contained in
paragraphs (5), (6), (7) and (8) describe benefits provided through
[[Page 111]]
employee benefit plans. Moreover, only paragraph (6) describes benefits
not described in section 3(1)(A) of the Act. The benefits described in
section 302(c)(6) of the LMRA but not in section 3(1)(A) of the Act are
``* * * holiday, severance or similar benefits''. Thus, the effect of
section 3(1)(B) of the Act is to include within the definition of
``welfare plan'' those plans which provide holiday and severance
benefits, and benefits which are similar (for example, benefits which
are in substance severance benefits, although not so characterized).
(4) Some of the practices listed in this section as excluded from
the definition of ``welfare plan'' or mentioned as examples of general
categories of excluded practices are inserted in response to questions
received by the Department of Labor and, in the Department's judgment,
do not represent borderline cases under the definition in section 3(1)
of the Act. Therefore, this section should not be read as implicitly
indicating the Department's views on the possible scope of section 3(1).
(b) Payroll practices. For purposes of title I of the Act and this
chapter, the terms ``employee welfare benefit plan'' and ``welfare
plan'' shall not include--
(1) Payment by an employer of compensation on account of work
performed by an employee, including compensation at a rate in excess of
the normal rate of compensation on account of performance of duties
under other than ordinary circumstances, such as--
(i) Overtime pay,
(ii) Shift premiums,
(iii) Holiday premiums,
(iv) Weekend premiums;
(2) Payment of an employee's normal compensation, out of the
employer's general assets, on account of periods of time during which
the employee is physically or mentally unable to perform his or her
duties, or is otherwise absent for medical reasons (such as pregnancy, a
physical examination or psychiatric treatment); and
(3) Payment of compensation, out of the employer's general assets,
on account of periods of time during which the employee, although
physically and mentally able to perform his or her duties and not absent
for medical reasons (such as pregnancy, a physical examination or
psychiatric treatment) performs no duties; for example--
(i) Payment of compensation while an employee is on vacation or
absent on a holiday, including payment of premiums to induce employees
to take vacations at a time favorable to the employer for business
reasons,
(ii) Payment of compensation to an employee who is absent while on
active military duty,
(iii) Payment of compensation while an employee is absent for the
purpose of serving as a juror or testifying in official proceedings,
(iv) Payment of compensation on account of periods of time during
which an employee performs little or no productive work while engaged in
training (whether or not subsidized in whole or in part by Federal,
State or local government funds), and
(v) Payment of compensation to an employee who is relieved of duties
while on sabbatical leave or while pursuing further education.
(c) On-premises facilities. For purposes of title I of the Act and
this chapter, the terms ``employee welfare benefit plan'' and ``welfare
plan'' shall not include--
(1) The maintenance on the premises of an employer or of an employee
organization of recreation, dining or other facilities (other than day
care centers) for use by employees or members; and
(2) The maintenance on the premises of an employer of facilities for
the treatment of minor injuries or illness or rendering first aid in
case of accidents occurring during working hours.
(d) Holiday gifts. For purposes of title I of the Act and this
chapter the terms ``employee welfare benefit plan'' and ``welfare plan''
shall not include the distribution of gifts such as turkeys or hams by
an employer to employees at Christmas and other holiday seasons.
(e) Sales to employees. For purposes of title I of the Act and this
chapter, the terms ``employee welfare benefit plan'' and ``welfare
plan'' shall not include the sale by an employer to employees of an
employer, whether or not at prevailing market prices, of articles or
commodities of the kind which the employer offers for sale in the
regular course of business.
[[Page 112]]
(f) Hiring halls. For purposes of title I of the Act and this
chapter, the terms ``employee welfare benefit plan'' and ``welfare
plan'' shall not include the maintenance by one or more employers,
employee organizations, or both, of a hiring hall facility.
(g) Remembrance funds. For purposes of title I of the Act and this
chapter, the terms ``employee welfare benefit plan'' and ``welfare
plan'' shall not include a program under which contributions are made to
provide remembrances such as flowers, an obituary notice in a newspaper
or a small gift on occasions such as the sickness, hospitalization,
death or termination of employment of employees, or members of an
employee organization, or members of their families.
(h) Strike funds. For purposes of title I of the Act and this
chapter, the terms ``employee welfare benefit plan'' and ``welfare
plan'' shall not include a fund maintained by an employee organization
to provide payments to its members during strikes and for related
purposes.
(i) Industry advancement programs. For purposes of title I of the
Act and this chapter, the terms ``employee welfare benefit plan'' and
``welfare plan'' shall not include a program maintained by an employer
or group or association of employers, which has no employee participants
and does not provide benefits to employees or their dependents,
regardless of whether the program serves as a conduit through which
funds or other assets are channelled to employee benefit plans covered
under title I of the Act.
(j) Certain group or group-type insurance programs. For purposes of
title I of the Act and this chapter, the terms ``employee welfare
benefit plan'' and ``welfare plan'' shall not include a group or group-
type insurance program offered by an insurer to employees or members of
an employee organization, under which
(1) No contributions are made by an employer or employee
organization;
(2) Participation the program is completely voluntary for employees
or members;
(3) The sole functions of the employer or employee organization with
respect to the program are, without endorsing the program, to permit the
insurer to publicize the program to employees or members, to collect
premiums through payroll deductions or dues checkoffs and to remit them
to the insurer; and
(4) The employer or employee organization receives no consideration
in the form of cash or otherwise in connection with the program, other
than reasonable compensation, excluding any profit, for administrative
services actually rendered in connection with payroll deductions or dues
checkoffs.
(k) Unfunded scholarship programs. For purposes of title I of the
Act and this chapter, the terms ``employe welfare benefit plan'' and
``welfare plan'' shall not include a scholarship program, including a
tuition and education expense refund program, under which payments are
made solely from the general assets of an employer or employee
organization.
(l) Safe harbor for health reimbursement arrangements (HRAs) and
certain other arrangements that reimburse individual health insurance
coverage. For purposes of title I of the Act and this chapter, the terms
``employee welfare benefit plan'' and ``welfare plan'' shall not include
individual health insurance coverage the premiums of which are
reimbursed by a health reimbursement arrangement (HRA) (or other
account-based group health plan), including an HRA or other account-
based group health plan integrated with individual health insurance
coverage (as described in Sec. 2590.702-2 of this chapter), an HRA that
covers fewer than two current employees (as described in Sec.
2590.732(b) of this chapter) and that reimburses premiums for individual
health insurance coverage, a qualified small employer health
reimbursement arrangement (QSEHRA), as defined in section 9831(d)(2) of
the Code, or an arrangement under which an employer allows employees to
pay the portion of the premium for individual health insurance coverage
that is not covered by an HRA or other account-based group health plan
with which the coverage is integrated by using a salary reduction
arrangement in a cafeteria plan under section 125 of the Code
(supplemental salary reduction arrangement), if all the conditions of
this paragraph (l) are satisfied.
[[Page 113]]
(1) The purchase of any individual health insurance coverage is
completely voluntary for participants and beneficiaries. The fact that a
plan sponsor requires such coverage to be purchased as a condition for
participation in an HRA or supplemental salary reduction arrangement
does not make the purchase involuntary.
(2) The employer, employee organization, or other plan sponsor does
not select or endorse any particular issuer or insurance coverage. In
contrast, providing general contact information regarding availability
of health insurance in a state (such as providing information regarding
www.HealthCare.gov or contact information for a state insurance
commissioner's office) or providing general health insurance educational
information (such as the uniform glossary of health coverage and medical
terms available at: https://www.dol.gov/sites/default/files/ebsa/laws-
and-regulations/laws/affordable-care-act/for-employers-and-advisers/sbc-
uniform-glossary-of-coverage-and-medical-terms-final.pdf) is permitted.
(3) Reimbursement for non-group health insurance premiums is limited
solely to individual health insurance coverage (as defined in Sec.
2590.701-2 of this chapter) that does not consist solely of excepted
benefits (as defined in Sec. 2590.732(c) of this chapter).
(4) The employer, employee organization, or other plan sponsor
receives no consideration in the form of cash or otherwise in connection
with the employee's selection or renewal of any individual health
insurance coverage.
(5) Each plan participant is notified annually that the individual
health insurance coverage is not subject to title I of ERISA. For an HRA
that is integrated with individual health insurance coverage, the notice
must satisfy the notice requirement set forth in Sec. 2590.702-2(c)(6)
of this chapter. A QSEHRA or an HRA not subject to the notice
requirement set forth in Sec. 2590.702-2(c)(6) of this chapter may use
the following language to satisfy this condition: ``The individual
health insurance coverage that is paid for by this plan, if any, is not
subject to the rules and consumer protections of the Employee Retirement
Income Security Act. You should contact your state insurance department
for more information regarding your rights and responsibilities if you
purchase individual health insurance coverage.'' A supplemental salary
reduction arrangement is not required to provide this notice as the
notice will be provided by the HRA that such an arrangement supplements.
[40 FR 34530, Aug. 15, 1975, as amended at 84 FR 29000, June 20, 2019]
Sec. 2510.3-2 Employee pension benefit plan.
(a) General. This section clarifies the limits of the defined terms
``employee pension benefit plan'' and ``pension plan'' for purposes of
Title I of the Act and this chapter by identifying certain specific
plans, funds and programs which do not constitute employee pension
benefit plans for those purposes. To the extent that these plans, funds
and programs constitute employee welfare benefit plans within the
meaning of section 3(1) of the Act and Sec. 2510.3-1, they will be
covered under Title I; however, they will not be subject to parts 2 and
3 of Title I of the Act.
(b) Severance pay plans. (1) For purposes of title I of the Act and
this chapter, an arrangement shall not be deemed to constitute an
employee pension benefit plan or pension plan solely by reason of the
payment of severance benefits on account of the termination of an
employee's service, provided that:
(i) Such payments are not contingent, directly or indirectly, upon
the employee's retiring;
(ii) The total amount of such payments does not exceed the
equivalent of twice the employee's annual compensation during the year
immediately preceding the termination of his service; and
(iii) All such payments to any employee are completed,
(A) In the case of an employee whose service is terminated in
connection with a limited program of terminations, within the later of
24 months after the termination of the employee's service, or 24 months
after the employee reaches normal retirement age; and
(B) In the case of all other employees, within 24 months after the
termination of the employee's service.
[[Page 114]]
(2) For purposes of this paragraph (b),
(i) ``Annual compensation'' means the total of all compensation,
including wages, salary, and any other benefit of monetary value,
whether paid in the form of cash or otherwise, which was paid as
consideration for the employee's service during the year, or which would
have been so paid at the employee's usual rate of compensation if the
employee had worked a full year.
(ii) ``Limited program of terminations'' means a program of
terminations:
(A) Which, when begun, was scheduled to be completed upon a date
certain or upon the occurrence of one or more specified events;
(B) Under which the number, percentage or class or classes of
employees whose services are to be terminated is specified in advance;
and
(C) Which is described in a written document which is available to
the Secretary upon request, and which contains information sufficient to
demonstrate that the conditions set forth in paragraphs (b)(2)(ii)(A)
and (B) of this section have been met.
(c) Bonus program. For purposes of title I of the Act and this
chapter, the terms ``employee pension benefit plan'' and ``pension
plan'' shall not include payments made by an employer to some or all of
its employees as bonuses for work performed, unless such payments are
systematically deferred to the termination of covered employment or
beyond, or so as to provide retirement income to employees.
(d) Individual Retirement Accounts. (1) For purposes of title I of
the Act and this chapter, the terms ``employee pension benefit plan''
and ``pension plan'' shall not include an individual retirement account
described in section 408(a) of the Code, an individual retirement
annuity described in section 408(b) of the Internal Revenue Code of 1954
(hereinafter ``the Code'') and an individual retirement bond described
in section 409 of the Code, provided that--
(i) No contributions are made by the employer or employee
association;
(ii) Participation is completely voluntary for employees or members;
(iii) The sole involvement of the employer or employee organization
is without endorsement to permit the sponsor to publicize the program to
employees or members, to collect contributions through payroll
deductions or dues checkoffs and to remit them to the sponsor; and
(iv) The employer or employee organization receives no consideration
in the form of cash or otherwise, other than reasonable compensation for
services actually rendered in connection with payroll deductions or dues
checkoffs.
(e) Gratuitous payments to pre-Act retirees. For purposes of title I
of the Act and this chapter the terms ``employee pension benefit plan''
and ``pension plan'' shall not include voluntary, gratuitous payments by
an employer to former employees who separated from the service of the
employer if:
(1) Payments are made out of the general assets of the employer,
(2) Former employees separated from the service of the employer
prior to September 2, 1974,
(3) Payments made to such employees commenced prior to September 2,
1974, and
(4) Each former employee receiving such payments is notified
annually that the payments are gratuitous and do not constitute a
pension plan.
(f) Tax sheltered annuities. For the purpose of title I of the Act
and this chapter, a program for the purchase of an annuity contract or
the establishment of a custodial account described in section 403(b) of
the Internal Revenue Code of 1954 (the Code), pursuant to salary
reduction agreements or agreements to forego an increase in salary,
which meets the requirements of 26 CFR 1.403(b)-1(b)(3) shall not be
``established or maintained by an employer'' as that phrase is used in
the definition of the terms ``employee pension benefit plan'' and
``pension plan'' if
(1) Participation is completely voluntary for employees;
(2) All rights under the annuity contract or custodial account are
enforceable solely by the employee, by a beneficiary of such employee,
or by any authorized representative of such employee or beneficiary;
[[Page 115]]
(3) The sole involvement of the employer, other than pursuant to
paragraph (f)(2) of this section, is limited to any of the following:
(i) Permitting annuity contractors (which term shall include any
agent or broker who offers annuity contracts or who makes available
custodial accounts within the meaning of section 403(b)(7) of the Code)
to publicize their products to employees,
(ii) Requesting information concerning proposed funding media,
products or annuity contractors;
(iii) Summarizing or otherwise compiling the information provided
with respect to the proposed funding media or products which are made
available, or the annuity contractors whose services are provided, in
order to facilitate review and analysis by the employees;
(iv) Collecting annuity or custodial account considerations as
required by salary reduction agreements or by agreements to forego
salary increases, remitting such considerations to annuity contractors
and maintaining records of such considerations;
(v) Holding in the employer's name one or more group annuity
contracts covering its employees;
(vi) Before February 7, 1978, to have limited the funding media or
products available to employees, or the annuity contractors who could
approach employees, to those which, in the judgment of the employer,
afforded employees appropriate investment opportunities; or
(vii) After February 6, 1978, limiting the funding media or products
available to employees, or the annuity contractors who may approach
employees, to a number and selection which is designed to afford
employees a reasonable choice in light of all relevant circumstances.
Relevant circumstances may include, but would not necessarily be limited
to, the following types of factors:
(A) The number of employees affected,
(B) The number of contractors who have indicated interest in
approaching employees,
(C) The variety of available products,
(D) The terms of the available arrangements,
(E) The administrative burdens and costs to the employer, and
(F) The possible interference with employee performance resulting
from direct solicitation by contractors; and
(4) The employer receives no direct or indirect consideration or
compensation in cash or otherwise other than reasonable compensation to
cover expenses properly and actually incurred by such employer in the
performance of the employer's duties pursuant to the salary reduction
agreements or agreements to forego salary increases described in this
paragraph (f) of this section.
(g) Supplemental payment plans--(1) General rule. Generally, an
arrangement by which a payment is made by an employer to supplement
retirement income is a pension plan. Supplemental payments made on or
after September 26, 1980, shall be treated as being made under a welfare
plan rather than a pension plan for purposes of title I of the Act if
all of the following conditions are met:
(i) Payment is made for the purpose of supplementing the pension
benefits of a participant or his or her beneficiary out of:
(A) The general assets of the employer, or
(B) A separate trust fund established and maintained solely for that
purpose.
(ii) The amount payable under the supplemental payment plan to a
participant or his or her beneficiary with respect to a month does not
exceed the payee's supplemental payment factor (``SPF,'' as defined in
paragraph (g)(3)(i) of this section) for that month, provided however
that unpaid monthly amounts may be cumulated and paid in subsequent
months to the participant or his or her beneficiary.
(iii) The payment is not made before the last day of the month with
respect to which it is computed.
(2) Safe harbor for arrangements concerning pre-1977 retirees. (i)
Notwithstanding paragraph (g)(1) of this section, effective January 1,
1975 an arrangement by which a payment is made by an employer to
supplement the retirement income of a former employee who separated from
the service of the employer prior to January 1, 1977 shall be deemed not
to have been made
[[Page 116]]
under an employee benefit plan if all of the following conditions are
met:
(A) The employer is not obligated to make the payment or similar
payments for more than twelve months at a time.
(B) The payment is made out of the general assets of the employer.
(C) The former employee is notified in writing at least once each
year in which a payment is made that the payments are not part of an
employee benefit plan subject to the protections of the Act.
(D) The former employee is notified in writing at least once each
year in which a payment is made of the extent of the employer's
obligation, if any, to continue the payments.
(ii) A person who receives a payment on account of his or her
relationship to a former employee who retired prior to January 1, 1977
is considered to be a former employee for purposes of this paragraph
(g)(2).
(3) Definitions and special rules. For purposes of this paragraph
(g)--
(i) The term ``supplemental payment factor'' (SPF) is, for any
particular month, the product of:
(A) The individual's pension benefit amount (as defined in paragraph
(g)(3)(ii) of this section), and
(B) The cost of living increase (as defined in paragraph (g)(3)(v)
of this section) for that month.
(ii)(A) The term ``pension benefit amount'' (PBA) means, with regard
to a retiree, the amount of pension benefits payable, in the form of the
annuity chosen by the retiree, for the first full month that he or she
is in pay status under a pension plan (as defined in paragraph
(g)(3)(iii) of this section) sponsored by his or her employer or under a
multiemployer plan in which his or her employer participates. If the
retiree has received a lump-sum distribution from the plan, the PBA for
the retiree shall be determined as follows:
(1) If the plan provides an annuity option at the time of the
distribution, the PBA shall be computed as if the distribution had been
applied on that date to the purchase from the plan of a level straight
annuity for the life of the participant if the participant was unmarried
at the time of the distribution or a joint and survivor annuity if the
participant was married at the time of distribution.
(2) If the plan does not provide an annuity option at the time of
the distribution, the PBA shall be computed as if the distribution had
been applied on that date to the purchase from an insurance company
qualified to do business in a State of a commercially available level
straight annuity for the life of the participant if the participant was
then single, or a joint and survivor annuity if the participant was then
married, based upon the assumption that the participant and beneficiary
are standard mortality risks.
(B) If the retiree has received from the plan a series of
distributions which do not constitute a lump-sum distribution or an
annuity, the PBA for the retiree shall be determined with respect to
each distribution according to paragraph (g)(3)(ii)(A) of this section,
or in accordance with a reasonably equivalent method.
(C) The term PBA, with regard to the beneficiary of a plan
participant, means:
(1) The amount of pension benefits, payable in the form of a
survivor annuity to the beneficiary, for the first full month that he or
she begins to receive the survivor annuity, reduced by:
(2) Any increases which have been incorporated as part of the
survivor annuity under the plan since the participant entered pay status
or, if the participant died before the commencement of pension benefits,
since the participant's date of death.
(D) Where a plan participant has commenced to receive his or her
pension benefits in the form of a straight-life annuity, or another form
of an annuity that does not continue after the participant's death in
the form of a survivor annuity, no beneficiary of the participant will
have a PBA.
(iii) The term ``pension plan'' means, for purposes of this
paragraph (g), a pension plan as defined in section 3(2) of the Act, but
not including a plan described in section 4(b), 201(2), or 301(a)(3) of
the Act. The term also does not include an arrangement meeting all the
conditions of paragraph (g)(1) or (g)(2) of this section or of an
arrangement described in Sec. 2510.3-2(e). In the
[[Page 117]]
case of a controlled group of corporations within the meaning of section
407(d)(5) of the Act, all pension plans sponsored by members of the
group shall be considered to be one pension plan.
(iv) The term ``employer'' means, for purposes of paragraph (g) of
this section, the former employer making the supplemental payment. In
the case of a contolled group of corporations within the meaning of
section 407(d)(7) of the Act, all members of the controlled group shall
be considered to be one employer for purposes of this paragraph (g).
(v) The term ``cost of living increase'' (CLI) means, as to any
month, a percentage equal to the following fraction:
[GRAPHIC] [TIFF OMITTED] TC21OC91.039
where a = the CPIU for the month for which a payment is being computed,
and b= the CPIU for the first full month the retiree was in pay status.
Where the CLI is calculated for the beneficiary of a plan participant,
``b'' continues to be equal to the CPIU for the first full month the
retiree was in pay status. If, however, the participant dies before the
commencement of pension benefits, ``b'' is equal to the CPIU for the
first full month the survivor is in pay status.
(vi) The term ``CPIU'' means the U.S. City Average All Items
Consumer Price Index for all Urban Consumers, published by the U.S.
Department of Labor, Bureau of Labor Statistics. Data concerning the
CPIU for a particular period can be obtained from the U.S. Department of
Labor, Bureau of Labor Statistics, Division of Consumer Prices and Price
Indexes, Washington, DC 20212.
(vii) Where an employer does not pay to a retiree the full amount of
the supplemental payments which would be permitted under paragraph
(g)(1) of this section, any unpaid amounts may be cumulated and paid in
subsequent months to either the retiree or the beneficiary of the
retiree. The beneficiary need not be the recipient of a survivor annuity
in order to be paid these cumulated supplemental payments.
(5) Examples. The following examples illustrate how this paragraph
(g) works. As referred to in these examples, the CPIU's for July through
November of 1980 are as follows:
July 1980: 247.8
August 1980: 249.4
September 1980: 251.7
October 1980: 253.9
November 1980: 256.2
Example (1)(a). E is an employer. R received monthly benefits of
$600 under a straight-life annuity under E's defined benefit pension
plan after R retired from E and entered pay status on July 1, 1980. The
amount that E may pay to R as supplemental payments under a welfare
rather than pension plan with respect to the months of July through
September of 1980 is computed as follows:
SPF for July 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.040
SPF for August 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.041
SPF for September 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.042
No supplemental payment may be made to R as a welfare plan payment with
respect to July 1980, the month of retirement. The $3.87 that may be
paid with respect to August 1980 may be paid at any time after August
31, 1980. The $9.44 that may be paid with respect to September 1980 may
be paid at any time after September 30, 1980.
Example (1)(b). S is the beneficiary of R. Because R received
pension benefits under a straight-life annuity, S will receive no
survivor annuity from E after R's death. S thus will have no PBA after
R's death and will not be eligible to receive any supplemental payments
from E based on S's PBA. To the extent, however, that R did not receive
supplemental payments from E to the maximum limit allowable under
paragraph (g)(1), any amounts not paid to R may be cumulated and paid to
S after R's death.
[[Page 118]]
Example (2)(a). E is an employer. Q received monthly benefits of
$500 in the form of a joint and survivor annuity under E's defined
benefit pension plan since retirement from E on July 1, 1980. The amount
that E may pay to Q as welfare rather than pension plan payments with
respect to the months of July through September of 1980 is computed as
follows:
SPF for July 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.043
SPF for August 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.044
SPF for September 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.045
No supplemental payment may be made as a welfare plan payment with
respect to July 1980, the month of retirement. The $3.23 that may be
paid with respect to August 1980 may be paid at any time after August
31, 1980. The $7.87 that may be paid with respect to September 1980 may
be paid at any time after September 30, 1980.
Example (2)(b). Q dies on October 15, 1980 without having received
any supplemental payments from E. T is the beneficiary of Q. E pays T a
survivor's annuity of $300 beginning in November of 1980. The amount
payable to T as a survivor annuity under the plan has not been increased
since Q began to receive pension benefits. Thus, T's PBA is $300. The
amount that E may pay to T as welfare rather than pension plan payments
with respect to the months of July through November 1980 is computed as
follows:
SPF for July 1980 = $0.00
SPF for August 1980 = $3.23
SPF for September 1980 = $7.87
SPF for October 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.046
(Note that T's ``b'' is equal to Q's ``b''.)
SPF for November 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.047
Total that may be paid to T
The maximum E may pay T with respect to the months of July through
November 1980 as welfare rather than pension plan payments is the sum of
those months' SPFs, which is $33.58.
Example (3). Assume the same facts as in Example (1)(a), except that
R elected to receive a lump-sum distribution rather than a straight-life
annuity. If R is unmarried on July 1, 1980, R's PBA is $600 for the
remainder of R's life. If R is married to S on July 1, 1980, the PBAs of
R and S are based on the annuity that would have been paid under an
election to receive a joint and survivor annuity. See paragraph
(g)(3)(ii)(A)(1) of this section.
[40 FR 34530, Aug. 15, 1975, as amended at 44 FR 11763, Mar. 2, 1979; 44
FR 23527, Apr. 20, 1979; 47 FR 50240, Nov. 5, 1982; 47 FR 56847, Dec.
21, 1982; 81 FR 59476, Aug. 30, 2016; 81 FR 92653, Dec. 20, 2016; 82 FR
29237, June 28, 2017]
Editorial Note: At 82 FR 29236, June 28, 2017, as required by the
Congressional Review Act and Public Law 115-35 and Public Law 115-24,
the Employee Benefits Security Administration removed all amendments to
Sec. 2510.3-2 published at 81 FR 59464, Aug. 30, 2016 and at 81 FR
92639, Dec. 20, 2016.
Sec. 2510.3-3 Employee benefit plan.
(a) General. This section clarifies the definition in section 3(3)
of the term ``employee benefit plan'' for purposes of title I of the Act
and this chapter. It states a general principle which can be applied to
a large class of plans to determine whether they constitute employee
benefit plans within the meaning of section 3(3) of the Act. Under
section 4(a) of the Act, only employee benefit plans within the meaning
of section 3(3) are subject to title I.
(b) Plans without employees. For purposes of title I of the Act and
this chapter, the term ``employee benefit plan'' shall not include any
plan, fund or program, other than an apprenticeship or other training
program, under which no employees are participants covered under the
plan, as defined in paragraph (d) of this section. For example, a so-
called ``Keogh'' or ``H.R. 10'' plan under which only partners or
[[Page 119]]
only a sole proprietor are participants covered under the plan will not
be covered under title I. However, a Keogh plan under which one or more
common law employees, in addition to the self-employed individuals, are
participants covered under the plan, will be covered under title I.
Similarly, partnership buyout agreements described in section 736 of the
Internal Revenue Code of 1954 will not be subject to title I.
(c) Employees. For purposes of this section and except as provided
in Sec. Sec. 2510.3-5(e) and 2510.3-55(d):
(1) An individual and his or her spouse shall not be deemed to be
employees with respect to a trade or business, whether incorporated or
unincorporated, which is wholly owned by the individual or by the
individual and his or her spouse, and
(2) A partner in a partnership and his or her spouse shall not be
deemed to be employees with respect to the partnership.
(d) Participant covered under the plan. (1)(i) An individual becomes
a participant covered under an employee welfare benefit plan on the
earlier of--
(A) The date designated by the plan as the date on which the
individual begins participation in the plan;
(B) The date on which the individual becomes eligible under the plan
for a benefit subject only to occurrence of the contingency for which
the benefit is provided; or
(C) The date on which the individual makes a contribution to the
plan, whether voluntary or mandatory.
(ii) An individual becomes a participant covered under an employee
pension plan--
(A) In the case of a plan which provides for employee contributions
or defines participation to include employees who have not yet retired,
on the earlier of--
(1) The date on which the individual makes a contribution, whether
voluntary or mandatory, or
(2) The date designated by the plan as the date on which the
individual has satisfied the plan's age and service requirements for
participation, and
(B) In the case of a plan which does not provide for employee
contributions and does not define participation to include employees who
have not yet retired, the date on which the individual completes the
first year of employment which may be taken into account in
determining--
(1) Whether the individual is entitled to benefits under the plan,
or
(2) The amount of benefits to which the individual is entitled,
whichever results in earlier participation.
(2)(i) An individual is not a participant covered under an employee
welfare plan on the earliest date on which the individual--
(A) Is ineligible to receive any benefit under the plan even if the
contingency for which such benefit is provided should occur, and
(B) Is not designated by the plan as a participant.
(ii) An individual is not a participant covered under an employee
pension plan or a beneficiary receiving benefits under an employee
pension plan if--
(A) The entire benefit rights of the individual--
(1) Are fully guaranteed by an insurance company, insurance service
or insurance organization licensed to do business in a State, and are
legally enforceable by the sole choice of the individual against the
insurance company, insurance service or insurance organization; and
(2) A contract, policy or certificate describing the benefits to
which the individual is entitled under the plan has been issued to the
individual; or
(B) The individual has received from the plan a lump-sum
distribution or a series of distributions of cash or other property
which represents the balance of his or her credit under the plan.
(3)(i) In the case of an employee pension benefit plan, an
individual who, under the terms of the plan, has incurred a one-year
break in service after having become a participant covered under the
plan, and who has acquired no vested right to a benefit before such
break in service is not a participant covered under the plan until the
individual has completed a year of service after returning to employment
covered by the plan.
(ii) For purposes of paragraph (d)(3)(i) of this section, in the
case of an employee pension benefit plan which is subject to section 203
of the Act the
[[Page 120]]
term ``year of service'' shall have the same meaning as in section
203(b)(2)(A) of the Act and any regulations issued under the Act and the
term ``one-year break in service'' shall have the same meaning as in
section 203(b)(3)(A) of the Act and any regulations issued under the
Act.
[40 FR 34530, Aug. 15, 1975, as amended at 83 FR 28961, June 21, 2018;
84 FR 37543, July 31, 2019]
Sec. 2510.3-5 Definition of employer--Association Health Plans.
(a) In general. The purpose of this section is to clarify which
persons may act as an ``employer'' within the meaning of section 3(5) of
the Act in sponsoring a multiple employer group health plan. Section
733(a)(1) defines the term ``group health plan,'' in relevant part, as
an employee welfare benefit plan to the extent that the plan provides
medical care to employees or their dependents through insurance,
reimbursement, or otherwise. The Act defines an ``employee welfare
benefit plan'' in section 3(1), in relevant part, as any plan, fund, or
program established or maintained by an employer, employee organization,
or by both an employer and an employee organization, for the purpose of
providing certain listed welfare benefits to participants or their
beneficiaries. For purposes of being able to establish and maintain a
welfare benefit plan, an ``employer'' under section 3(5) of the Act
includes any person acting directly as an employer, or any person acting
indirectly in the interest of an employer in relation to an employee
benefit plan. A group or association of employers is specifically
identified in section 3(5) of the Act as a person able to act directly
or indirectly in the interest of an employer, including for purposes of
establishing or maintaining an employee welfare benefit plan. A bona
fide group or association shall be deemed to be able to act in the
interest of an employer within the meaning of section 3(5) of the Act by
satisfying the criteria set forth in paragraphs (b) through (e) of this
section. This section does not invalidate any existing advisory
opinions, or preclude future advisory opinions, from the Department
under section 3(5) of the Act that address other circumstances in which
the Department will view a person as able to act directly or indirectly
in the interest of direct employers in sponsoring an employee welfare
benefit plan that is a group health plan.
(b) Bona fide group or association of employers. For purposes of
Title I of the Act and this chapter, a bona fide group or association of
employers capable of establishing a group health plan that is an
employee welfare benefit plan shall include a group or association of
employers that meets the following requirements:
(1) The primary purpose of the group or association may be to offer
and provide health coverage to its employer members and their employees;
however, the group or association also must have at least one
substantial business purpose unrelated to offering and providing health
coverage or other employee benefits to its employer members and their
employees. For purposes of satisfying the standard of this paragraph
(b)(1), as a safe harbor, a substantial business purpose is considered
to exist if the group or association would be a viable entity in the
absence of sponsoring an employee benefit plan. For purposes of this
paragraph (b)(1), a business purpose includes promoting common business
interests of its members or the common economic interests in a given
trade or employer community, and is not required to be a for-profit
activity;
(2) Each employer member of the group or association participating
in the group health plan is a person acting directly as an employer of
at least one employee who is a participant covered under the plan,
(3) The group or association has a formal organizational structure
with a governing body and has by-laws or other similar indications of
formality,
(4) The functions and activities of the group or association are
controlled by its employer members, and the group's or association's
employer members that participate in the group health plan control the
plan. Control must be present both in form and in substance,
(5) The employer members have a commonality of interest as described
in paragraph (c) of this section,
[[Page 121]]
(6)(i) The group or association does not make health coverage
through the group's or association's group health plan available other
than to:
(A) An employee of a current employer member of the group or
association;
(B) A former employee of a current employer member of the group or
association who became eligible for coverage under the group health plan
when the former employee was an employee of the employer; and
(C) A beneficiary of an individual described in paragraph
(b)(6)(i)(A) or (b)(6)(i)(B) of this section (e.g., spouses and
dependent children).
(ii) Notwithstanding paragraph (b)(6)(i)(B) of this section,
coverage may not be made available to any individual (or beneficiaries
of the individual) for any plan year following the plan year in which
the plan determines pursuant to reasonable monitoring procedures that
the individual ceases to meet the conditions in paragraph (e)(2) of this
section (unless the individual again meets those conditions), except as
may be required by section 601 of the Act.
(7) The group or association and health coverage offered by the
group or association complies with the nondiscrimination provisions of
paragraph (d) of this section.
(8) The group or association is not a health insurance issuer
described in section 733(b)(2) of the Act, or owned or controlled by
such a health insurance issuer or by a subsidiary or affiliate of such a
health insurance issuer, other than to the extent such entities
participate in the group or association in their capacity as employer
members of the group or association.
(c) Commonality of interest. (1) Employer members of a group or
association will be treated as having a commonality of interest if the
standards of either paragraph (c)(1)(i) or (c)(1)(ii) of this section
are met, provided these standards are not implemented in a manner that
is subterfuge for discrimination as is prohibited under paragraph (d) of
this section:
(i) The employers are in the same trade, industry, line of business
or profession; or
(ii) Each employer has a principal place of business in the same
region that does not exceed the boundaries of a single State or a
metropolitan area (even if the metropolitan area includes more than one
State).
(2) In the case of a group or association that is sponsoring a group
health plan under this section and that is itself an employer member of
the group or association, the group or association will be deemed for
purposes of paragraph (c)(1)(i) of this section to be in the same trade,
industry, line of business, or profession, as applicable, as the other
employer members of the group or association.
(d) Nondiscrimination. A bona fide group or association, and any
health coverage offered by the bona fide group or association, must
comply with the nondiscrimination provisions of this paragraph (d).
(1) The group or association must not condition employer membership
in the group or association on any health factor, as defined in Sec.
2590.702(a) of this chapter, of any individual who is or may become
eligible to participate in the group health plan sponsored by the group
or association.
(2) The group health plan sponsored by the group or association must
comply with the rules of Sec. 2590.702(b) of this chapter with respect
to nondiscrimination in rules for eligibility for benefits, subject to
paragraph (d)(4) of this section.
(3) The group health plan sponsored by the group or association must
comply with the rules of Sec. 2590.702(c) of this chapter with respect
to nondiscrimination in premiums or contributions required by any
participant or beneficiary for coverage under the plan, subject to
paragraph (d)(4) of this section.
(4) In applying the nondiscrimination provisions of paragraphs
(d)(2) and (3) of this section, the group or association may not treat
the employees of different employer members of the group or association
as distinct groups of similarly-situated individuals based on a health
factor of one or more individuals, as defined in Sec. 2590.702(a) of
this chapter.
(5) The rules of this paragraph (d) are illustrated by the following
examples:
[[Page 122]]
Example 1. (i) Facts. Association A offers group health coverage to
all members. According to the bylaws of Association A, membership is
subject to the following criteria: All members must be restaurants
located in a specified area. Restaurant B, which is located within the
specified area, has several employees with large health claims.
Restaurant B applies for membership in Association A, and is denied
membership based on the claims experience of its employees.
(ii) Conclusion. In this Example 1, Association A's exclusion of
Restaurant B from Association A discriminates on the basis of claims
history, which is a health factor under Sec. 2590.702(a)(1) of this
chapter. Accordingly, Association A does not satisfy the requirement in
paragraph (d)(1) of this section, and, therefore would not meet the
definition of a bona fide group or association of employers under
paragraph (b) of this section.
Example 2. (i) Facts. Association C offers group health coverage to
all members. According to the bylaws of Association C, membership is
subject to the following criteria: All members must have a principal
place of business in a specified metropolitan area. Individual D is a
sole proprietor whose principal place of business is within the
specified area. As part of the membership application process,
Individual D provides certain health information to Association C. After
learning that Individual D has diabetes, based on D's diabetes,
Association C denies Individual D's membership application.
(ii) Conclusion. In this Example 2, Association C's exclusion of
Individual D because D has diabetes is a decision that discriminates on
the basis of a medical condition, which is a health factor under Sec.
2590.702(a)(1) of this chapter. Accordingly, Association C does not
satisfy the requirement in paragraph (d)(1) of this section and would
not meet the definition of a bona fide group or association of employers
under paragraph (b) of this section.
Example 3. (i) Facts. Association F offers group health coverage to
all plumbers working for plumbing companies in a State, if the plumbing
company employer chooses to join the association. Plumbers employed by a
plumbing company on a full-time basis (which is defined under the terms
of the arrangement as regularly working at least 30 hours a week) are
eligible for health coverage without a waiting period. Plumbers employed
by a plumbing company on a part-time basis (which is defined under the
terms of the arrangement as regularly working at least 10 hours per
week, but less than 30 hours per week) are eligible for health coverage
after a 60-day waiting period.
(ii) Conclusion. In this Example 3, making a distinction between
part-time versus full-time employment status is a permitted distinction
between similarly-situated individuals under Sec. 2590.702(d) of this
chapter, provided the distinction is not directed at individuals under
Sec. 2590.702(d)(3) of this chapter. Accordingly, the requirement that
plumbers working part time must satisfy a waiting period for coverage is
a rule for eligibility that does not violate Sec. 2590.702(b) and, as a
consequence, satisfies paragraph (d)(2) of this section.
Example 4. (i) Facts. Association G sponsors a group health plan,
available to all employers doing business in Town H. Association G
charges Business I more for premiums than it charges other members
because Business I employs several individuals with chronic illnesses.
(ii) Conclusion. In this Example 4, the employees of Business I
cannot be treated as a separate group of similarly-situated individuals
from other members based on a health factor of one or more individuals
under paragraph (d)(4) of this section. Therefore, charging Business I
more for premiums based on one or more health factors of the employees
of Business I does not satisfy the requirements in paragraph (d)(4) of
this section.
Example 5. (i) Facts. Association J sponsors a group health plan
that is available to all members. According to the bylaws of Association
J, membership is open to any entity whose principal place of business is
in State K, which has only one major metropolitan area, the capital city
of State K. Members whose principal place of business is in the capital
city of State K are charged more for premiums than members whose
principal place of business is outside of the capital city.
(ii) Conclusion. In this Example 5, making a distinction between
members whose principal place of business is in the capital city of
State K, as compared to some other area in State K, is a permitted
distinction between similarly-situated individuals under Sec.
2590.702(d) of this chapter, provided the distinction is not directed at
individuals under Sec. 2590.702(d)(3) of this chapter. Accordingly,
Association J's rule for charging different premiums based on principal
place of business satisfies paragraph (d)(3) and (d)(4) of this section.
Example 6. (i) Facts. Association L sponsors a group health plan,
available to all its members. According to the bylaws of Association L,
membership is open to any entity whose principal place of business is in
State M. Sole Proprietor N's principal place of business is in City O,
within State M. It is the only member whose principal place of business
is in City O, and it is otherwise similarly situated with respect to all
other members of the association. After learning that Sole Proprietor N
has been diagnosed with cancer, based on the cancer diagnosis,
Association L changes its premium structure to charge higher premiums
for members
[[Page 123]]
whose principal place of business is in City O.
(ii) Conclusion. In this Example 6, cancer is a health factor under
Sec. 2590.702(a) of this chapter. Making a distinction between groups
of otherwise similarly situated individuals that on its face is based on
geography (which is not a health factor), but that is directed at one or
more individuals based on a health factor (cancer), is in this case a
distinction directed at an individual under Sec. 2590.702(d)(3) of this
chapter and is not a permitted distinction. Accordingly, by charging
higher premiums to members whose principal place of business is City O,
Association L violates Sec. 2590.702(c) of this chapter and,
consequently, the conditions of paragraphs (d)(3) and (d)(4) of this
section are not satisfied.
Example 7. (i) Facts. Association P is an agriculture industry
association. It sponsors a group health plan that charges employers
different premiums based on their primary agriculture subsector, defined
under the terms of the plan as: Crop farming, livestock, fishing and
aquaculture, and forestry. The distinction is not directed at individual
participants or beneficiaries based on a health factor.
(ii) Conclusion. In this Example 7, the premium distinction between
members is permitted under paragraphs (d)(3) and (d)(4) because it is
not based on a health factor and is not directed at individual
participants and beneficiaries based on a health factor.
Example 8. (i) Facts. Association Q is a retail industry
association. It sponsors a group health plan that charges employees of
employers different premiums based on their occupation: Cashier,
stockers, and sales associates. The distinction is not directed at
individual participants or beneficiaries based on a health factor.
(ii) Conclusion. In this Example 8, the premium distinction is
permitted under paragraph (d)(3) and (d)(4) of this section because it
is not based on a health factor and is not directed at individual
participants and beneficiaries based on a health factor.
Example 9. (i) Facts. Association R sponsors a group health plan
that is available to all employers with a principal place of business in
State S. Employers are charged different premiums based on their
industry subsector, defined under the terms of the plan as:
Construction, education, health, financial services, information
services, leisure and hospitality, manufacturing, transportation,
natural resources, and other. In addition, within any employer,
employees are charged different premiums based on part-time versus full-
time status (part time status is defined, under the terms of the plan,
as regularly working at least 40 hours, but less than 120 hours, per
month). These distinctions are not directed at individual participants
or beneficiaries based on a health factor.
(ii) Conclusion. In this Example 9, the premium distinctions between
employer members of a State AHP based on industry, and between employees
of employer members who are working part-time versus full-time, are
permitted under paragraphs (d)(3) and (d)(4) of this section because
these distinctions are not based on a health factor or directed at
individual participants and beneficiaries based on a health factor.
Example 10. (i) Facts. Association T sponsors a group health plan
that offers a premium discount to participants who participate in a
wellness program that complies with section 2590.702(f) of this chapter.
(ii) Conclusion. In this Example 10, providing a reward (such as a
premium discount or rebate, a waiver of all or part of a cost-sharing
mechanism, an additional benefit, or any financial or other incentive,
as well as avoiding a penalty such as the absence of a premium surcharge
or other financial or nonfinancial disincentive) in return for adherence
to a wellness program that satisfies conditions of Sec. 2590.702(f) of
this chapter is permissible under this paragraph (d).
(e) Dual treatment of working owners as employers and employees. (1)
A working owner of a trade or business without common law employees may
qualify as both an employer and as an employee of the trade or business
for purposes of the requirements in paragraph (b) of this section,
including the requirement in paragraph (b)(2) that each employer member
of the group or association participating in the group health plan must
be a person acting directly as an employer of one or more employees who
are participants covered under the plan, and the requirement in
paragraph (b)(6) that the group or association does not make health
coverage offered to employer members through the association available
other than to certain employees and former employees and their
beneficiaries.
(2) The term ``working owner'' as used in this paragraph (e) of this
section means any person who a responsible plan fiduciary reasonably
determines is an individual:
(i) Who has an ownership right of any nature in a trade or business,
whether incorporated or unincorporated, including a partner and other
self-employed individual;
(ii) Who is earning wages or self-employment income from the trade
or business for providing personal services to the trade or business;
and
(iii) Who either:
[[Page 124]]
(A) Works on average at least 20 hours per week or at least 80 hours
per month providing personal services to the working owner's trade or
business, or
(B) Has wages or self-employment income from such trade or business
that at least equals the working owner's cost of coverage for
participation by the working owner and any covered beneficiaries in the
group health plan sponsored by the group or association in which the
individual is participating.
(3) The determination under this paragraph must be made when the
working owner first becomes eligible for coverage under the group health
plan and continued eligibility must be periodically confirmed pursuant
to reasonable monitoring procedures.
(f) Applicability dates. (1) This section is applicable on September
1, 2018, for employee welfare benefit plans that are fully insured and
that meet the requirements for being an association health plan
sponsored by a bona fide group or association of employers pursuant to
paragraphs (b) through (e) of this section.
(2) This section is applicable on January 1, 2019, for any employee
welfare benefit plan that is not fully insured, is in existence on June
21, 2018, meets the requirements that applied before June 21, 2018, and
chooses to become an association health plan sponsored by a bona fide
group or association of employers pursuant to paragraphs (b) through (e)
of this section (e.g., in order to expand to a broader group of
individuals, such as working owners without employees).
(3) This section is applicable on April 1, 2019, for any other
employee welfare benefit plan established to be and operated as an
association health plan sponsored by a bona fide group or association of
employers pursuant to pursuant to paragraphs (b) through (e) of this
section.
(g) Severability. If any provision of this section is held to be
invalid or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, the provision
shall be construed so as to continue to give the maximum effect to the
provision permitted by law, unless such holding shall be one of utter
invalidity or unenforceability, in which event the provision shall be
severable from this section and shall not affect the remainder thereof.
[83 FR 28961, June 21, 2018]
Sec. 2510.3-16 Definition of ``plan administrator.''
(a) In general. The term ``plan administrator'' or ``administrator''
means the person specifically so designated by the terms of the
instrument under which the plan is operated. If an administrator is not
so designated, the plan administrator is the plan sponsor, as defined in
section 3(16)(B) of ERISA.
(b) In the case of a self-insured group health plan established or
maintained by an eligible organization, as defined in Sec. 2590.715-
2713A(a) of this chapter, if the eligible organization provides a copy
of the self-certification of its objection to administering or funding
any contraceptive benefits in accordance with Sec. 2590.715-
2713A(b)(1)(ii) of this chapter to a third party administrator, the
self-certification shall be an instrument under which the plan is
operated, shall be treated as a designation of the third party
administrator as the plan administrator under section 3(16) of ERISA for
any contraceptive services required to be covered under Sec. 2590.715-
2713(a)(1)(iv) of this chapter to which the eligible organization
objects on religious grounds, and shall supersede any earlier
designation. If, instead, the eligible organization notifies the
Secretary of Health and Human Services of its objection to administering
or funding any contraceptive benefits in accordance with Sec. 2590.715-
2713A(b)(1)(ii) of this chapter, the Department of Labor, working with
the Department of Health and Human Services, shall separately provide
notification to each third party administrator that such third party
administrator shall be the plan administrator under section 3(16) of
ERISA for any contraceptive services required to be covered under Sec.
2590.715-2713(a)(1)(iv) of this chapter to which the eligible
organization objects on religious grounds, with respect to benefits for
contraceptive services that the third party administrator would
otherwise manage. Such notification from the Department of Labor shall
be
[[Page 125]]
an instrument under which the plan is operated and shall supersede any
earlier designation.
(c) A third party administrator that becomes a plan administrator
pursuant to this section shall be responsible for--
(1) Complying with section 2713 of the Public Health Service Act (42
U.S.C. 300gg-13) (as incorporated into section 715 of ERISA) and Sec.
2590.715-2713 of this chapter with respect to coverage of contraceptive
services. To the extent the plan contracts with different third party
administrators for different classifications of benefits (such as
prescription drug benefits versus inpatient and outpatient benefits),
each third party administrator is responsible for providing
contraceptive coverage that complies with section 2713 of the Public
Health Service Act (as incorporated into section 715 of ERISA) and Sec.
2590.715-2713 of this chapter with respect to the classification or
classifications of benefits subject to its contract.
(2) Establishing and operating a procedure for determining such
claims for contraceptive services in accordance with Sec. 2560.503-1 of
this chapter.
(3) Complying with disclosure and other requirements applicable to
group health plans under Title I of ERISA with respect to such benefits.
[78 FR 39894, July 2, 2013, as amended at 79 FR 51099, Aug. 27, 2014]
Sec. 2510.3-21 Definition of ``Fiduciary.''
(a)-(b) [Reserved]
(c) Investment advice. (1) A person shall be deemed to be rendering
``investment advice'' to an employee benefit plan, within the meaning of
section 3(21)(A)(ii) of the Employee Retirement Income Security Act of
1974 (the Act) and this paragraph, only if:
(i) Such person renders advice to the plan as to the value of
securities or other property, or makes recommendation as to the
advisability of investing in, purchasing, or selling securities or other
property; and
(ii) Such person either directly or indirectly (e.g., through or
together with any affiliate)--
(A) Has discretionary authority or control, whether or not pursuant
to agreement, arrangement or understanding, with respect to purchasing
or selling securities or other property for the plan; or
(B) Renders any advice described in paragraph (c)(1)(i) of this
section on a regular basis to the plan pursuant to a mutual agreement,
arrangement or understanding, written or otherwise, between such person
and the plan or a fiduciary with respect to the plan, that such services
will serve as a primary basis for investment decisions with respect to
plan assets, and that such person will render individualized investment
advice to the plan based on the particular needs of the plan regarding
such matters as, among other things, investment policies or strategy,
overall portfolio composition, or diversification of plan investments.
(2) A person who is a fiduciary with respect to a plan by reason of
rendering investment advice (as defined in paragraph (c)(1) of this
section) for a fee or other compensation, direct or indirect, with
respect to any moneys or other property of such plan, or having any
authority or responsibility to do so, shall not be deemed to be a
fiduciary regarding any assets of the plan with respect to which such
person does not have any discretionary authority, discretionary control
or discretionary responsibility, does not exercise any authority or
control, does not render investment advice (as defined in paragraph
(c)(1) of this section) for a fee or other compensation, and does not
have any authority or responsibility to render such investment advice,
provided that nothing in this paragraph shall be deemed to:
(i) Exempt such person from the provisions of section 405(a) of the
Act concerning liability for fiduciary breaches by other fiduciaries
with respect to any assets of the plan; or
(ii) Exclude such person from the definition of the term ``party in
interest'' (as set forth in section 3(14)(B) of the Act) with respect to
any assets of the plan.
(d) Execution of securities transactions. (1) A person who is a
broker or dealer registered under the Securities Exchange Act of 1934, a
reporting dealer who makes primary markets in securities of the United
States Government or of an agency of the United States
[[Page 126]]
Government and reports daily to the Federal Reserve Bank of New York its
positions with respect to such securities and borrowings thereon, or a
bank supervised by the United States or a State, shall not be deemed to
be a fiduciary, within the meaning of section 3(21)(A) of the Act, with
respect to an employee benefit plan solely because such person executes
transactions for the purchase or sale of securities on behalf of such
plan in the ordinary course of its business as a broker, dealer, or
bank, pursuant to instructions of a fiduciary with respect to such plan,
if:
(i) Neither the fiduciary nor any affiliate of such fiduciary is
such broker, dealer, or bank; and
(ii) The instructions specify (A) the security to be purchased or
sold, (B) a price range within which such security is to be purchased or
sold, or, if such security is issued by an open-end investment company
registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1, et
seq.), a price which is determined in accordance with Rule 22c-1 under
the Investment Company Act of 1940 (17 CFR 270.22c-1), (C) a time span
during which such security may be purchased or sold (not to exceed five
business days), and (D) the minimum or maximum quantity of such security
which may be purchased or sold within such price range, or, in the case
of a security issued by an open-end investment company registered under
the Investment Company Act of 1940, the minimum or maximum quantity of
such security which may be purchased or sold, or the value of such
security in dollar amount which may be purchased or sold, at the price
referred to in paragraph (d)(1)(ii)(B) of this section.
(2) A person who is a broker-dealer, reporting dealer, or bank which
is a fiduciary with respect to an employee benefit plan solely by reason
of the possession or exercise of discretionary authority or
discretionary control in the management of the plan or the management or
disposition of plan assets in connection with the execution of a
transaction or transactions for the purchase or sale of securities on
behalf of such plan which fails to comply with the provisions of
paragraph (d)(1) of this section, shall not be deemed to be a fiduciary
regarding any assets of the plan with respect to which such broker-
dealer, reporting dealer or bank does not have any discretionary
authority, discretionary control or discretionary responsibility, does
not exercise any authority or control, does not render investment advice
(as defined in paragraph (c)(1) of this section) for a fee or other
compensation, and does not have any authority or responsibility to
render such investment advice, provided that nothing in this paragraph
shall be deemed to:
(i) Exempt such broker-dealer, reporting dealer, or bank from the
provisions of section 405(a) of the Act concerning liability for
fiduciary breaches by other fiduciaries with respect to any assets of
the plan; or
(ii) Exclude such broker-dealer, reporting dealer, or bank from the
definition, of the term ``party in interest'' (as set forth in section
3(14)(B) of the Act) with respect to any assets of the plan.
(e) Affiliate and control. (1) For purposes of paragraphs (c) and
(d) of this section, an ``affiliate'' of a person shall include:
(i) Any person directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with
such person;
(ii) Any officer, director, partner, employee or relative (as
defined in section 3(15) of the Act) of such person; and
(iii) Any corporation or partnership of which such person is an
officer, director or partner.
(2) For purposes of this paragraph, the term ``control'' means the
power to exercise a controlling influence over the management or
policies of a person other than an individual.
[85 FR 40593, July 7, 2020]
Sec. 2510.3-37 Multiemployer plan.
(a) General. Section 3(37) of the Act contains in paragraphs (a)(i)-
(iv) a number of criteria which an employee benefit plan must meet in
order to be a multiemployer plan under the Act. Section 3(37) also
provides that the Secretary may prescribe by regulation other
requirements in addition to those contained in paragraphs (a)(i)-(iv).
The
[[Page 127]]
purpose of this regulation is to establish such requirements.
(b) Plans in existence before the effective date. (1) A plan in
existence before September 2, 1974, will be considered a multiemployer
plan if it satisfies the requirements of section 3(37)(A)(i)-(iv) of the
Act.
(2) For purposes of this section, a plan is considered to be in
existence if:
(i)(A) The plan was reduced to writing and adopted by the
participating employers and the employee organization (including, in the
case of a corporate employer, formal approval by an employer's board of
directors or shareholders, if required), even though no amounts had been
contributed under the plan, and
(B) The plan has not been terminated; or
(ii)(A) There was a legally enforceable agreement to establish such
a plan signed by the employers and the employee organization, and
(B) The contributions to be made to the plan were set forth in the
agreement.
(iii) If a plan was in existence within the meaning of paragraph
(b)(2)(i) or (ii) of this section, any other plan with which such
existing plan is merged or consolidated shall also be considered to be
in existence.
(c) Plans not in existence before the effective date. In addition to
the provisions of section 3(37)(A)(i)-(iv) of the Act, a multiemployer
plan established on or after September 2, 1974, must meet the
requirement that it was established for a substantial business purpose.
A substantial business purpose includes the interest of a labor
organization in securing an employee benefit plan for its members. The
following factors are relevant in determining whether a substantial
business purpose existed for the establishment of a plan; any single
factor may be sufficient to constitute a substantial business purpose:
(1) The extent to which the plan is maintained by a substantial
number of unaffiliated contributing employers and covers a substantial
portion of the trade, craft or industry in terms of employees or a
substantial number of the employees in the trade, craft or industry in a
locality or geographic area;
(2) The extent to which the plan provides benefits more closely
related to years of service within the trade, craft or industry rather
than with an employer, reflecting the fact that an employee's
relationship with an employer maintaining the plan is generally short-
term although service in the trade, craft or industry is generally long-
term;
(3) The extent to which collective bargaining takes place on matters
other than employee benefit plans between the employee organization and
the employers maintaining the plan; and
(4) The extent to which the administrative burden and expense of
providing benefits through single employer plans would be greater than
through a multiemployer plan.
[40 FR 52008, Nov. 7, 1975]
Sec. 2510.3-38 Filing requirements for State registered investment
advisers to be investment managers.
(a) General. Section 3(38) of the Act sets forth the criteria for a
fiduciary to be an investment manager for purposes of section 405 of the
Act. Subparagraph (B)(ii) of section 3(38) of the Act provides that, in
the case of a fiduciary who is not registered under the Investment
Advisers Act of 1940 by reason of paragraph (1) of section 203A(a) of
such Act, the fiduciary must be registered as an investment adviser
under the laws of the State in which it maintains its principal office
and place of business, and, at the time the fiduciary files registration
forms with such State to maintain the fiduciary's registration under the
laws of such State, also files a copy of such forms with the Secretary
of Labor. The purpose of this section is to set forth the exclusive
means for investment advisers to satisfy the filing obligation with the
Secretary described in subparagraph (B)(ii) of section 3(38) of the Act.
(b) Filing requirement. To satisfy the filing requirement with the
Secretary in section 3(38)(B)(ii) of the Act, a fiduciary must be
registered as an investment adviser with the State in which it maintains
its principal office and place of business and file through the
Investment Adviser Registration Depository (IARD), in accordance with
applicable
[[Page 128]]
IARD requirements, the information required to be registered and
maintain the fiduciary's registration as an investment adviser in such
State. Submitting to the Secretary investment adviser registration forms
filed with a State does not constitute compliance with the filing
requirement in section 3(38)(B)(ii) of the Act.
(c) Definitions. For purposes of this section, the term ``Investment
Adviser Registration Depository'' or ``IARD'' means the centralized
electronic depository described in 17 CFR 275.203-1.
(d) Cross reference. Information for investment advisers on how to
file through the IARD is available on the Securities and Exchange
Commission website at www.sec.gov/iard.
[69 FR 52125, Aug. 24, 2004]
Sec. 2510.3-40 Plans Established or Maintained Under or Pursuant
to Collective Bargaining Agreements Under Section 3(40)(A) of ERISA.
(a) Scope and purpose. Section 3(40)(A) of the Employee Retirement
Income Security Act of 1974 (ERISA) provides that the term ``multiple
employer welfare arrangement'' (MEWA) does not include an employee
welfare benefit plan that is established or maintained under or pursuant
to one or more agreements that the Secretary of Labor (the Secretary)
finds to be collective bargaining agreements. This section sets forth
criteria that represent a finding by the Secretary whether an
arrangement is an employee welfare benefit plan established or
maintained under or pursuant to one or more collective bargaining
agreements. A plan is established or maintained under or pursuant to
collective bargaining if it meets the criteria in this section. However,
even if an entity meets the criteria in this section, it will not be an
employee welfare benefit plan established or maintained under or
pursuant to a collective bargaining agreement if it comes within the
exclusions in the section. Nothing in or pursuant to this section shall
constitute a finding for any purpose other than the exception for plans
established or maintained under or pursuant to one or more collective
bargaining agreements under section 3(40) of ERISA. In a particular case
where there is an attempt to assert state jurisdiction or the
application of state law with respect to a plan or other arrangement
that allegedly is covered under Title I of ERISA, the Secretary has set
forth a procedure for obtaining individualized findings at 29 CFR part
2570, subpart H.
(b) General criteria. The Secretary finds, for purposes of section
3(40) of ERISA, that an employee welfare benefit plan is ``established
or maintained under or pursuant to one or more agreements which the
Secretary finds to be collective bargaining agreements'' for any plan
year in which the plan meets the criteria set forth in paragraphs
(b)(1), (2), (3), and (4) of this section, and is not excluded under
paragraph (c) of this section.
(1) The entity is an employee welfare benefit plan within the
meaning of section 3(1) of ERISA.
(2) At least 85% of the participants in the plan are:
(i) Individuals employed under one or more agreements meeting the
criteria of paragraph (b)(3) of this section, under which contributions
are made to the plan, or pursuant to which coverage under the plan is
provided;
(ii) Retirees who either participated in the plan at least five of
the last 10 years preceding their retirement, or
(A) Are receiving benefits as participants under a multiemployer
pension benefit plan that is maintained under the same agreements
referred to in paragraph (b)(3) of this section, and
(B) Have at least five years of service or the equivalent under that
multiemployer pension benefit plan;
(iii) Participants on extended coverage under the plan pursuant to
the requirements of a statute or court or administrative agency
decision, including but not limited to the continuation coverage
requirements of the Consolidated Omnibus Budget Reconciliation Act of
1985, sections 601-609, 29 U.S.C. 1169, the Family and Medical Leave
Act, 29 U.S.C. 2601 et seq., the Uniformed Services Employment and
Reemployment Rights Act of 1994, 38 U.S.C. 4301 et seq., or the National
Labor Relations Act, 29 U.S.C. 158(a)(5);
(iv) Participants who were active participants and whose coverage is
otherwise extended under the terms of the
[[Page 129]]
plan, including but not limited to extension by reason of self-payment,
hour bank, long or short-term disability, furlough, or temporary
unemployment, provided that the charge to the individual for such
extended coverage is no more than the applicable premium under section
604 of the Act;
(v) Participants whose coverage under the plan is maintained
pursuant to a reciprocal agreement with one or more other employee
welfare benefit plans that are established or maintained under or
pursuant to one or more collective bargaining agreements and that are
multiemployer plans;
(vi) Individuals employed by:
(A) An employee organization that sponsors, jointly sponsors, or is
represented on the association, committee, joint board of trustees, or
other similar group of representatives of the parties who sponsor the
plan;
(B) The plan or associated trust fund;
(C) Other employee benefit plans or trust funds to which
contributions are made pursuant to the same agreement described in
paragraph (b)(3) of this section; or
(D) An employer association that is the authorized employer
representative that actually engaged in the collective bargaining that
led to the agreement that references the plan as described in paragraph
(b)(3) of this section;
(vii) Individuals who were employed under an agreement described in
paragraph (b)(3) of this section, provided that they are employed by one
or more employers that are parties to an agreement described in
paragraph (b)(3) and are covered under the plan on terms that are
generally no more favorable than those that apply to similarly situated
individuals described in paragraph (b)(2)(i) of this section;
(viii) Individuals (other than individuals described in paragraph
(b)(2)(i) of this section) who are employed by employers that are bound
by the terms of an agreement described in paragraph (b)(3) of this
section and that employ personnel covered by such agreement, and who are
covered under the plan on terms that are generally no more favorable
than those that apply to such covered personnel. For this purpose, such
individuals in excess of 10% of the total population of participants in
the plan are disregarded;
(ix) Individuals who are, or were for a period of at least three
years, employed under one or more agreements between or among one or
more ``carriers'' (including ``carriers by air'') and one or more
``representatives'' of employees for collective bargaining purposes and
as defined by the Railway Labor Act, 45 U.S.C. 151 et seq., providing
for such individuals' current or subsequent participation in the plan,
or providing for contributions to be made to the plan by such carriers;
or
(x) Individuals who are licensed marine pilots operating in United
States ports as a state-regulated enterprise and are covered under an
employee welfare benefit plan that meets the definition of a qualified
merchant marine plan, as defined in section 415(b)(2)(F) of the Internal
Revenue Code (26 U.S.C.).
(3) The plan is incorporated or referenced in a written agreement
between one or more employers and one or more employee organizations,
which agreement, itself or together with other agreements among the same
parties:
(i) Is the product of a bona fide collective bargaining relationship
between the employers and the employee organization(s);
(ii) Identifies employers and employee organization(s) that are
parties to and bound by the agreement;
(iii) Identifies the personnel, job classifications, and/or work
jurisdiction covered by the agreement;
(iv) Provides for terms and conditions of employment in addition to
coverage under, or contributions to, the plan; and
(v) Is not unilaterally terminable or automatically terminated
solely for non-payment of benefits under, or contributions to, the plan.
(4) For purposes of paragraph (b)(3)(i) of this section, the
following factors, among others, are to be considered in determining the
existence of a bona fide collective bargaining relationship. In any
proceeding initiated under 29 CFR part 2570 subpart H, the existence of
a bona fide collective bargaining relationship under paragraph (b)(3)(i)
shall be presumed where at least four
[[Page 130]]
of the factors set out in paragraphs (b)(4)(i) through (viii) of this
section are established. In such a proceeding, the Secretary may also
consider whether other objective or subjective indicia of actual
collective bargaining and representation are present as set out in
paragraph (b)(4)(ix) of this section.
(i) The agreement referred to in paragraph (b)(3) of this section
provides for contributions to a labor-management trust fund structured
according to section 302(c)(5), (6), (7), (8), or (9) of the Taft-
Hartley Act, 29 U.S.C. 186(c)(5), (6), (7), (8) or (9), or to a plan
lawfully negotiated under the Railway Labor Act;
(ii) The agreement referred to in paragraph (b)(3) of this section
requires contributions by substantially all of the participating
employers to a multiemployer pension plan that is structured in
accordance with section 401 of the Internal Revenue Code (26 U.S.C.) and
is either structured in accordance with section 302(c)(5) of the Taft-
Hartley Act, 29 U.S.C. 186(c)(5), or is lawfully negotiated under the
Railway Labor Act, and substantially all of the active participants
covered by the employee welfare benefit plan are also eligible to become
participants in that pension plan;
(iii) The predominant employee organization that is a party to the
agreement referred to in paragraph (b)(3) of this section has maintained
a series of agreements incorporating or referencing the plan since
before January 1, 1983;
(iv) The predominant employee organization that is a party to the
agreement referred to in paragraph (b)(3) of this section has been a
national or international union, or a federation of national and
international unions, or has been affiliated with such a union or
federation, since before January 1, 1983;
(v) A court, government agency, or other third-party adjudicatory
tribunal has determined, in a contested or adversary proceeding, or in a
government-supervised election, that the predominant employee
organization that is a party to the agreement described in paragraph
(b)(3) of this section is the lawfully recognized or designated
collective bargaining representative with respect to one or more
bargaining units of personnel covered by such agreement;
(vi) Employers who are parties to the agreement described in
paragraph (b)(3) of this section pay at least 75% of the premiums or
contributions required for the coverage of active participants under the
plan or, in the case of a retiree-only plan, the employers pay at least
75% of the premiums or contributions required for the coverage of the
retirees. For this purpose, coverage under the plan for dental or vision
care, coverage for excepted benefits under 29 CFR 2590.732(b), and
amounts paid by participants and beneficiaries as co-payments or
deductibles in accordance with the terms of the plan are disregarded;
(vii) The predominant employee organization that is a party to the
agreement described in paragraph (b)(3) of this section provides,
sponsors, or jointly sponsors a hiring hall(s) and/or a state-certified
apprenticeship program(s) that provides services that are available to
substantially all active participants covered by the plan;
(viii) The agreement described in paragraph (b)(3) of this section
has been determined to be a bona fide collective bargaining agreement
for purposes of establishing the prevailing practices with respect to
wages and supplements in a locality, pursuant to a prevailing wage
statute of any state or the District of Columbia.
(ix) There are other objective or subjective indicia of actual
collective bargaining and representation, such as that arm's-length
negotiations occurred between the parties to the agreement described in
paragraph (b)(3) of this section; that the predominant employee
organization that is party to such agreement actively represents
employees covered by such agreement with respect to grievances,
disputes, or other matters involving employment terms and conditions
other than coverage under, or contributions to, the employee welfare
benefit plan; that there is a geographic, occupational, trade,
organizing, or other rationale for the employers and bargaining units
covered by such agreement; that there is a connection between such
agreement and the participation, if any, of
[[Page 131]]
self-employed individuals in the employee welfare benefit plan
established or maintained under or pursuant to such agreement.
(c) Exclusions. An employee welfare benefit plan shall not be deemed
to be ``established or maintained under or pursuant to one or more
agreements which the Secretary finds to be collective bargaining
agreements'' for any plan year in which:
(1) The plan is self-funded or partially self-funded and is marketed
to employers or sole proprietors
(i) By one or more insurance producers as defined in paragraph (d)
of this section;
(ii) By an individual who is disqualified from, or ineligible for,
or has failed to obtain, a license to serve as an insurance producer to
the extent that the individual engages in an activity for which such
license is required; or
(iii) By individuals (other than individuals described in paragraphs
(c)(1)(i) and (ii) of this section) who are paid on a commission-type
basis to market the plan.
(iv) For the purposes of this paragraph (c)(1):
(A) ``Marketing'' does not include administering the plan,
consulting with plan sponsors, counseling on benefit design or coverage,
or explaining the terms of coverage available under the plan to
employees or union members;
(B) ``Marketing'' does include the marketing of union membership
that carries with it plan participation by virtue of such membership,
except for membership in unions representing insurance producers
themselves;
(2) The agreement under which the plan is established or maintained
is a scheme, plan, stratagem, or artifice of evasion, a principal intent
of which is to evade compliance with state law and regulations
applicable to insurance; or
(3) There is fraud, forgery, or willful misrepresentation as to the
factors relied on to demonstrate that the plan satisfies the criteria
set forth in paragraph (b) of this section.
(d) Definitions. (1) Active participant means a participant who is
not retired and who is not on extended coverage under paragraphs
(b)(2)(iii) or (b)(2)(iv) of this section.
(2) Agreement means the contract embodying the terms and conditions
mutually agreed upon between or among the parties to such agreement.
Where the singular is used in this section, the plural is automatically
included.
(3) Individual employed means any natural person who furnishes
services to another person or entity in the capacity of an employee
under common law, without regard to any specialized definitions or
interpretations of the terms ``employee,'' ``employer,'' or ``employed''
under federal or state statutes other than ERISA.
(4) Insurance producer means an agent, broker, consultant, or
producer who is an individual, entity, or sole proprietor that is
licensed under the laws of the state to sell, solicit, or negotiate
insurance.
(5) Predominant employee organization means, where more than one
employee organization is a party to an agreement, either the
organization representing the plurality of individuals employed under
such agreement, or organizations that in combination represent the
majority of such individuals.
(e) Examples. The operation of the provisions of this section may be
illustrated by the following examples.
Example 1. Plan A has 500 participants, in the following 4
categories of participants under paragraph (b)(2) of this section:
------------------------------------------------------------------------
Total Nexus
Categories of participants number group Non-nexus
------------------------------------------------------------------------
1. Individuals working under CBAs... 335 (67%) 335 (67%) 0
2. Retirees......................... 50 (10%) 50 (10%) 0
3. ``Special Class''--Non-CBA, non- 100 (20%) 50 (10%) 50 (10%)
CBA-alumni.........................
4. Non-nexus participants........... 15 (3%) 0 15 (3%)
-----------------------------------
Total......................... 500 (100%) 435 (87%) 65 (13%)
------------------------------------------------------------------------
In determining whether at least 85% of Plan A's participant
population is made up of individuals with the required nexus to the
collective bargaining agreement as required by paragraph (b)(2) of this
section, the Plan may count as part of the nexus group only 50 (10% of
the total plan population) of the 100 individuals described in paragraph
(b)(2)(viii) of this section. That is because the number of individuals
meeting the category of individuals in paragraph (b)(2)(viii) exceeds
10% of the total participant population by 50 individuals. The paragraph
specifies that of those individuals who would otherwise be
[[Page 132]]
deemed to be nexus individuals because they are the type of individuals
described in paragraph (b)(2)(viii), the number in excess of 10% of the
total plan population may not be counted in the nexus group. Here, 50 of
the 100 individuals employed by signatory employers, but not covered by
the collective bargaining agreement, are counted as nexus individuals
and 50 are not counted as nexus individuals. Nonetheless, the Plan
satisfies the 85% criterion under paragraph (b)(2) because a total of
435 (335 individuals covered by the collective bargaining agreement,
plus 50 retirees, plus 50 individuals employed by signatory employers),
or 87%, of the 500 participants in Plan A are individuals who may be
counted as nexus participants under paragraph (b)(2). Beneficiaries
(e.g., spouses, dependent children, etc.) are not counted to determine
whether the 85% test has been met.
Example 2. (i) International Union MG and its Local Unions have
represented people working primarily in a particular industry for over
60 years. Since 1950, most of their collective bargaining agreements
have called for those workers to be covered by the National MG Health
and Welfare Plan. During that time, the number of union-represented
workers in the industry, and the number of active participants in the
National MG Health and Welfare Plan, first grew and then declined. New
Locals were formed and later were shut down. Despite these fluctuations,
the National MG Health and Welfare Plan meets the factors described in
paragraphs (b)(4)(iii) and (iv) of this section, as the plan has been in
existence pursuant to collective bargaining agreements to which the
International Union and its affiliates have been parties since before
January 1, 1983.
(ii) Assume the same facts, except that on January 1, 1999,
International Union MG merged with International Union RE to form
International Union MRGE. MRGE and its Locals now represent the active
participants in the National MG Health and Welfare Plan and in the
National RE Health and Welfare Plan, which, for 45 years, had been
maintained under collective bargaining agreements negotiated by
International Union RE and its Locals. Since International Union MRGE is
the continuation of, and successor to, the MG and RE unions, the two
plans continue to meet the factors in paragraphs (b)(4)(iii) and (iv) of
this section. This also would be true if the two plans were merged.
(iii) Assume the same facts as in paragraphs (i) and (ii) of this
Example. In addition to maintaining the health and welfare plans
described in those paragraphs, International Union MG also maintained
the National MG Pension Plan and International Union RE maintained the
National RE Pension Plan. When the unions merged and the health and
welfare plans were merged, National MG Pension Plan and National RE
Pension Plan were merged to form National MRGE Pension Plan. When the
unions merged, the employees and retirees covered under the pre-merger
plans continued to be covered under the post-merger plans pursuant to
the collective bargaining agreements and also were given credit in the
post-merger plans for their years of service and coverage in the pre-
merger plans. Retirees who originally were covered under the pre-merger
plans and continue to be covered under the post-merger plans based on
their past service and coverage would be considered to be ``retirees''
for purposes of 2550.3-40(b)(2)(ii). Likewise, bargaining unit alumni
who were covered under the pre-merger plans and continued to be covered
under the post-merger plans based on their past service and coverage and
their continued employment with employers that are parties to an
agreement described in paragraph (b)(3) of this section would be
considered to be bargaining unit alumni for purposes of 2550.3-
40(b)(2)(vii).
Example 3. Assume the same facts as in paragraph (ii) of Example 2
with respect to International Union MG. However, in 1997, one of its
Locals and the employers with which it negotiates agree to set up a new
multiemployer health and welfare plan that only covers the individuals
represented by that Local Union. That plan would not meet the factor in
paragraph (b)(4)(iii) of this section, as it has not been incorporated
or referenced in collective bargaining agreements since before January
1, 1983.
Example 4. (i) Pursuant to a collective bargaining agreement between
various employers and Local 2000, the employers contribute $2 per hour
to the Fund for every hour that a covered employee works under the
agreement. The covered employees are automatically entitled to health
and disability coverage from the Fund for every calendar quarter the
employees have 300 hours of additional covered service in the preceding
quarter. The employees do not need to make any additional contributions
for their own coverage, but must pay $250 per month if they want health
coverage for their dependent spouse and children. Because the employer
payments cover 100% of the required contributions for the employees' own
coverage, the Local 2000 Employers Health and Welfare Fund meets the
``75% employer payment'' factor under paragraph (b)(4)(vi) of this
section.
(ii) Assume, however, that the negotiated employer contribution rate
was $1 per hour, and the employees could only obtain health coverage for
themselves if they also elected to contribute $1 per hour, paid on a
pre-tax basis through salary reduction. The Fund would not meet the 75%
employer payment factor, even though the employees' contributions are
treated as employer contributions
[[Page 133]]
for tax purposes. Under ERISA, and therefore under this section,
elective salary reduction contributions are treated as employee
contributions. The outcome would be the same if a uniform employee
contribution rate applied to all employees, whether they had individual
or family coverage, so that the $1 per hour employee contribution
qualified an employee for his or her own coverage and, if he or she had
dependents, dependent coverage as well.
Example 5. Arthur is a licensed insurance broker, one of whose
clients is Multiemployer Fund M, a partially self-funded plan. Arthur
takes bids from insurance companies on behalf of Fund M for the insured
portion of its coverage, helps the trustees to evaluate the bids, and
places the Fund's health insurance coverage with the carrier that is
selected. Arthur also assists the trustees of Fund M in preparing
material to explain the plan and its benefits to the participants, as
well as in monitoring the insurance company's performance under the
contract. At the Trustees' request, Arthur meets with a group of
employers with which the union is negotiating for their employees'
coverage under Fund M, and he explains the cost structure and benefits
that Fund M provides. Arthur is not engaged in marketing within the
meaning of paragraph (c)(1) of this section, so the fact that he
provides these administrative services and sells insurance to the Fund
itself does not affect the plan's status as a plan established or
maintained under or pursuant to a collective bargaining agreement. This
is the case whether or how he is compensated.
Example 6. Assume the same facts as Example 5, except that Arthur
has a group of clients who are unrelated to the employers bound by the
collective bargaining agreement, whose employees would not be ``nexus
group'' members, and whose insurance carrier has withdrawn from the
market in their locality. He persuades the client group to retain him to
find them other coverage. The client group has no relationship with the
labor union that represents the participants in Fund M. However, Arthur
offers them coverage under Fund M and persuades the Fund's Trustees to
allow the client group to join Fund M in order to broaden Fund M's
contribution base. Arthur's activities in obtaining coverage for the
unrelated group under Fund M constitutes marketing through an insurance
producer; Fund M is a MEWA under paragraph (c)(1) of this section.
Example 7. Union A represents thousands of construction workers in a
three-state geographic region. For many years, Union A has maintained a
standard written collective bargaining agreement with several hundred
large and small building contractors, covering wages, hours, and other
terms and conditions of employment for all work performed in Union A's
geographic territory. The terms of those agreements are negotiated every
three years between Union A and a multiemployer Association, which signs
on behalf of those employers who have delegated their bargaining
authority to the Association. Hundreds of other employers--including
both local and traveling contractors--have chosen to become bound to the
terms of Union A's standard area agreement for various periods of time
and in various ways, such as by signing short-form binders or ``me too''
agreements, executing a single job or project labor agreement, or
entering into a subcontracting arrangement with a signatory employer.
All of these employ individuals represented by Union A and contribute to
Plan A, a self-insured multiemployer health and welfare plan established
and maintained under Union A's standard area agreement. During the past
year, the trustees of Plan A have brought lawsuits against several
signatory employers seeking contributions allegedly owed, but not paid
to the trust. In defending that litigation, a number of employers have
sworn that they never intended to operate as union contractors, that
their employees want nothing to do with Union A, that Union A procured
their assent to the collective bargaining agreement solely by threats
and fraudulent misrepresentations, and that Union A has failed to file
certain reports required by the Labor Management Reporting and
Disclosure Act. In at least one instance, a petition for a
decertification election has been filed with the National Labor
Relations Board. In this example, Plan A meets the criteria for a
regulatory finding under this section that it is a multiemployer plan
established and maintained under or pursuant to one or more collective
bargaining agreements, assuming that its participant population
satisfies the 85% test of paragraph (b)(2) of this section and that none
of the disqualifying factors in paragraph (c) of this section is
present. Plan A's status for the purpose of this section is not affected
by the fact that some of the employers who deal with Union A have
challenged Union A's conduct, or have disputed under labor statutes and
legal doctrines other than ERISA section 3(40) the validity and
enforceability of their putative contract with Union A, regardless of
the outcome of those disputes.
Example 8. Assume the same facts as Example 7. Plan A's benefits
consultant recently entered into an arrangement with the Medical
Consortium, a newly formed organization of health care providers, which
allows the Plan to offer a broader range of health services to Plan A's
participants while achieving cost savings to the Plan and to
participants. Union A, Plan A, and Plan A's consultant each have added a
page to their Web sites publicizing the new arrangement with the Medical
Consortium. Concurrently, Medical Consortium's Web site prominently
[[Page 134]]
publicizes its recent affiliation with Plan A and the innovative
services it makes available to the Plan's participants. Union A has
mailed out informational packets to its members describing the benefit
enhancements and encouraging election of family coverage. Union A has
also begun distributing similar material to workers on hundreds of non-
union construction job sites within its geographic territory. In this
example, Plan A remains a plan established and maintained under or
pursuant to one or more collective bargaining agreements under section
3(40) of ERISA. Neither Plan A's relationship with a new organization of
health care providers, nor the use of various media to publicize Plan
A's attractive benefits throughout the area served by Union A, alters
Plan A's status for purpose of this section.
Example 9. Assume the same facts as in Example 7. Union A undertakes
an area-wide organizing campaign among the employees of all the health
care providers who belong to the Medical Consortium. When soliciting
individual employees to sign up as union members, Union A distributes
Plan A's information materials and promises to bargain for the same
coverage. At the same time, when appealing to the employers in the
Medical Consortium for voluntary recognition, Union A promises to
publicize the Consortium's status as a group of unionized health care
service providers. Union A eventually succeeds in obtaining recognition
based on its majority status among the employees working for Medical
Consortium employers. The Consortium, acting on behalf of its employer
members, negotiates a collective bargaining agreement with Union A that
provides terms and conditions of employment, including coverage under
Plan A. In this example, Plan A still meets the criteria for a
regulatory finding that it is collectively bargained under section 3(40)
of ERISA. Union A's recruitment and representation of a new occupational
category of workers unrelated to the construction trade, its promotion
of attractive health benefits to achieve organizing success, and the
Plan's resultant growth, do not take Plan A outside the regulatory
finding.
Example 10. Assume the same facts as in Example 7. The Medical
Consortium, a newly formed organization, approaches Plan A with a
proposal to make money for Plan A and Union A by enrolling a large group
of employers, their employees, and self-employed individuals affiliated
with the Medical Consortium. The Medical Consortium obtains employers'
signatures on a generic document bearing Union A's name, labeled
``collective bargaining agreement,'' which provides for health coverage
under Plan A and compliance with wage and hour statutes, as well as
other employment laws. Employees of signatory employers sign enrollment
documents for Plan A and are issued membership cards in Union A; their
membership dues are regularly checked off along with their monthly
payments for health coverage. Self-employed individuals similarly
receive union membership cards and make monthly payments, which are
divided between Plan A and the Union. Aside from health coverage
matters, these new participants have little or no contact with Union A.
The new participants enrolled through the Consortium amount to 18% of
the population of Plan A during the current Plan Year. In this example,
Plan A now fails to meet the criteria in paragraphs (b)(2) and (b)(3) of
this section, because more than 15% of its participants are individuals
who are not employed under agreements that are the product of a bona
fide collective bargaining relationship and who do not fall within any
of the other nexus categories set forth in paragraph (b)(2) of this
section. Moreover, even if the number of additional participants
enrolled through the Medical Consortium, together with any other
participants who did not fall within any of the nexus categories, did
not exceed 15% of the total participant population under the plan, the
circumstances in this example would trigger the disqualification of
paragraph (c)(2) of this section, because Plan A now is being maintained
under a substantial number of agreements that are a ``scheme, plan,
stratagem or artifice of evasion'' intended primarily to evade
compliance with state laws and regulations pertaining to insurance. In
either case, the consequence of adding the participants through the
Medical Consortium is that Plan A is now a MEWA for purposes of section
3(40) of ERISA and is not exempt from state regulation by virtue of
ERISA.
(f) Cross-reference. See 29 CFR part 2570, subpart H for procedural
rules relating to proceedings seeking an Administrative Law Judge
finding by the Secretary under section 3(40) of ERISA.
(g) Effect of proceeding seeking Administrative Law Judge Section
3(40) Finding.
(1) An Administrative Law Judge finding issued pursuant to the
procedures in 29 CFR part 2570, subpart H will constitute a finding
whether the entity in that proceeding is an employee welfare benefit
plan established or maintained under or pursuant to an agreement that
the Secretary finds to be a collective bargaining agreement for purposes
of section 3(40) of ERISA.
(2) Nothing in this section or in 29 CFR part 2570, subpart H is
intended to provide the basis for a stay or delay of
[[Page 135]]
a state administrative or court proceeding or enforcement of a subpoena.
[68 FR 17480, Apr. 9, 2003]
Sec. 2510.3-44 Registration requirement to serve as a pooled plan
provider to pooled employer plans.
(a) General. Section 3(44) of the Act sets forth the criteria that a
person must meet to be a pooled plan provider for pooled employer plans
under section 3(43) of the Act.
(b) Registration requirement. Subparagraph (A)(ii) of section 3(44)
requires the person to register as a pooled plan provider with the
Department and provide such other information as the Department may
require, before beginning operations as a pooled plan provider. For this
purpose, ``beginning operations as a pooled plan provider'' means the
initiation of operations of the first plan that the person operates as a
pooled employer plan, as described in paragraph (b)(6) of this section.
To meet the requirements to register with the Department under section
3(44) of the Act, a person intending to act as a pooled plan provider
must:
(1) At least 30 days before beginning operations as a pooled plan
provider, file with the Department the following information on a
complete and accurate Form PR (Pooled Plan Provider Registration) in
accordance with the form's instructions.
(i) The legal business name and any trade name (doing business as)
of such person.
(ii) The business mailing address and phone number of such person.
(iii) The employer identification number (EIN) assigned to such
person by the Internal Revenue Service.
(iv) The address of any public website or websites of the pooled
plan provider or any affiliates to be used to market any such person as
a pooled plan provider to the public or to provide public information on
the pooled employer plans operated by the pooled plan provider.
(v) Name, address, contact telephone number, and email address for
the responsible compliance official of the pooled plan provider. For
purposes of this paragraph (b)(1)(v), the term ``responsible compliance
official'' means the person or persons, identified by name, title, or
office, responsible for addressing questions regarding the pooled plan
provider's status under, or compliance with, applicable provisions of
the Act and the Internal Revenue Code as pertaining to a pooled employer
plan.
(vi) The agent for service of legal process for the pooled plan
provider, and the address at which process may be served on such agent.
(vii) The approximate date when pooled plan operations are expected
to commence.
(viii) An identification of the administrative, investment, and
fiduciary services that will be offered or provided in connection with
the pooled employer plans by the pooled plan provider or an affiliate.
For purposes of this paragraph (b)(1)(viii), the term ``affiliate''
includes all persons who are treated as a single employer with the
person intending to be a pooled plan provider under section 414(b), (c),
(m), or (o) of the Internal Revenue Code who will provide services to
pooled employer plans sponsored by the pooled plan provider and any
officer, director, partner, employee, or relative (as defined in section
3(15) of the Act) of such person; and any corporation or partnership of
which such person is an officer, director, or partner.
(ix) A statement disclosing any ongoing Federal or State criminal
proceedings, or any Federal or State criminal conviction, related to the
provision of services to, operation of, or investments of, any employee
benefit plan, against the pooled plan provider, or any officer,
director, or employee of the pooled plan provider, provided that any
criminal conviction may be omitted if the conviction, or related term of
imprisonment served, is outside ten years of the date of registration.
(x) A statement disclosing any ongoing civil or administrative
proceedings in any court or administrative tribunal by the Federal or
State government or other regulatory authority against the pooled plan
provider, or any officer, director, or employee of the pooled plan
provider, involving a claim of fraud or dishonesty with respect to any
employee benefit plan, or involving the mismanagement of plan assets.
[[Page 136]]
(2) No later than the initiation of operations of a plan as a pooled
employer plan, as described in paragraph (b)(6) of this section, file
with the Department a supplemental report using the Form PR containing
the name and plan number that the pooled employer plan will use for
annual reporting purposes, and the name, address, and EIN for the
trustee for the plan.
(3) File with the Department a supplemental report using the Form PR
within the later of 30 days after the calendar quarter in which the
following reportable events occurred or 45 days after a following
reportable event occurred:
(i) Any change in the information reported pursuant to paragraph
(b)(1) or (2) of this section unless otherwise disclosed pursuant to
paragraphs (b)(3)(iii) through (v) of this section.
(ii) Any significant change in corporate or business structure of
the pooled plan provider, e.g., merger, acquisition, or initiation of
bankruptcy, receivership, or other insolvency proceeding for the pooled
plan provider or an affiliate that provides services to a pooled
employer plan, or ceasing all operations as a pooled plan provider.
(iii) Receipt of written notice of the initiation of any
administrative proceeding or civil enforcement action in any court or
administrative tribunal by any Federal or State governmental agency or
other regulatory authority against the pooled plan provider, or any
officer, director, or employee of the pooled plan provider involving a
claim of fraud or dishonesty with respect to any employee benefit plan,
or involving the mismanagement of plan assets.
(iv) Receipt of written notice of a finding involving a claim of
fraud or dishonesty with respect to any employee benefit plan, or
involving the mismanagement of plan assets in any matter described in
paragraph (b)(1)(x) or (b)(3)(iii) of this section.
(v) Receipt of written notice of the filing of any Federal or State
criminal charges related to the provision of services to, operation of,
or investments of any pooled employer plan or other employee benefit
plan against the pooled plan provider or any officer, director, or
employee of the pooled plan provider.
(4) Only one registration must be filed for each person intending to
act as a pooled plan provider, regardless of the number of pooled
employer plans it operates. A pooled plan provider must file updates for
each pooled employer plan described in paragraph (b)(2) of this section,
any change of previously reported information, and any change in
circumstances listed in paragraph (b)(3) of this section, but may file a
single statement to report multiple changes, as long as the timing
requirements are met with respect to each reportable change.
(5) If a pooled plan provider has terminated and ceased operating
all pooled employer plans, the pooled plan provider must file a final
supplemental filing in accordance with instructions for the Form PR. For
purposes of this section, a pooled employer plan is treated as having
terminated and ceased operating when a resolution has been adopted
terminating the plan, all assets under the plan (including insurance/
annuity contracts) have been distributed to the participants and
beneficiaries or legally transferred to the control of another plan, and
a final Form 5500 has been filed for the plan.
(6) For purposes of this section, a person is treated as initiating
operations of a plan as a pooled employer plan when the first employer
executes or adopts a participation, subscription, or similar agreement
for the plan specifying that it is a pooled employer plan, or, if
earlier, when the trustee of the plan first holds any asset in trust.
(7) Registrations required under this section shall be filed with
the Secretary electronically on the Form PR in accordance with the Form
PR instructions published by the Department.
(8) For purposes of this section, the term ``administrative
proceeding'' or ``administrative proceedings'' means a judicial-type
proceeding of public record before an administrative law judge or
similar decision-maker.
(9) For purposes of this section, the term ``other regulatory
authority'' means Federal or State authorities and
[[Page 137]]
self-regulatory organizations authorized by law, but does not include
any foreign regulatory authorities.
(10) For purposes of paragraphs (b)(1)(ix) and (x) and (b)(3)(iii)
and (v) of this section, employees of the pooled plan provider include
employees of the pooled employer plan, but only if they handle assets of
the plan, within the meaning of section 412 of the Act, or if they are
responsible for operations or investments of the pooled employer plan.
(c) Transition rule. Notwithstanding paragraph (b)(1) of this
section, a person intending to act as a pooled plan provider may file
the Form PR on or before beginning operations as a pooled plan provider
(dispensing with the 30-day advance filing requirement) if the filing is
made before February 1, 2021.
(d) Acquittals and removal of information. A pooled plan provider
may file an update to remove any matter previously reported under
paragraph (b)(1)(ix) or (b)(3)(v) of this section for which the
defendant has received an acquittal. For this purpose, the term
``acquittal'' means a finding by a judge or jury that a defendant is not
guilty or any other dismissal or judgment which the government may not
appeal.
[85 FR 72955, Nov. 16, 2020]
Sec. 2510.3-55 Definition of employer--Association Retirement
Plans and other multiple employer pension benefit plans.
(a) In general. The purpose of this section is to clarify which
persons may act as an ``employer'' within the meaning of section 3(5) of
the Act in sponsoring a multiple employer defined contribution pension
plan (hereinafter ``MEP''). The Act defines the term ``employee pension
benefit plan'' in section 3(2), in relevant part, as any plan, fund, or
program established or maintained by an employer, employee organization,
or by both an employer and an employee organization, to the extent by
its express terms or as a result of surrounding circumstances such plan,
fund, or program provides retirement income to employees or results in a
deferral of income by employees for periods extending to the termination
of covered employment or beyond. For purposes of being able to establish
and maintain an employee pension benefit plan within the meaning of
section 3(2), an ``employer'' under section 3(5) of the Act includes any
person acting directly as an employer, or any person acting indirectly
in the interest of an employer in relation to an employee benefit plan.
A group or association of employers is specifically identified in
section 3(5) of the Act as a person able to act directly or indirectly
in the interest of an employer, including for purposes of establishing
or maintaining an employee benefit plan. A bona fide group or
association of employers (as defined in paragraph (b) of this section)
and a bona fide professional employer organization (as described in
paragraph (c) of this section) shall be deemed to be able to act in the
interest of an employer within the meaning of section 3(5) of the Act by
satisfying the criteria set forth in paragraphs (b) and (c) of this
section, respectively.
(b)(1) Bona fide group or association of employers. For purposes of
title I of the Act and this chapter, a bona fide group or association of
employers capable of establishing a MEP shall include a group or
association of employers that meets the following requirements:
(i) The primary purpose of the group or association may be to offer
and provide MEP coverage to its employer members and their employees;
however, the group or association also must have at least one
substantial business purpose unrelated to offering and providing MEP
coverage or other employee benefits to its employer members and their
employees. For purposes of satisfying the standard of this paragraph
(b)(1)(i), as a safe harbor, a substantial business purpose is
considered to exist if the group or association would be a viable entity
in the absence of sponsoring an employee benefit plan. For purposes of
this paragraph (b)(1)(i), a business purpose includes promoting common
business interests of its members or the common economic interests in a
given trade or employer community and is not required to be a for-profit
activity;
(ii) Each employer member of the group or association participating
in the plan is a person acting directly as an employer of at least one
employee
[[Page 138]]
who is a participant covered under the plan;
(iii) The group or association has a formal organizational structure
with a governing body and has by-laws or other similar indications of
formality;
(iv) The functions and activities of the group or association are
controlled by its employer members, and the group's or association's
employer members that participate in the plan control the plan. Control
must be present both in form and in substance;
(v) The employer members have a commonality of interest as described
in paragraph (b)(2) of this section;
(vi) The group or association does not make plan participation
through the association available other than to employees and former
employees of employer members, and their beneficiaries; and
(vii) The group or association is not a bank or trust company,
insurance issuer, broker-dealer, or other similar financial services
firm (including a pension recordkeeper or third-party administrator), or
owned or controlled by such an entity or any subsidiary or affiliate of
such an entity, other than to the extent such an entity, subsidiary or
affiliate participates in the group or association in its capacity as an
employer member of the group or association.
(2) Commonality of interest. (i) Employer members of a group or
association will be treated as having a commonality of interest if
either:
(A) The employers are in the same trade, industry, line of business
or profession; or
(B) Each employer has a principal place of business in the same
region that does not exceed the boundaries of a single State or a
metropolitan area (even if the metropolitan area includes more than one
State).
(ii) In the case of a group or association that is sponsoring a MEP
under this section and that is itself an employer member of the group or
association, the group or association will be deemed for purposes of
paragraph (b)(2)(i)(A) of this section to be in the same trade,
industry, line of business, or profession, as applicable, as the other
employer members of the group or association.
(c)(1) Bona fide professional employer organization. A professional
employer organization (PEO) is a human-resource company that
contractually assumes certain employer responsibilities of its client
employers. For purposes of title I of the Act and this chapter, a bona
fide PEO is capable of establishing a MEP. A bona fide PEO is an
organization that meets the following requirements:
(i) The PEO performs substantial employment functions on behalf of
its client employers that adopt the MEP, and maintains adequate records
relating to such functions;
(ii) The PEO has substantial control over the functions and
activities of the MEP, as the plan sponsor (within the meaning of
section 3(16)(B) of the Act), the plan administrator (within the meaning
of section 3(16)(A) of the Act), and a named fiduciary (within the
meaning of section 402 of the Act), and continues to have employee-
benefit-plan obligations to MEP participants after the client employer
no longer contracts with the organization.
(iii) The PEO ensures that each client employer that adopts the MEP
acts directly as an employer of at least one employee who is a
participant covered under the MEP; and
(iv) The PEO ensures that participation in the MEP is available only
to employees and former employees of the PEO and client employers,
employees and former employees of former client employers who became
participants during the contract period between the PEO and former
client employers, and their beneficiaries.
(2) Safe harbor criteria for substantial employment functions. For
purposes of paragraph (c)(1)(i) of this section, whether a PEO performs
substantial employment functions on behalf of its client employers is
determined on the basis of the facts and circumstances of the particular
situation. As a safe harbor, a PEO shall be considered to perform
substantial employment functions on behalf of its client-employers that
adopt the MEP if it meets the following criteria with respect to each
client-employer employee that participates in the MEP--
(i) The PEO assumes responsibility for and pays wages to employees
of its
[[Page 139]]
client-employers that adopt the MEP, without regard to the receipt or
adequacy of payment from those client employers;
(ii) The PEO assumes responsibility for and reports, withholds, and
pays any applicable federal employment taxes for its client employers
that adopt the MEP, without regard to the receipt or adequacy of payment
from those client employers;
(iii) The PEO plays a definite and contractually specified role in
recruiting, hiring, and firing workers of its client-employers that
adopt the MEP, in addition to the client-employer's responsibility for
recruiting, hiring, and firing workers. A PEO is considered to satisfy
this standard if it recruits, hires, and fires, assumes responsibility
for recruiting, hiring, and firing, or retains the right to recruit,
hire, and fire workers of its client-employers that adopt the MEP, in
addition to the client-employer's responsibility for recruiting, hiring,
and firing workers; and
(iv) The PEO assumes responsibility for and has substantial control
over the functions and activities of any employee benefits which the
service contract may require the PEO to provide, without regard to the
receipt or adequacy of payment from those client employers for such
benefits.
(d) Dual treatment of working owners as employers and employees. (1)
A working owner of a trade or business without common law employees may
qualify as both an employer and as an employee of the trade or business
for purposes of the requirements in paragraph (b) of this section,
including the requirement in paragraph (b)(1)(ii) of this section that
each employer member of the group or association adopting the MEP must
be a person acting directly as an employer of one or more employees who
are participants covered under the MEP, and the requirement in paragraph
(b)(1)(vi) of this section that the group or association does not make
participation through the group or association available other than to
certain employees and former employees and their beneficiaries.
(2) The term ``working owner'' as used in this paragraph (d) means
any person who a responsible plan fiduciary reasonably determines is an
individual:
(i) Who has an ownership right of any nature in a trade or business,
whether incorporated or unincorporated, including a partner or other
self-employed individual;
(ii) Who is earning wages or self-employment income from the trade
or business for providing personal services to the trade or business;
and
(iii) Who either:
(A) Works on average at least 20 hours per week or at least 80 hours
per month providing personal services to the working owner's trade or
business, or
(B) In the case of a MEP described in paragraph (b) of this section,
if applicable, has wages or self-employment income from such trade or
business that at least equals the working owner's cost of coverage for
participation by the working owner and any covered beneficiaries in any
group health plan sponsored by the group or association in which the
individual is participating or is eligible to participate.
(3) The determination under this paragraph (d) must be made when the
working owner first becomes eligible for participation in the defined
contribution MEP and continued eligibility must be periodically
confirmed pursuant to reasonable monitoring procedures.
(e) Severability. (1) If any provision of this section is held to be
invalid or unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, the provision
shall be construed so as to continue to give the maximum effect to the
provision permitted by law, unless such holding shall be one of complete
invalidity or unenforceability, in which event the provision shall be
severable from this section and shall not affect the remainder thereof.
(2) Examples. (i) If any portion of paragraph (b)(1)(i) of this
section (containing the substantial business purpose requirement) is
found to be void in a manner contemplated by paragraph (e)(1) of this
section, then the whole of paragraph (b)(1)(i) of this section shall be
construed as follows: ``The group or association must be a viable entity
in the absence of offering and providing
[[Page 140]]
MEP coverage or other employee benefits to its employer members and
their employees.''
(ii) If any portion of paragraph (d) of this section (containing the
``working owner'' provision) is found to be void in a manner
contemplated by paragraph (e)(1) of this section, such a decision does
not impact the ability of a bona fide group or association to meet the
``commonality of interest'' requirement in paragraph (b)(2) of this
section by being located in the same geographic locale.
[84 FR 37543, July 31, 2019]
Sec. 2510.3-101 Definition of ``plan assets''--plan investments.
(a) In general. (1) This section describes what constitute assets of
a plan with respect to a plan's investment in another entity for
purposes of subtitle A, and parts 1 and 4 of subtitle B, of title I of
the Act and section 4975 of the Internal Revenue Code. Paragraph (a)(2)
of this section contains a general rule relating to plan investments.
Paragraphs (b) through (f) of this section define certain terms that are
used in the application of the general rule. Paragraph (g) of this
section describes how the rules in this section are to be applied when a
plan owns property jointly with others or where it acquires an equity
interest whose value relates solely to identified assets of an issuer.
Paragraph (h) of this section contains special rules relating to
particular kinds of plan investments. Paragraph (i) describes the assets
that a plan acquires when it purchases certain guaranteed mortgage
certificates. Paragraph (j) of this section contains examples
illustrating the operation of this section. The effective date of this
section is set forth in paragraph (k) of this section.
(2) Generally, when a plan invests in another entity, the plan's
assets include its investment, but do not, solely by reason of such
investment, include any of the underlying assets of the entity. However,
in the case of a plan's investment in an equity interest of an entity
that is neither a publicly-offered security nor a security issued by an
investment company registered under the Investment Company Act of 1940
its assets include both the equity interest and an undivided interest in
each of the underlying assets of the entity, unless it is established
that--
(i) The entity is an operating company, or
(ii) Equity participation in the entity by benefit plan investors is
not significant.
Therefore, any person who exercises authority or control respecting the
management or disposition of such underlying assets, and any person who
provides investment advice with respect to such assets for a fee (direct
or indirect), is a fiduciary of the investing plan.
(b) Equity interests and publicly-offered securities. (1) The term
equity interest means any interest in an entity other than an instrument
that is treated as indebtedness under applicable local law and which has
no substantial equity features. A profits interest in a partnership, an
undivided ownership interest in property and a beneficial interest in a
trust are equity interests.
(2) A publicly-offered security is a security that is freely
transferable, part of a class of securities that is widely held and
either--
(i) Part of a class of securities registered under section 12(b) or
12(g) of the Securities Exchange Act of 1934, or
(ii) Sold to the plan as part of an offering of securities to the
public pursuant to an effective registration statement under the
Securities Act of 1933 and the class of securities of which such
security is a part is registered under the Securities Exchange Act of
1934 within 120 days (or such later time as may be allowed by the
Securities and Exchange Commission) after the end of the fiscal year of
the issuer during which the offering of such securities to the public
occurred.
(3) For purposes of paragraph (b)(2) of this section, a class of
securities is ``widely-held'' only if it is a class of securities that
is owned by 100 or more investors independent of the issuer and of one
another. A class of securities will not fail to be widely-held solely
because subsequent to the initial offering the number of independent
investors falls below 100 as a result of events beyond the control of
the issuer.
(4) For purposes of paragraph (b)(2) of this section, whether a
security is
[[Page 141]]
``freely transferable'' is a factual question to be determined on the
basis of all relevant facts and circumstances. If a security is part of
an offering in which the minimum investment is $10,000 or less, however,
the following factors ordinarily will not, alone or in combination,
affect a finding that such securities are freely transferable:
(i) Any requirement that not less than a minimum number of shares or
units of such security be transferred or assigned by any investor,
provided that such requirement does not prevent transfer of all of the
then remaining shares or units held by an investor;
(ii) Any prohibition against transfer or assignment of such security
or rights in respect thereof to an ineligible or unsuitable investor;
(iii) Any restriction on, or prohibition against, any transfer or
assignment which would either result in a termination or
reclassification of the entity for Federal or state tax purposes or
which would violate any state or Federal statute, regulation, court
order, judicial decree, or rule of law;
(iv) Any requirement that reasonable transfer or administrative fees
be paid in connection with a transfer or assignment;
(v) Any requirement that advance notice of a transfer or assignment
be given to the entity and any requirement regarding execution of
documentation evidencing such transfer or assignment (including
documentation setting forth representations from either or both of the
transferor or transferee as to compliance with any restriction or
requirement described in this paragraph (b)(4) of this section or
requiring compliance with the entity's governing instruments);
(vi) Any restriction on substitution of an assignee as a limited
partner of a partnership, including a general partner consent
requirement, provided that the economic benefits of ownership of the
assignor may be transferred or assigned without regard to such
restriction or consent (other than compliance with any other restriction
described in this paragraph (b)(4)) of this section;
(vii) Any administrative procedure which establishes an effective
date, or an event, such as the completion of the offering, prior to
which a transfer or assignment will not be effective; and
(viii) Any limitation or restriction on transfer or assignment which
is not created or imposed by the issuer or any person acting for or on
behalf of such issuer.
(c) Operating company. (1) An ``operating company'' is an entity
that is primarily engaged, directly or through a majority owned
subsidiary or subsidiaries, in the production or sale of a product or
service other than the investment of capital. The term ``operating
company'' includes an entity which is not described in the preceding
sentence, but which is a ``venture capital operating company'' described
in paragraph (d) or a ``real estate operating company'' described in
paragraph (e).
(2) [Reserved]
(d) Venture capital operating company. (1) An entity is a ``venture
capital operating company'' for the period beginning on an initial
valuation date described in paragraph (d)(5)(i) and ending on the last
day of the first ``annual valuation period'' described in paragraph
(d)(5)(ii) (in the case of an entity that is not a venture capital
operating company immediately before the determination) or for the 12
month period following the expiration of an ``annual valuation period''
described in paragraph (d)(5)(ii) (in the case of an entity that is a
venture capital operating company immediately before the determination)
if--
(i) On such initial valuation date, or at any time within such
annual valuation period, at least 50 percent of its assets (other than
short-term investments pending long-term commitment or distribution to
investors), valued at cost, are invested in venture capital investments
described in paragraph (d)(3)(i) or derivative investments described in
paragraph (d)(4); and
(ii) During such 12 month period (or during the period beginning on
the initial valuation date and ending on the last day of the first
annual valuation period), the entity, in the ordinary course of its
business, actually exercises management rights of the kind described in
paragraph (d)(3)(ii) with respect to one or more of the operating
companies in which it invests.
[[Page 142]]
(2)(i) A venture capital operating company described in paragraph
(d)(1) shall continue to be treated as a venture capital operating
company during the ``distribution period'' described in paragraph
(d)(2)(ii). An entity shall not be treated as a venture capital
operating company at any time after the end of the distribution period.
(ii) The ``distribution period'' referred to in paragraph (d)(2)(i)
begins on a date established by a venture capital operating company that
occurs after the first date on which the venture capital operating
company has distributed to investors the proceeds of at least 50 percent
of the highest amount of its investments (other than short-term
investments made pending long-term commitment or distribution to
investors) outstanding at any time from the date it commenced business
(determined on the basis of the cost of such investments) and ends on
the earlier of--
(A) The date on which the company makes a ``new portfolio
investment'', or
(B) The expiration of 10 years from the beginning of the
distribution period.
(iii) For purposes of paragraph (d)(2)(ii)(A), a ``new portfolio
investment'' is an investment other than--
(A) An investment in an entity in which the venture capital
operating company had an outstanding venture capital investment at the
beginning of the distribution period which has continued to be
outstanding at all times during the distribution period, or
(B) A short-term investment pending long-term commitment or
distribution to investors.
(3)(i) For purposes of this paragraph (d) a ``venture capital
investment'' is an investment in an operating company (other than a
venture capital operating company) as to which the investor has or
obtains management rights.
(ii) The term ``management rights'' means contractual rights
directly between the investor and an operating company to substantially
participate in, or substantially influence the conduct of, the
management of the operating company.
(4)(i) An investment is a ``derivative investment'' for purposes of
this paragraph (d) if it is--
(A) A venture capital investment as to which the investor's
management rights have ceased in connection with a public offering of
securities of the operating company to which the investment relates, or
(B) An investment that is acquired by a venture capital operating
company in the ordinary course of its business in exchange for an
existing venture capital investment in connection with:
(1) A public offering of securities of the operating company to
which the existing venture capital investment relates, or
(2) A merger or reorganization of the operating company to which the
existing venture capital investment relates, provided that such merger
or reorganization is made for independent business reasons unrelated to
extinguishing management rights.
(ii) An investment ceases to be a derivative investment on the later
of:
(A) 10 years from the date of the acquisition of the original
venture capital investment to which the derivative investment relates,
or
(B) 30 months from the date on which the investment becomes a
derivative investment.
(5) For purposes of this paragraph (d) and paragraph (e)--
(i) An ``initial valuation date'' is the later of--
(A) Any date designated by the company within the 12 month period
ending with the effective date of this section, or
(B) The first date on which an entity makes an investment that is
not a short-term investment of funds pending long-term commitment.
(ii) An ``annual valuation period'' is a preestablished annual
period, not exceeding 90 days in duration, which begins no later than
the anniversary of an entity's initial valuation date. An annual
valuation period, once established may not be changed except for good
cause unrelated to a determination under this paragraph (d) or paragraph
(e).
[[Page 143]]
(e) Real estate operating company. An entity is a ``real estate
operating company'' for the period beginning on an initial valuation
date described in paragraph (d)(5)(i) and ending on the last day of the
first ``annual valuation period'' described in paragraph (d)(5)(ii) (in
the case of an entity that is not a real estate operating company
immediately before the determination) or for the 12 month period
following the expiration of an annual valuation period described in
paragraph (d)(5)(ii) (in the case of an entity that is a real estate
operating company immediately before the determination) if:
(1) On such initial valuation date, or on any date within such
annual valuation period, at least 50 percent of its assets, valued at
cost (other than short-term investments pending long-term commitment or
distribution to investors), are invested in real estate which is managed
or developed and with respect to which such entity has the right to
substantially participate directly in the management or development
activities; and
(2) During such 12 month period (or during the period beginning on
the initial valuation date and ending on the last day of the first
annual valuation period) such entity in the ordinary course of its
business is engaged directly in real estate management or development
activities.
(f) Participation by benefit plan investors. (1) Equity
participation in an entity by benefit plan investors is ``significant''
on any date if, immediately after the most recent acquisition of any
equity interest in the entity, 25 percent or more of the value of any
class of equity interests in the entity is held by benefit plan
investors (as defined in paragraph (f)(2)). For purposes of
determinations pursuant to this paragraph (f), the value of any equity
interests held by a person (other than a benefit plan investor) who has
discretionary authority or control with respect to the assets of the
entity or any person who provides investment advice for a fee (direct or
indirect) with respect to such assets, or any affiliate of such a
person, shall be disregarded.
(2) A ``benefit plan investor'' is any of the following--
(i) Any employee benefit plan (as defined in section 3(3) of the
Act), whether or not it is subject to the provisions of title I of the
Act,
(ii) Any plan described in section 4975(e)(1) of the Internal
Revenue Code,
(iii) Any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity.
(3) An ``affiliate'' of a person includes any person, directly or
indirectly, through one or more intermediaries, controlling, controlled
by, or under common control with the person. For purposes of this
paragraph (f)(3), ``control'', with respect to a person other than an
individual, means the power to exercise a controlling influence over the
management or policies of such person.
(g) Joint ownership. For purposes of this section, where a plan
jointly owns property with others, or where the value of a plan's equity
interest in an entity relates solely to identified property of the
entity, such property shall be treated as the sole property of a
separate entity.
(h) Specific rules relating to plan investments. Notwithstanding any
other provision of this section--
(1) Except where the entity is an investment company registered
under the Investment Company Act of 1940, when a plan acquires or holds
an interest in any of the following entities its assets include its
investment and an undivided interest in each of the underlying assets of
the entity:
(i) A group trust which is exempt from taxation under section 501(a)
of the Internal Revenue Code pursuant to the principles of Rev. Rul. 81-
100, 1981-1 C.B. 326,
(ii) A common or collective trust fund of a bank,
(iii) A separate account of an insurance company, other than a
separate account that is maintained solely in connection with fixed
contractual obligations of the insurance company under which the amounts
payable, or credited, to the plan and to any participant or beneficiary
of the plan (including an annuitant) are not affected in any manner by
the investment performance of the separate account.
(2) When a plan acquires or holds an interest in any entity (other
than an
[[Page 144]]
insurance company licensed to do business in a State) which is
established or maintained for the purpose of offering or providing any
benefit described in section 3(1) or section 3(2) of the Act to
participants or beneficiaries of the investing plan, its assets will
include its investment and an undivided interest in the underlying
assets of that entity.
(3) When a plan or a related group of plans owns all of the
outstanding equity interests (other than director's qualifying shares)
in an entity, its assets include those equity interests and all of the
underlying assets of the entity. This paragraph (h)(3) does not apply,
however, where all of the outstanding equity interests in an entity are
qualifying employer securities described in section 407(d)(5) of the
Act, owned by one or more eligible individual account plan(s) (as
defined in section 407(d)(3) of the Act) maintained by the same
employer, provided that substantially all of the participants in the
plan(s) are, or have been, employed by the issuer of such securities or
by members of a group of affiliated corporations (as determined under
section 407(d)(7) of the Act) of which the issuer is a member.
(4) For purposes of paragraph (h)(3), a ``related group'' of
employee benefit plans consists of every group of two or more employee
benefit plans--
(i) Each of which receives 10 percent or more of its aggregate
contributions from the same employer or from members of the same
controlled group of corporations (as determined under section 1563(a) of
the Internal Revenue Code, without regard to section 1563(a)(4)
thereof); or
(ii) Each of which is either maintained by, or maintained pursuant
to a collective bargaining agreement negotiated by, the same employee
organization or affiliated employee organizations. For purposes of this
paragraph, an ``affiliate'' of an employee organization means any person
controlling, controlled by, or under common control with such
organization, and includes any organization chartered by the same parent
body, or governed by the same constitution and bylaws, or having the
relation of parent and subordinate.
(i) Governmental mortgage pools. (1) Where a plan acquires a
guaranteed governmental mortgage pool certificate, as defined in
paragraph (i)(2), the plan's assets include the certificate and all of
its rights with respect to such certificate under applicable law, but do
not, solely by reason of the plan's holding of such certificate, include
any of the mortgages underlying such certificate.
(2) A ``guaranteed governmental mortgage pool certificate'' is a
certificate backed by, or evidencing an interest in, specified mortgages
or participation interests therein and with respect to which interest
and principal payable pursuant to the certificate is guaranteed by the
United States or an agency or instrumentality thereof. The term
``guaranteed governmental mortgage pool certificate'' includes a
mortgage pool certificate with respect to which interest and principal
payable pursuant to the certificate is guaranteed by:
(i) The Government National Mortgage Association;
(ii) The Federal Home Loan Mortgage Corporation; or
(iii) The Federal National Mortgage Association.
(j) Examples. The principles of this section are illustrated by the
following examples:
(1) A plan, P, acquires debentures issued by a corporation, T,
pursuant to a private offering. T is engaged primarily in investing and
reinvesting in precious metals on behalf of its shareholders, all of
which are benefit plan investors. By its terms, the debenture is
convertible to common stock of T at P's option. At the time of P's
acquisition of the debentures, the conversion feature is incidental to
T's obligation to pay interest and principal. Although T is not an
operating company, P's assets do not include an interest in the
underlying assets of T because P has not acquired an equity interest in
T. However, if P exercises its option to convert the debentures to
common stock, it will have acquired an equity interest in T at that time
and (assuming that the common stock is not a publicly-offered security
and that there has been no change in the composition of the other equity
investors in T) P's assets would then include an undivided interest in
the underlying assets of T.
(2) A plan, P, acquires a limited partnership interest in a limited
partnership, U, which is established and maintained by A, a general
partner in U. U has only one class of
[[Page 145]]
limited partnership interests. U is engaged in the business of investing
and reinvesting in securities. Limited partnership interests in U are
offered privately pursuant to an exemption from the registration
requirements of the Securities Act of 1933. P acquires 15 percent of the
value of all the outstanding limited partnership interests in U, and, at
the time of P's investment, a governmental plan owns 15 percent of the
value of those interests. U is not an operating company because it is
engaged primarily in the investment of capital. In addition, equity
participation by benefit plan investors is significant because
immediately after P's investment such investors hold more than 25
percent of the limited partnership interests in U. Accordingly, P's
assets include an undivided interest in the underlying assets of U, and
A is a fiduciary of P with respect to such assets by reason of its
discretionary authority and control over U's assets. Although the
governmental plan's investment is taken into account for purposes of
determining whether equity participation by benefit plan investors is
significant, nothing in this section imposes fiduciary obligations on A
with respect to that plan.
(3) Assume the same facts as in paragraph (j)(2), except that P
acquires only 5 percent of the value of all the outstanding limited
partnership interests in U, and that benefit plan investors in the
aggregate hold only 10 percent of the value of the limited partnership
interests in U. Under these facts, there is no significant equity
participation by benefit plan investors in U, and, accordingly, P's
assets include its limited partnership interest in U, but do not include
any of the underlying assets of U. Thus, A would not be a fiduciary of P
by reason of P's investment.
(4) Assume the same facts as in paragraph (j)(3) and that the
aggregate value of the outstanding limited partnership interests in U is
$10,000 (and that the value of the interests held by benefit plan
investors is thus $1000). Also assume that an affiliate of A owns
limited partnership interests in U having a value of $6500. The value of
the limited partnership interests held by A's affiliate are disregarded
for purposes of determining whether there is significant equity
participation in U by benefit plan investors. Thus, the percentage of
the aggregate value of the limited partnership interests held by benefit
plan investors in U for purposes of such a determination is
approximately 28.6% ($1000/$3500). Therefore there is significant
benefit plan investment in T.
(5) A plan, P, invests in a limited partnership, V, pursuant to a
private offering. There is significant equity participation by benefit
plan investors in V. V acquires equity positions in the companies in
which it invests, and, in connection with these investments, V
negotiates terms that give it the right to participate in or influence
the management of those companies. Some of these investments are in
publicly-offered securities and some are in securities acquired in
private offerings. During its most recent valuation period, more than 50
percent of V's assets, valued at cost, consisted of investments with
respect to which V obtained management rights of the kind described
above. V's managers routinely consult informally with, and advise, the
management of only one portfolio company with respect to which it has
management rights, although it devotes substantial resources to its
consultations with that company. With respect to the other portfolio
companies, V relies on the managers of other entities to consult with
and advise the companies' management. V is a venture capital operating
company and therefore P has acquired its limited partnership investment,
but has not acquired an interest in any of the underlying assets of V.
Thus, none of the managers of V would be fiduciaries with respect to P
solely by reason of its investment. In this situation, the mere fact
that V does not participate in or influence the management of all its
portfolio companies does not affect its characterization as a venture
capital operating company.
(6) Assume the same facts as in paragraph (j)(5) and the following
additional facts: V invests in debt securities as well as equity
securities of its portfolio companies. In some cases V makes debt
investments in companies in which it also has an equity investment; in
other cases V only invests in debt instruments of the portfolio company.
V's debt investments are acquired pursuant to private offerings and V
negotiates covenants that give it the right to substantially participate
in or to substantially influence the conduct of the management of the
companies issuing the obligations. These covenants give V more
significant rights with respect to the portfolio companies' management
than the covenants ordinarily found in debt instruments of established,
creditworthy companies that are purchased privately by institutional
investors. V routinely consults with and advises the management of its
portfolio companies. The mere fact that V's investments in portfolio
companies are debt, rather than equity, will not cause V to fail to be a
venture capital operating company, provided it actually obtains the
right to substantially participate in or influence the conduct of the
management of its portfolio companies and provided that in the ordinary
course of its business it actually exercises those rights.
(7) A plan, P, invests (pursuant to a private offering) in a limited
partnership, W, that is engaged primarily in investing and reinvesting
assets in equity positions in real property. The properties acquired by
W are subject to long-term leases under which substantially all
management and maintenance activities with respect to the property are
[[Page 146]]
the responsibility of the lessee. W is not engaged in the management or
development of real estate merely because it assumes the risks of
ownership of income-producing real property, and W is not a real estate
operating company. If there is significant equity participation in W by
benefit plan investors, P will be considered to have acquired an
undivided interest in each of the underlying assets of W.
(8) Assume the same facts as in paragraph (j)(7) except that W owns
several shopping centers in which individual stores are leased for
relatively short periods to various merchants (rather than owning
properties subject to long-term leases under which substantially all
management and maintenance activities are the responsibility of the
lessee). W retains independent contractors to manage the shopping center
properties. These independent contractors negotiate individual leases,
maintain the common areas and conduct maintenance activities with
respect to the properties. W has the responsibility to supervise and the
authority to terminate the independent contractors. During its most
recent valuation period more than 50 percent of W's assets, valued at
cost, are invested in such properties. W is a real estate operating
company. The fact that W does not have its own employees who engage in
day-to-day management and development activities is only one factor in
determining whether it is actively managing or developing real estate.
Thus, P's assets include its interest in W, but do not include any of
the underlying assets of W.
(9) A plan, P, acquires a limited partnership interest in X pursuant
to a private offering. There is significant equity participation in X by
benefit plan investors. X is engaged in the business of making
``convertible loans'' which are structured as follows: X lends a
specified percentage of the cost of acquiring real property to a
borrower who provides the remaining capital needed to make the
acquisition. This loan is secured by a mortgage on the property. Under
the terms of the loan, X is entitled to receive a fixed rate of interest
payable out of the initial cash flow from the property and is also
entitled to that portion of any additional cash flow which is equal to
the percentage of the acquisition cost that is financed by its loan.
Simultaneously with the making of the loan, the borrower also gives X an
option to purchase an interest in the property for the original
principal amount of the loan at the expiration of its initial term. X's
percentage interest in the property, if it exercises this option, would
be equal to the percentage of the acquisition cost of the property which
is financed by its loan. The parties to the transaction contemplate that
the option ordinarily will be exercised at the expiration of the loan
term if the property has appreciated in value. X and the borrower also
agree that, if the option is exercised, they will form a limited
partnership to hold the property. X negotiates loan terms which give it
rights to substantially influence, or to substantially participate in,
the management of the property which is acquired with the proceeds of
the loan. These loan terms give X significantly greater rights to
participate in the management of the property than it would obtain under
a conventional mortgage loan. In addition, under the terms of the loan,
X and the borrower ratably share any capital expenditures relating to
the property. During its most recent valuation period, more than 50
percent of the value of X's assets valued at cost consisted of real
estate investments of the kind described above. X, in the ordinary
course of its business, routinely exercises its management rights and
frequently consults with and advises the borrower and the property
manager. Under these facts, X is a real estate operating company. Thus,
P's assets include its interest in X, but do not include any of the
underlying assets of X.
(10) In a private transaction, a plan, P, acquires a 30 percent
participation in a debt instrument that is held by a bank. Since the
value of the participation certificate relates solely to the debt
instrument, that debt instrument is, under paragraph (g), treated as the
sole asset of a separate entity. Equity participation in that entity by
benefit plan investors is significant since the value of the plan's
participation exceeds 25 percent of the value of the instrument. In
addition, the hypothetical entity is not an operating company because it
is primarily engaged in the investment of capital (i.e., holding the
debt instrument). Thus, P's assets include the participation and an
undivided interest in the debt instrument, and the bank is a fiduciary
of P to the extent it has discretionary authority or control over the
debt instrument.
(11) In a private transaction, a plan, P, acquires 30% of the value
of a class of equity securities issued by an operating company, Y. These
securities provide that dividends shall be paid solely out of earnings
attributable to certain tracts of undeveloped land that are held by Y
for investment. Under paragraph (g), the property is treated as the sole
asset of a separate entity. Thus, even though Y is an operating company,
the hypothetical entity whose sole assets are the undeveloped tracts of
land is not an operating company. Accordingly, P is considered to have
acquired an undivided interest in the tracts of land held by Y. Thus, Y
would be a fiduciary of P to the extent it exercises discretionary
authority or control over such property.
(12) A medical benefit plan, P, acquires a beneficial interest in a
trust, Z, that is not an insurance company licensed to do business in a
State. Under this arrangement, Z
[[Page 147]]
will provide the benefits to the participants and beneficiaries of P
that are promised under the terms of the plan. Under paragraph (h)(2),
P's assets include its beneficial interest in Z and an undivided
interest in each of its underlying assets. Thus, persons with
discretionary authority or control over the assets of Z would be
fiduciaries of P.
(k) Effective date and transitional rules. (1) In general, this
section is effective for purposes of identifying the assets of a plan on
or after March 13, 1987. Except as a defense, this section shall not
apply to investments in an entity in existence on March 13, 1987, if no
plan subject to title I of the Act or plan described in section
4975(e)(1) of the Code (other than a plan described in section
4975(g)(2) or (3)) acquires an interest in the entity from an issuer or
underwriter at any time on or after March 13, 1987 except pursuant to a
contract binding on the plan in effect on March 13, 1987 with an issuer
or underwriter to acquire an interest in the entity.
(2) Notwithstanding paragraph (k)(1), this section shall not, except
as a defense, apply to a real estate entity described in section
11018(a) of Pub. L. 99-272.
[51 FR 41280, Nov. 13, 1986, as amended at 51 FR 47226, Dec. 31, 1986]
Sec. 2510.3-102 Definition of ``plan assets''--participant contributions.
(a)(1) General rule. For purposes of subtitle A and parts 1 and 4 of
subtitle B of title I of ERISA and section 4975 of the Internal Revenue
Code only (but without any implication for and may not be relied upon to
bar criminal prosecutions under 18 U.S.C. 664), the assets of the plan
include amounts (other than union dues) that a participant or
beneficiary pays to an employer, or amounts that a participant has
withheld from his wages by an employer, for contribution or repayment of
a participant loan to the plan, as of the earliest date on which such
contributions or repayments can reasonably be segregated from the
employer's general assets.
(2) Safe harbor. (i) For purposes of paragraph (a)(1) of this
section, in the case of a plan with fewer than 100 participants at the
beginning of the plan year, any amount deposited with such plan not
later than the 7th business day following the day on which such amount
is received by the employer (in the case of amounts that a participant
or beneficiary pays to an employer), or the 7th business day following
the day on which such amount would otherwise have been payable to the
participant in cash (in the case of amounts withheld by an employer from
a participant's wages), shall be deemed to be contributed or repaid to
such plan on the earliest date on which such contributions or
participant loan repayments can reasonably be segregated from the
employer's general assets.
(ii) This paragraph (a)(2) sets forth an optional alternative method
of compliance with the rule set forth in paragraph (a)(1) of this
section. This paragraph (a)(2) does not establish the exclusive means by
which participant contribution or participant loan repayment amounts
shall be considered to be contributed or repaid to a plan by the
earliest date on which such contributions or repayments can reasonably
be segregated from the employer's general assets.
(b) Maximum time period for pension benefit plans. (1) Except as
provided in paragraph (b)(2) of this section, with respect to an
employee pension benefit plan as defined in section 3(2) of ERISA, in no
event shall the date determined pursuant to paragraph (a)(1) of this
section occur later than the 15th business day of the month following
the month in which the participant contribution or participant loan
repayment amounts are received by the employer (in the case of amounts
that a participant or beneficiary pays to an employer) or the 15th
business day of the month following the month in which such amounts
would otherwise have been payable to the participant in cash (in the
case of amounts withheld by an employer from a participant's wages).
(2) With respect to a SIMPLE plan that involves SIMPLE IRAs (i.e.,
Simple Retirement Accounts, as described in section 408(p) of the
Internal Revenue Code), in no event shall the date determined pursuant
to paragraph (a)(1) of this section occur later than the 30th calendar
day following the
[[Page 148]]
month in which the participant contribution amounts would otherwise have
been payable to the participant in cash.
(c) Maximum time period for welfare benefit plans. With respect to
an employee welfare benefit plan as defined in section 3(1) of ERISA, in
no event shall the date determined pursuant to paragraph (a)(1) of this
section occur later than 90 days from the date on which the participant
contribution amounts are received by the employer (in the case of
amounts that a participant or beneficiary pays to an employer) or the
date on which such amounts would otherwise have been payable to the
participant in cash (in the case of amounts withheld by an employer from
a participant's wages).
(d) Extension of maximum time period for pension plans. (1) With
respect to participant contributions received or withheld by the
employer in a single month, the maximum time period provided under
paragraph (b) of this section shall be extended for an additional 10
business days for an employer who--
(i) Provides a true and accurate written notice, distributed in a
manner reasonably designed to reach all the plan participants within 5
business days after the end of such extension period, stating--
(A) That the employer elected to take such extension for that month;
(B) That the affected contributions have been transmitted to the
plan; and
(C) With particularity, the reasons why the employer cannot
reasonably segregate the participant contributions within the time
period described in paragraph (b) of this section;
(ii) Prior to such extension period, obtains a performance bond or
irrevocable letter of credit in favor of the plan and in an amount of
not less than the total amount of participant contributions received or
withheld by the employer in the previous month; and
(iii) Within 5 business days after the end of such extension period,
provides a copy of the notice required under paragraph (d)(1)(i) of this
section to the Secretary, along with a certification that such notice
was provided to the participants and that the bond or letter of credit
required under paragraph (d)(1)(ii) of this section was obtained.
(2) The performance bond or irrevocable letter of credit required in
paragraph (d)(1)(ii) of this section shall be guaranteed by a bank or
similar institution that is supervised by the Federal government or a
State government and shall remain in effect for 3 months after the month
in which the extension expires.
(3)(i) An employer may not elect an extension under this paragraph
(d) more than twice in any plan year unless the employer pays to the
plan an amount representing interest on the participant contributions
that were subject to all the extensions within such plan year.
(ii) The amount representing interest in paragraph (d)(3)(i) of this
section shall be the greater of--
(A) The amount that otherwise would have been earned on the
participant contributions from the date on which such contributions were
paid to, or withheld by, the employer until such money is transmitted to
the plan had such contributions been invested during such period in the
investment alternative available under plan which had the highest rate
of return; or
(B) Interest at a rate equal to the underpayment rate defined in
section 6621(a)(2) of the Internal Revenue Code from the date on which
such contributions were paid to, or withheld by, the employer until such
money is fully restored to the plan.
(e) Definition. For purposes of this section, the term business day
means any day other than a Saturday, Sunday or any day designated as a
holiday by the Federal Government.
(f) Examples. The requirements of this section are illustrated by
the following examples:
(1) Employer A sponsors a 401(k) plan. There are 30 participants in
the 401(k) plan. A has one payroll period for its employees and uses an
outside payroll processing service to pay employee wages and process
deductions. A has established a system under which the payroll
processing service provides payroll deduction information to A within 1
business day after the issuance of paychecks. A checks this information
for accuracy within 5 business days and then forwards the withheld
employee contributions to the
[[Page 149]]
plan. The amount of the total withheld employee contributions is
deposited with the trust that is maintained under the plan on the 7th
business day following the date on which the employees are paid. Under
the safe harbor in paragraph (a)(2) of this section, when the
participant contributions are deposited with the plan on the 7th
business day following a pay date, the participant contributions are
deemed to be contributed to the plan on the earliest date on which such
contributions can reasonably be segregated from A's general assets.
(2) Employer B is a large national corporation which sponsors a
401(k) plan with 600 participants. B has several payroll centers and
uses an outside payroll processing service to pay employee wages and
process deductions. Each payroll center has a different pay period. Each
center maintains separate accounts on its books for purposes of
accounting for that center's payroll deductions and provides the outside
payroll processor the data necessary to prepare employee paychecks and
process deductions. The payroll processing service issues the employees'
paychecks and deducts all payroll taxes and elective employee
deductions. The payroll processing service forwards the employee payroll
deduction data to B on the date of issuance of paychecks. B checks this
data for accuracy and transmits this data along with the employee 401(k)
deferral funds to the plan's investment firm within 3 business days. The
plan's investment firm deposits the employee 401(k) deferral funds into
the plan on the day received from B. The assets of B's 401(k) plan would
include the participant contributions no later than 3 business days
after the issuance of paychecks.
(3) Employer C sponsors a self-insured contributory group health
plan with 90 participants. Several former employees have elected,
pursuant to the provisions of ERISA section 602, 29 U.S.C. 1162, to pay
C for continuation of their coverage under the plan. These checks arrive
at various times during the month and are deposited in the employer's
general account at bank Z. Under paragraphs (a) and (c) of this section,
the assets of the plan include the former employees' payments as soon
after the checks have cleared the bank as C could reasonably be expected
to segregate the payments from its general assets, but in no event later
than 90 days after the date on which the former employees' participant
contributions are received by C. If, however, C deposits the former
employees' payments with the plan no later than the 7th business day
following the day on which they are received by C, the former employees'
participant contributions will be deemed to be contributed to the plan
on the earliest date on which such contributions can reasonably be
segregated from C's general assets.
(g) Effective date. This section is effective February 3, 1997.
(h) Applicability date for collectively-bargained plans. (1)
Paragraph (b) of this section applies to collectively bargained plans no
sooner than the later of--
(i) February 3, 1997; or
(ii) The first day of the plan year that begins after the expiration
of the last to expire of any applicable bargaining agreement in effect
on August 7, 1996.
(2) Until paragraph (b) of this section applies to a collectively
bargained plan, paragraph (c) of this section shall apply to such plan
as if such plan were an employee welfare benefit plan.
(i) Optional postponement of applicability. (1) The application of
paragraph (b) of this section shall be postponed for up to an additional
90 days beyond the effective date described in paragraph (g) of this
section for an employer who, prior to February 3, 1997--
(i) Provides a true and accurate written notice, distributed in a
manner designed to reach all the plan participants before the end of
February 3, 1997, stating--
(A) That the employer elected to postpone such applicability;
(B) The date that the postponement will expire; and
(C) With particularity the reasons why the employer cannot
reasonably segregate the participant contributions within the time
period described in paragraph (b) of this section, by February 3, 1997;
(ii) Obtains a performance bond or irrevocable letter of credit in
favor of
[[Page 150]]
the plan and in an amount of not less than the total amount of
participant contributions received or withheld by the employer in the
previous 3 months;
(iii) Provides a copy of the notice required under paragraph
(i)(1)(i) of this section to the Secretary, along with a certification
that such notice was provided to the participants and that the bond or
letter of credit required under paragraph (i)(1)(ii) of this section was
obtained; and
(iv) For each month during which such postponement is in effect,
provides a true and accurate written notice to the plan participants
indicating the date on which the participant contributions received or
withheld by the employer during such month were transmitted to the plan.
(2) The notice required in paragraph (i)(1)(iv) of this section
shall be distributed in a manner reasonably designed to reach all the
plan participants within 10 days after transmission of the affected
participant contributions.
(3) The bond or letter of credit required under paragraph (i)(1)(ii)
shall be guaranteed by a bank or similar institution that is supervised
by the Federal government or a State government and shall remain in
effect for 3 months after the month in which the postponement expires.
(4) During the period of any postponement of applicability with
respect to a plan under this paragraph (i), paragraph (c) of this
section shall apply to such plan as if such plan were an employee
welfare benefit plan.
[61 FR 41233, Aug. 7, 1996, as amended at 62 FR 62936, Nov. 25, 1997; 75
FR 2076, Jan. 14, 2010]
[[Page 151]]
SUBCHAPTER C_REPORTING AND DISCLOSURE UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
PART 2520_RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE--
Table of Contents
Subpart A_General Reporting and Disclosure Requirements
Sec.
2520.101-1 Duty of reporting and disclosure.
2520.101-2 Filing by multiple employer welfare arrangements and certain
other related entities.
2520.101-3 Notice of blackout periods under individual account plans.
2520.101-4 [Reserved]
2520.101-5 Annual funding notice for defined benefit pension plans.
2520.101-6 Multiemployer pension plan information made available on
request.
Subpart B_Contents of Plan Descriptions and Summary Plan Descriptions
2520.102-1 [Reserved]
2520.102-2 Style and format of summary plan description.
2520.102-3 Contents of summary plan description.
2520.102-4 Option for different summary plan descriptions.
Subpart C_Annual Report Requirements
2520.103-1 Contents of the annual report.
2520.103-2 Contents of the annual report for a group insurance
arrangement.
2520.103-3 Exemption from certain annual reporting requirements for
assets held in a common or collective trust.
2520.103-4 Exemption from certain annual reporting requirements for
assets held in an insurance company pooled separate account.
2520.103-5 Transmittal and certification of information to plan
administrator for annual reporting purposes.
2520.103-6 Definition of reportable transaction for Annual Return/
Report.
2520.103-8 Limitation on scope of accountant's examination.
2520.103-9 Direct filing for bank or insurance carrier trusts and
accounts.
2520.103-10 Annual report financial schedules.
2520.103-11 Assets held for investment purposes.
2520.103-12 Limited exemption and alternative method of compliance for
annual reporting of investments in certain entities.
2520.103-13 Special terminal report for abandoned plans.
2520.103-14 Contents of the annual report for defined contribution group
(DCG) reporting arrangements.
Subpart D_Provisions Applicable to Both Reporting and Disclosure
Requirements
2520.104-1 General.
2520.104-2--2520.104-3 [Reserved]
2520.104-4 Alternative method of compliance for certain successor
pension plans.
2520.104-5--2520.104-6 [Reserved]
2520.104-20 Limited exemption for certain small welfare plans.
2520.104-21 Limited exemption for certain group insurance arrangements.
2520.104-22 Exemption from reporting and disclosure requirements for
apprenticeship and training plans.
2520.104-23 Alternative method of compliance for pension plans for
certain selected employees.
2520.104-24 Exemption for welfare plans for certain selected employees.
2520.104-25 Exemption from reporting and disclosure for day care
centers.
2520.104-26 Limited exemption for certain unfunded dues financed welfare
plans maintained by employee organizations.
2520.104-27 Alternative method of compliance for certain unfunded dues
financed pension plans maintained by employee organizations.
2520.104-28 [Reserved]
2520.104-41 Simplified annual reporting requirements for plans with
fewer than 100 participants.
2520.104-42 Waiver of certain actuarial information in the annual
report.
2520.104-43 Exemption from annual reporting requirement for certain
group insurance arrangements.
2520.104-44 Limited exemption and alternative method of compliance for
annual reporting by unfunded plans and by certain insured
plans.
2520.104-45 [Reserved]
2520.104-46 Waiver of examination and report of an independent qualified
public accountant for employee benefit plans with fewer than
100 participants.
2520.104-47 Limited exemption and alternative method of compliance for
filing of insurance company financial reports.
2520.104-48 Alternative method of compliance for model simplified
employee pensions--IRS Form 5305-SEP.
2520.104-49 Alternative method of compliance for certain simplified
employee pensions.
[[Page 152]]
2520.104-50 Short plan years, deferral of accountant's examination and
report.
2590.104-51 Alternative method of compliance for defined contribution
group (DCG) reporting arrangements.
Subpart E_Reporting Requirements
2520.104a-1 Filing with the Secretary of Labor.
2520.104a-2 Electronic filing of annual reports.
2520.104a-3--2520.104a-4 [Reserved]
2520.104a-5 Annual report filing requirements.
2520.104a-6 Annual reporting for plans which are part of a group
insurance arrangement.
2520.104a-7 [Reserved]
2520.104a-8 Requirement to furnish documents to the Secretary of Labor
on request.
2520.104a-9 Annual reporting for defined contribution group (DCG)
reporting arrangements.
Subpart F_Disclosure Requirements
2520.104b-1 Disclosure.
2520.104b-2 Summary plan description.
2520.104b-3 Summary of material modifications to the plan and changes in
the information required to be included in the summary plan
description.
2520.104b-4 Alternative methods of compliance for furnishing the summary
plan description and summaries of material modifications of a
pension plan to a retired participant, a separated participant
with vested benefits, and a beneficiary receiving benefits.
2520.104b-10 Summary Annual Report.
2520.104b-30 Charges for documents.
2520.104b-31 Alternative method for disclosure through electronic
media--Notice-and-access.
2520.105-1--2520.105-2 [Reserved]
2520.105-3 Lifetime income disclosure for individual account plans.
Appendix A to Subpart F of Part 2520--Model Benefit Statement Supplement
Appendix B to Subpart F of Part 2520--Model Benefit Statement
Supplement--Plans That Offer Distribution Annuities
Subpart G_Recordkeeping Requirements
2520.107-1 Use of electronic media for maintenance and retention of
records.
Authority: 29 U.S.C. 1002(44), 1021-1025, 1027, 1029-31, 1059, 1134,
and 1135; and Secretary of Labor's Order 1-2011, 77 FR 1088. Sec.
2520.101-2 also issued under 29 U.S.C. 1132, 1181-1183, 1181 note, 1185,
1185a-b, 1191, and 1191a-c. Sec. 2520.101-5 also issued under 29 U.S.C.
1021 note; sec. 501, Pub. L. 109-280, 120 Stat. 780; sec. 105(a), Pub.
L. 110-458, 122 Stat. 5092. Secs. 2520.102-3, 2520.104b-1, and
2520.104b-3 also issued under 29 U.S.C. 1003, 1181-1183, 1181 note,
1185, 1185a-b, 1191, and 1191a-c. Secs. 2520.104b-1 and 2520.107 also
issued under 26 U.S.C. 401 note; sec. 1510, Pub. L. 105-34, 111 Stat.
1068.
Subpart A_General Reporting and Disclosure Requirements
Sec. 2520.101-1 Duty of reporting and disclosure.
The procedures for implementing the plan administrator's duty of
reporting to the Secretary of Labor and disclosing information to
participants and beneficiaries are located in subparts D, E and F of
this part.
(Approved by the Office of Management and Budget under control number
1210-0016)
[41 FR 16962, Apr. 23, 1976, as amended at 46 FR 62845, Dec. 29, 1981]
Sec. 2520.101-2 Filing by multiple employer welfare arrangements
and certain other related entities.
(a) Basis and scope. Section 101(g) of the Employee Retirement
Income Security Act (ERISA), as amended by the Patient Protection and
Affordable Care Act, requires the Secretary of Labor (the Secretary) to
establish, by regulation, a requirement that multiple employer welfare
arrangements (MEWAs) providing benefits that consist of medical care (as
described in paragraph (b)(6) of this section), which are not group
health plans, to register with the Secretary prior to operating in a
State. Section 101(g) also permits the Secretary to require, by
regulation, such MEWAs to report, not more frequently than annually, in
such form and manner as the Secretary may require, for the purpose of
determining the extent to which the requirements of part 7 of subtitle B
of title I of ERISA (part 7) are being carried out in connection with
such benefits. Section 734 of ERISA provides that the Secretary may
promulgate such regulations as may be necessary or appropriate to carry
out the provisions of part 7. This section sets out requirements for
reporting by MEWAs that provide benefits that consist of medical care
and by certain entities that claim not to be a MEWA solely due to the
exception in
[[Page 153]]
section 3(40)(A)(i) of ERISA (referred to in this section as Entities
Claiming Exception or ECEs). The reporting requirements apply regardless
of whether the MEWA or ECE is a group health plan.
(b) Definitions. As used in this section, the following definitions
apply:
(1) Administrator means--(i) The person specifically so designated
by the terms of the instrument under which the MEWA or ECE is operated;
(ii) If the MEWA or ECE is a group health plan and the administrator
is not so designated, the plan sponsor (as defined in section 3(16)(B)
of ERISA); or
(iii) In the case of a MEWA or ECE for which an administrator is not
designated and a plan sponsor cannot be identified, jointly and
severally, the person or persons actually responsible (whether or not so
designated under the terms of the instrument under which the MEWA or ECE
is operated) for the control, disposition, or management of the cash or
property received by or contributed to the MEWA or ECE, irrespective of
whether such control, disposition, or management is exercised directly
by such person or persons or indirectly through an agent, custodian, or
trustee designated by such person or persons.
(2) Entity Claiming Exception (ECE) means an entity that claims it
is not a MEWA on the basis that the entity is established or maintained
pursuant to one or more agreements that the Secretary finds to be
collective bargaining agreements within the meaning of section
3(40)(A)(i) of ERISA and Sec. 2510.3-40.
(3) Excepted benefits means excepted benefits within the meaning of
section 733(c) of ERISA and Sec. 2590.701-2 of this chapter.
(4) Group health plan means a group health plan within the meaning
of section 733(a) of ERISA and Sec. 2590.701-2 of this chapter.
(5) Health insurance issuer means a health insurance issuer within
the meaning of section 733(b)(2) of ERISA and Sec. 2590.701-2 of this
chapter.
(6) Medical care means medical care within the meaning of section
733(a)(2) of ERISA and Sec. 2590.701-2 of this chapter.
(7) Multiple employer welfare arrangement (MEWA) means a multiple
employer welfare arrangement within the meaning of section 3(40) of
ERISA.
(8) Operating means any activity including but not limited to
marketing, soliciting, providing, or offering to provide benefits
consisting of medical care.
(9) Origination means, with regard to an ECE, the occurrence of any
of the following events (an ECE is considered to have been originated
only when an event described below occurs)--
(i) The ECE begins operating with regard to the employees of two or
more employers (including one or more self-employed individuals);
(ii) The ECE begins operating following a merger with another ECE
(unless all of the ECEs that participate in the merger previously were
last originated at least three years prior to the merger); or
(iii) The number of employees receiving coverage for medical care
under the ECE is at least 50 percent greater than the number of such
employees on the last day of the previous calendar year (unless the
increase is due to a merger with another ECE under which all ECEs that
participate in the merger were last originated at least three years
prior to the merger).
(10) Reporting or to report means to file the Form M-1 as required
pursuant to sections 101(g) of ERISA; Sec. 2520.101-2; or the
instructions to the Form M-1.
(11) Special filing event means, with regard to an ECE--
(i) The ECE begins knowingly operating in any additional State or
States that were not indicated on a previous report filed pursuant to
paragraph (e)(1)(i) or (f)(2)(i) of this section; or
(ii) The ECE experiences a material change as defined in the Form M-
1 instructions.
(12) State means State within the meaning of Sec. 2590.701-2 of
this chapter.
(c) Persons required to report--(1) General rule. Except as provided
in paragraph (c)(2) of this section, the following persons are required
to report under this section:
(i) The administrator of a MEWA regardless of whether the entity is
a group health plan; and
(ii) The administrator of an ECE during the three-year period
following an event described in paragraph (b)(9) of this section.
[[Page 154]]
(2) Exceptions. (i) Nothing in this paragraph (c) shall be construed
to require reporting under this section by the administrator of a MEWA
or ECE described under this paragraph (c)(2)(i).
(A) A MEWA or ECE licensed or authorized to operate as a health
insurance issuer in every State in which it offers or provides coverage
for medical care to employees;
(B) A MEWA or ECE that provides coverage that consists solely of
excepted benefits, which are not subject to ERISA part 7. If the MEWA or
ECE provides coverage that consists of both excepted benefits and other
benefits for medical care that are not excepted benefits, the
administrator of the MEWA or ECE is required to report under this
section;
(C) A MEWA or ECE that is a group health plan not subject to ERISA,
including a governmental plan, church plan, or a plan maintained solely
for the purpose of complying with workmen's compensation laws, within
the meaning of sections 4(b)(1), 4(b)(2), or 4(b)(3) of ERISA,
respectively; or
(D) A MEWA or ECE that provides coverage only through group health
plans that are not covered by ERISA, including governmental plans,
church plans, or plans maintained solely for the purpose of complying
with workmen's compensation laws within the meaning of sections 4(b)(1),
4(b)(2), or 4(b)(3) of ERISA, respectively (or other arrangements not
covered by ERISA, such as health insurance coverage offered to
individuals other than in connection with a group health plan, known as
individual market coverage).
(ii) Nothing in this paragraph (c) shall be construed to require
reporting under this section by the administrator of an entity that
would not constitute a MEWA or ECE but for the following circumstances
under this paragraph (c)(2)(ii).
(A) The entity provides coverage to the employees of two or more
trades or businesses that share a common control interest of at least 25
percent at any time during the plan year, applying principles similar to
the principles of section 414(c) of the Internal Revenue Code;
(B) The entity provides coverage to the employees of two or more
employers due to a change in control of businesses (such as a merger or
acquisition) that occurs for a purpose other than avoiding Form M-1
filing and is temporary in nature. For purposes of this paragraph,
``temporary'' means the MEWA or ECE does not extend beyond the end of
the plan year following the plan year in which the change in control
occurs; or
(C) The entity provides coverage to persons (excluding spouses and
dependents) who are not employees or former employees of the plan
sponsor, such as non-employee members of the board of directors or
independent contractors, and the number of such persons who are not
employees or former employees does not exceed one percent of the total
number of employees or former employees covered under the arrangement,
determined as of the last day of the year to be reported or, determined
as of the 60th day following the date the MEWA or ECE began operating in
a manner such that a filing is required pursuant to paragraph (e)(1)(i),
(2), or (3) of this section.
(3) Examples. The rules of this paragraph (c) are illustrated by the
following examples:
Example 1. (i) Facts. MEWA A begins operating by offering coverage
to the employees of two or more employers on August 1, 2013. MEWA A is
licensed or authorized to operate as a health insurance issuer in every
State in which it offers coverage for medical care to employees.
(ii) Conclusion. In this Example 1, the administrator of MEWA A is
not required to report via Form M-1. MEWA A meets the exception to the
filing requirement in paragraph (c)(2)(i)(A) of this section because it
is licensed or authorized to operate as a health insurance issuer in
every State in which it offers coverage for medical care to employees.
Example 2. (i) Facts. Company B maintains a group health plan that
provides benefits for medical care for its employees (and their
dependents). Company B establishes a joint venture in which it has a 25
percent stock ownership interest, determined by applying the principles
similar to the principles under section 414(c) of the Internal Revenue
Code, and transfers some of its employees to the joint venture. Company
B continues to cover these transferred employees under its group health
plan.
(ii) Conclusion. In this Example 2, the administrator is not
required to file the Form M-1 because Company B's group health plan
[[Page 155]]
meets the exception to the filing requirement in paragraph (c)(2)(ii)(A)
of this section. This is because Company B's group health plan would not
constitute a MEWA but for the fact that it provides coverage to two or
more trades or businesses that share a common control interest of at
least 25 percent.
Example 3. (i) Facts. Company C maintains a group health plan that
provides benefits for medical care for its employees. The plan year of
Company C's group health plan is the fiscal year for Company C, which is
October 1st--September 30th. Therefore, October 1, 2012--September 30,
2013 is the 2013 plan year. Company C decides to sell a portion of its
business, Division Z, to Company D. Company C signs an agreement with
Company D under which Division Z will be transferred to Company D,
effective September 30, 2013. The change in control of Division Z
therefore occurs on September 30, 2013. Under the terms of the
agreement, Company C agrees to continue covering all of the employees
that formerly worked for Division Z under its group health plan until
Company D has established a new group health plan to cover these
employees. Under the terms of the agreement, it is anticipated that
Company C will not be required to cover the employees of Division Z
under its group health plan beyond the end of the 2014 plan year, which
is the plan year following the plan year in which the change in control
of Division Z occurred.
(ii) Conclusion. In this Example 3, the administrator of Company C's
group health plan is not required to report via the Form M-1 on March 1,
2014 for fiscal year 2013 because it is subject to the exception to the
filing requirement in paragraph (c)(2)(ii)(B) of this section for an
entity that would not constitute a MEWA but for the fact that it is
created by a change in control of businesses that occurs for a purpose
other than to avoid filing the Form M-1 and is temporary in nature.
Under the exception, ``temporary'' means the MEWA does not extend beyond
the end of the plan year following the plan year in which the change in
control occurs. The administrator is not required to file the 2013 Form
M-1 annual report because it is anticipated that Company C will not be
required to cover the employees of Division Z under its group health
plan beyond the end of the 2014 plan year, which is the plan year
following the plan year in which the change in control of businesses
occurred.
Example 4. (i) Facts. Company E maintains a group health plan that
provides benefits for medical care for its employees (and their
dependents) as well as certain independent contractors who are self-
employed individuals. The plan is therefore a MEWA. The administrator of
Company E's group health plan uses calendar year data to report for
purposes of the Form M-1. The administrator of Company E's group health
plan determines that the number of independent contractors covered under
the group health plan as of the last day of calendar year 2013 is less
than one percent of the total number of employees and former employees
covered under the plan determined as of the last day of calendar year
2013.
(ii) Conclusion. In this Example 4, the administrator of Company E's
group health plan is not required to report via the Form M-1 for
calendar year 2013 (a filing that is otherwise due by March 1, 2014)
because it is subject to the exception to the filing requirement
provided in paragraph (c)(2)(ii)(C) of this section for entities that
cover a very small number of persons who are not employees or former
employees of the plan sponsor.
(d) Information to be reported. (1) Any reporting required by this
section shall consist of a completed copy of the Form M-1 Report for
Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities
Claiming Exception (ECEs) (Form M-1) and any additional statements
required pursuant to the instructions for the Form M-1.
(2) Rejected filings.--The Secretary may reject any filing under
this section if the Secretary determines that the filing is incomplete,
in accordance with Sec. 2560.502c-5 of this chapter.
(3) If the Secretary rejects a filing under paragraph (d)(2) of this
section, and if a revised filing satisfactory to the Secretary is not
submitted within 45 days after the notice of rejection, the Secretary
may bring a civil action for such relief as may be appropriate
(including penalties under section 502(c)(5) of ERISA and Sec.
2560.502c-5 of this chapter).
(e) Origination, registration, and other non-annual reporting
requirements and timing--(1) General rule for ECEs. (i) Except as
provided in paragraph (e)(1)(ii) of this section, and subject to the
limitations established by paragraph (c)(1)(ii) of this section, when an
ECE experiences an event described in paragraphs (b)(9) or (b)(11) of
this section, the administrator of the ECE shall file Form M-1 by the
30th day following the date of the event.
(ii) Exception. Paragraph (e)(1)(i) of this section does not apply
to ECEs that experience an origination as described in paragraph
(b)(9)(i) of this section. Such entities are required, subject to the
limitations established by paragraph (c)(1)(ii) of this section,
[[Page 156]]
to file the Form M-1 30 days prior to the date of the event.
(2) General rule for MEWAs--(i) In general. Except as provided in
paragraph (e)(2)(ii) of this section, the administrator of the MEWA is
required to register with the Secretary by filing the Form M-1 30 days
prior to operating in any State.
(ii) Exception. Paragraph (e)(2)(i) of this section does not apply
to MEWAs that, prior to the effective date of this section, were already
in operation in a State (or States). Such entities are required to
submit an annual filing pursuant to annual reporting rules described in
paragraph (f)(2)(i) of this section for that State (or those States).
(3) Special rule requiring MEWAs to make additional filings.
Subsequent to registering with the Secretary pursuant to paragraph
(e)(2)(i) of this section, the administrator of a MEWA shall file the
Form M-1:
(i) Within 30 days of knowingly operating in any additional State or
States that were not indicated on a previous report filed pursuant to
paragraph (e)(2)(i) or (f)(2)(i) of this section;
(ii) Within 30 days of the MEWA operating with regard to the
employees of an additional employer (or employers, including one or more
self-employed individuals) after a merger with another MEWA;
(iii) Within 30 days of the date the number of employees receiving
coverage for medical care under the MEWA is at least 50 percent greater
than the number of such employees on the last day of the previous
calendar year; or
(iv) Within 30 days of experiencing a material change as defined in
the Form M-1 instructions.
(4) Anti-abuse rule. If a MEWA or ECE neither offers nor provides
benefits consisting of medical care within a State during the calendar
year immediately following the year in which a filing is made by the ECE
pursuant to paragraph (e)(1) of this section (due to an event described
in paragraph (b)(9)(i) or (b)(11)(i) of this section) or a filing is
made by the MEWA pursuant to paragraph (e)(2) or (3) of this section,
with respect to operating in such State, such filing will be considered
to have lapsed.
(5) Multiple filings not required in certain circumstances. If
multiple filings are required under this paragraph (e), a single filing
will satisfy this section so long as the filing is timely for each
required filing.
(6) Extensions. (i) An extension may be granted for filing a report
required by paragraph (e)(1), (2), or (3) of this section if the
administrator complies with the extension procedure prescribed in the
instructions to the Form M-1.
(ii) If the filing deadline set forth in this paragraph (e) is a
Saturday, Sunday, or federal holiday, the form must be filed no later
than the next business day.
(f) Annual reporting requirements and timing--(1) Period for which
reporting is required. A completed copy of the Form M-1 is required to
be filed for each calendar year during all or part of which the MEWA is
operating and for each of the three calendar years following an
origination during all or part of which the ECE is operating.
(2) Filing deadline--(i) General March 1 filing due date for annual
filings. Except as provided in paragraph (f)(2)(ii) of this section, a
completed copy of the Form M-1 is required to be filed on or before each
March 1 that follows a period for which reporting is required (as
described in paragraph (f)(1) of this section).
(ii) Exception. Paragraph (f)(2)(i) of this section does not apply
to ECEs and MEWAs if, between October 1 and December 31, the entity is
required to make a filing pursuant to paragraph (e)(1), (2), or (3) of
this section and makes that filing timely.
(3) Extensions. (i) An extension may be granted for filing a report
required by paragraph (f)(2)(i) of this section if the administrator
complies with the extension procedure prescribed in the instructions to
the Form M-1.
(ii) If the filing deadline set forth in this paragraph (f) is a
Saturday, Sunday, or federal holiday, the form must be filed no later
than the next business day.
(4) Examples. The rules of paragraphs (e) and (f) of this section
are illustrated by the following examples:
[[Page 157]]
Example 1. (i) Facts. MEWA A began offering coverage for medical
care to the employees of two or more employers on July 1, 2003 (and
continues to offer such coverage). MEWA A has satisfied all filing
requirements to date.
(ii) Conclusion. In this Example 1, the administrator of MEWA A must
continue to file a timely completed Form M-1 annual report each year,
but the administrator is not required to register with the Secretary
because MEWA A meets the exception to the registration requirement in
paragraph (e)(2)(ii) of this section and has not experienced any event
described in paragraph (e)(3) that would require registering with the
Secretary.
Example 2. (i) Facts. On August 25, 2013, MEWA B is operating in
State P and has made all appropriate filings related to those
operations. On December 22, 2013 one of the employers that participates
in MEWA B is awarded a new contract in State Q. The employer adds an
office in State Q and the employees there are eligible to access its
group health plan.
(ii) Conclusion. In this Example 2, the administrator of MEWA B must
report the addition of State Q by filing the Form M-1 within 30 days of
knowing that it is operating in State Q.
Example 3. (i) Facts. As of July 1, 2013, MEWA C is preparing to
operate in States Y and Z. MEWA C is not licensed or authorized to
operate as a health insurance issuer in any State and does not meet any
of the other exceptions set forth in paragraph (c)(2) of this section.
(ii) Conclusion. In this Example 3, the administrator of MEWA C is
required to register with the Secretary by filing a completed Form M-1
30 days prior to operating in States Y or Z. The administrator of MEWA C
must also report by filing the Form M-1 annually by every March 1
thereafter.
Example 4. (i) Facts. As of July 28, 2013, MEWA D is operating in
States V and W. MEWA D has satisfied the requirements of (e)(2) and, if
applicable, (e)(3) with respect to those States. MEWA D is not licensed
or authorized to operate as a health insurance issuer in any State and
does not meet any of the other exceptions set forth in (c)(2) of this
section. On August 5, 2013 MEWA D knowingly begins operating in State X.
(ii) Conclusion. In this Example 4, the administrator of MEWA D is
required to make an additional registration filing with the Secretary by
September 4, 2013 (within 30 days of knowingly operating in State X).
Additionally, the administrator of MEWA D must continue to file the Form
M-1 annually by every March 1 thereafter.
Example 5. (i) Facts. ECE A began offering coverage for medical care
to the employees of two or more employers on January 1, 2007 and ECE A
has not been involved in any mergers or experienced any other
origination as described in paragraph (b)(9) of this section.
(ii) Conclusion. In this Example 5, ECE A was originated on January
1, 2007 and has not been originated since then. Therefore, the
administrator of ECE A is not required to file a 2012 Form M-1 because
the last time the ECE A was originated was January 1, 2007 which is more
than three years prior. Further, the ECE has satisfied its reporting
requirements by making three timely annual filings after its
origination.
Example 6. (i) Facts. ECE B wants to begin offering coverage for
medical care to the employees of two or more employers on July 1, 2013.
(ii) Conclusion. In this Example 6, the administrator of ECE B must
file a completed Form M-1 on or before June 1, 2013 (which is 30 days
prior to the origination date). In addition, the administrator of ECE B
must file an updated copy of the Form M-1 by March 1, 2014 because the
last date ECE B was originated was July 1, 2013 (which is less than
three years prior to the March 1, 2014 due date). Furthermore, the
administrator of ECE B must file the Form M-1 by March 1, 2015 and again
by March 1, 2016 (because July 1, 2013 is less than three years prior to
March 1, 2015 and March 1, 2016, respectively). However, if ECE B is not
involved in any mergers and does not experience any other origination as
described in paragraph (b)(9) of this section, there would not be a new
origination date and no Form M-1 is required to be filed after March 1,
2016.
Example 7. (i) Facts. ECE D, which currently operates in State A and
is still within the three-year window following its origination and the
timely filing related thereto, is making preparations to operate in
State B beginning on November 1, 2013.
(ii) Conclusion. In this Example 7, by operating in State B, ECE D
experiences a special event within the three-year window following its
origination and must make a filing by December 2, 2013.
Example 8. (i) Facts. Same facts as Example 7. ECE D satisfied its
special filing requirement but is unsure about its annual filing
requirements.
(ii) Conclusion. ECE D is exempt from the next annual filing due
March 1, 2014 pursuant to the filing deadline exception under (f)(2)(ii)
of this section. However, ECE D must continue making annual filings for
the remainder of the three years following its origination.
Example 9. (i) Facts. MEWA E begins distributing marketing materials
on August 31, 2013.
(ii) Conclusion. In this Example 8, because MEWA E began operating
on August 31, 2013, the administrator of MEWA E must register with the
Secretary by filing a completed Form M-1 on or before August 1, 2013 (30
days
[[Page 158]]
prior to operating in any State). In addition, the administrator of MEWA
E must file the Form M-1 annually by every March 1 thereafter.
Example 10. (i) Facts. Same facts as Example 9, but MEWA E registers
on or before August 1, 2013 by filing a Form M-1 indicating it will
begin operating in every State. However, in the calendar year
immediately following the filing, MEWA E only offered or provided
benefits consisting of medical care to participants in State Z.
(ii) Conclusion. In this Example 10, the registration for all States
(other than State Z) have lapsed under (e)(4) because MEWA E only
offered or provided benefits consisting of medical care to participants
in State Z in the calendar year immediately following the filing. If
subsequently, MEWA E begins offering or providing benefits consisting of
medical care to participants in any additional State (or States), it
must make a new registration filing pursuant to (e)(3) of this section.
(g) Electronic filing. A completed Form M-1 is filed with the
Secretary by submitting it electronically as prescribed in the
instructions to the Form M-1.
(h) Penalties--(1) Civil penalties and procedures. For information
on civil penalties under section 502(c)(5) of ERISA for persons who fail
to file the information required under this section, see Sec.
2560.502c-5 of this chapter. For information relating to administrative
hearings and appeals in connection with the assessment of civil
penalties under section 502(c)(5) of ERISA, see Sec. Sec. 2570.90
through 2570.101 of this chapter.
(2) Criminal penalties and procedures. For information on criminal
penalties under section 519 of ERISA for persons who knowingly make
false statements or false representation of fact with regards to the
information required under this section, see section 501(b) of ERISA.
(3) Cease and desist and summary seizure orders. For information on
the Secretary's authority to issue a cease and desist or summary seizure
order under section 521 of ERISA, see Sec. 2560.521.
[78 FR 13792, Mar. 1, 2013]
Sec. 2520.101-3 Notice of blackout periods under individual
account plans.
(a) In general. In accordance with section 101(i) of the Act, the
administrator of an individual account plan, within the meaning of
paragraph (d)(2) of this section, shall provide notice of any blackout
period, within the meaning of paragraph (d)(1) of this section, to all
participants and beneficiaries whose rights under the plan will be
temporarily suspended, limited, or restricted by the blackout period
(the ``affected participants and beneficiaries'') and to issuers of
employer securities subject to such blackout period in accordance with
this section.
(b) Notice to participants and beneficiaries--(1) Content. The
notice required by paragraph (a) of this section shall be written in a
manner calculated to be understood by the average plan participant and
shall include--
(i) The reasons for the blackout period;
(ii) A description of the rights otherwise available to participants
and beneficiaries under the plan that will be temporarily suspended,
limited or restricted by the blackout period (e.g., right to direct or
diversify assets in individual accounts, right to obtain loans from the
plan, right to obtain distributions from the plan), including
identification of any investments subject to the blackout period;
(iii) The length of the blackout period by reference to:
(A) The expected beginning date and ending date of the blackout
period; or
(B) The calendar week during which the blackout period is expected
to begin and end, provided that during such weeks information as to
whether the blackout period has begun or ended is readily available,
without charge, to affected participants and beneficiaries, such as via
a toll-free number or access to a specific web site, and the notice
describes how to access the information;
(iv) In the case of investments affected, a statement that the
participant or beneficiary should evaluate the appropriateness of their
current investment decisions in light of their inability to direct or
diversify assets in their accounts during the blackout period (a notice
that includes the advisory statement contained in paragraph 4. of the
model notice in paragraph (e)(2) of this section will satisfy this
requirement);
[[Page 159]]
(v) In any case in which the notice required by paragraph (a) of
this section is not furnished at least 30 days in advance of the last
date on which affected participants and beneficiaries could exercise
affected rights immediately before the commencement of the blackout
period, except for a notice furnished pursuant to paragraph
(b)(2)(ii)(C) of this section:
(A) A statement that Federal law generally requires that notice be
furnished to affected participants and beneficiaries at least 30 days in
advance of the last date on which participants and beneficiaries could
exercise the affected rights immediately before the commencement of a
blackout period (a notice that includes the statement contained in
paragraph 5. of the model notice in paragraph (e)(2) of this section
will satisfy this requirement), and
(B) An explanation of the reasons why at least 30 days advance
notice could not be furnished; and
(vi) The name, address and telephone number of the plan
administrator or other contact responsible for answering questions about
the blackout period.
(2) Timing. (i) The notice described in paragraph (a) of this
section shall be furnished to all affected participants and
beneficiaries at least 30 days, but not more than 60 days, in advance of
the last date on which such participants and beneficiaries could
exercise the affected rights immediately before the commencement of any
blackout period.
(ii) The requirement to give at least 30 days advance notice
contained in paragraph (b)(2)(i) of this section shall not apply in any
case in which--
(A) A deferral of the blackout period in order to comply with
paragraph (b)(2)(i) of this section would result in a violation of the
requirements of section 404(a)(1)(A) or (B) of the Act, and a fiduciary
of the plan reasonably so determines in writing;
(B) The inability to provide the advance notice of a blackout period
is due to events that were unforeseeable or circumstances beyond the
reasonable control of the plan administrator, and a fiduciary of the
plan reasonably so determines in writing; or
(C) The blackout period applies only to one or more participants or
beneficiaries solely in connection with their becoming, or ceasing to
be, participants or beneficiaries of the plan as a result of a merger,
acquisition, divestiture, or similar transaction involving the plan or
plan sponsor.
(iii) In any case in which paragraph (b)(2)(ii) of this section
applies, the administrator shall furnish the notice described in
paragraph (a) of this section to all affected participants and
beneficiaries as soon as reasonably possible under the circumstances,
unless such notice in advance of the termination of the blackout period
is impracticable.
(iv) Determinations under paragraph (b)(2)(ii)(A) and (B) of this
section must be dated and signed by the fiduciary.
(3) Form and manner of furnishing notice. The notice required by
paragraph (a) of this section shall be in writing and furnished to
affected participants and beneficiaries in any manner consistent with
the requirements of Sec. 2520.104b-1 of this chapter, including Sec.
2520.104b-1(c) or Sec. 2520.104b-31 of this chapter relating to the use
of electronic media.
(4) Changes in length of blackout period. If, following the
furnishing of a notice pursuant to this section, there is a change in
the length of the blackout period (specified in such notice pursuant to
paragraph (b)(1)(iii) of this section), the administrator shall furnish
all affected participants and beneficiaries an updated notice explaining
the reasons for the change and identifying all material changes in the
information contained in the prior notice. Such notice shall be
furnished to all affected participants and beneficiaries as soon as
reasonably possible, unless such notice in advance of the termination of
the blackout period is impracticable.
(c) Notice to issuer of employer securities. (1) The notice required
by paragraph (a) of this section shall be furnished to the issuer of any
employer securities held by the plan and subject to the blackout period.
Such notice shall contain the information described in paragraph
(b)(1)(i), (ii), (iii) and (vi) of this section and shall be furnished
in
[[Page 160]]
accordance with the time frames prescribed in paragraph (b)(2) of this
section. In the event of a change in the length of the blackout period
specified in such notice, the plan administrator shall furnish an
updated notice to the issuer in accordance with the requirements of
paragraph (b)(4) of this section.
(2) For purposes of this section, notice to the agent for service of
legal process for the issuer shall constitute notice to the issuer,
unless the issuer has provided the plan administrator with the name of
another person for service of notice, in which case the plan
administrator shall furnish notice to such person. Such notice shall be
in writing, except that the notice may be in electronic or other form to
the extent the person to whom notice must be furnished consents to
receive the notice in such form.
(3) If the issuer designates the plan administrator as the person
for service of notice pursuant to paragraph (c)(2) of this section, the
issuer shall be deemed to have been furnished notice on the same date as
notice is furnished to affected participants and beneficiaries pursuant
to paragraph (b) of this section.
(d) Definitions. For purposes of this section--
(1) Blackout period--(i) General. The term ``blackout period''
means, in connection with an individual account plan, any period for
which any ability of participants or beneficiaries under the plan, which
is otherwise available under the terms of such plan, to direct or
diversify assets credited to their accounts, to obtain loans from the
plan, or to obtain distributions from the plan is temporarily suspended,
limited, or restricted, if such suspension, limitation, or restriction
is for any period of more than three consecutive business days.
(ii) Exclusions. The term ``blackout period'' does not include a
suspension, limitation, or restriction--
(A) Which occurs by reason of the application of the securities laws
(as defined in section 3(a)(47) of the Securities Exchange Act of 1934);
(B) Which is a regularly scheduled suspension, limitation, or
restriction under the plan (or change thereto), provided that such
suspension, limitation or restriction (or change) has been disclosed to
affected plan participants and beneficiaries through the summary plan
description, a summary of material modifications, materials describing
specific investment alternatives under the plan and limits thereon or
any changes thereto, participation or enrollment forms, or any other
documents and instruments pursuant to which the plan is established or
operated that have been furnished to such participants and
beneficiaries;
(C) Which occurs by reason of a qualified domestic relations order
or by reason of a pending determination (by the plan administrator, by a
court of competent jurisdiction or otherwise) whether a domestic
relations order filed (or reasonably anticipated to be filed) with the
plan is a qualified order within the meaning of section 206(d)(3)(B)(i)
of the Act; or
(D) Which occurs by reason of an act or a failure to act on the part
of an individual participant or by reason of an action or claim by a
party unrelated to the plan involving the account of an individual
participant.
(2) Individual account plan. The term ``individual account plan''
shall have the meaning provided such term in section 3(34) of the Act,
except that such term shall not include a ``one-participant retirement
plan'' within the meaning of paragraph (d)(3) of this section.
(3) One-participant retirement plan. The term ``one-participant
retirement plan'' means a one-participant retirement plan as defined in
section 101(i)(8)(B) of the Act.
(4) Issuer. The term ``issuer'' means an issuer as defined in
section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), the
securities of which are registered under section 12 of the Securities
Exchange Act of 1934, or that is required to file reports under section
15(d) of the Securities Exchange Act of 1934, or files or has filed a
registration statement that has not yet become effective under the
Securities Act of 1933 (15 U.S.C. 77a et seq.), and that it has not
withdrawn.
(5) Calendar week. For purposes of paragraph (b)(1)(iii)(B), the
term ``calendar week'' means a seven day period
[[Page 161]]
beginning on Sunday and ending on Saturday.
(e) Model notice--(1) General. The model notice set forth in
paragraph (e)(2) of this section is intended to assist plan
administrators in discharging their notice obligations under this
section. Use of the model notice is not mandatory. However, a notice
that uses the statements provided in paragraphs 4. and 5.(A) of the
model notice will be deemed to satisfy the notice content requirements
of paragraph (b)(1)(iv) and (b)(1)(v)(A), respectively, of this section.
With regard to all other information required by paragraph (b)(1) of
this section, compliance with the notice content requirements will
depend on the facts and circumstances pertaining to the particular
blackout period and plan.
(2) Form and content of model notice.
Important Notice Concerning Your Rights
Under The [Enter Name of Individual Account Plan]
[Enter date of notice]
1. This notice is to inform you that the [enter name of plan] will
be [enter reasons for blackout period, as appropriate: changing
investment options, changing recordkeepers, etc.].
2. As a result of these changes, you temporarily will be unable to
[enter as appropriate: direct or diversify investments in your
individual accounts (if only specific investments are subject to the
blackout, those investments should be specifically identified), obtain a
loan from the plan, or obtain a distribution from the plan]. This
period, during which you will be unable to exercise these rights
otherwise available under the plan, is called a ``blackout period.''
Whether or not you are planning retirement in the near future, we
encourage you to carefully consider how this blackout period may affect
your retirement planning, as well as your overall financial plan.
3. The blackout period for the plan [enter the following as
appropriate: is expected to begin on [enter date] and end [enter date]/
is expected to begin during the week of [enter date] and end during the
week of [enter date]. During these weeks, you can determine whether the
blackout period has started or ended by [enter instructions for use
toll-free number or accessing web site].
4. [In the case of investments affected by the blackout period, add
the following: During blackout period you will be unable to direct or
diversify the assets held in your plan account. For this reason, it is
very important that you review and consider the appropriateness of your
current investments in light of your inability to direct or diversify
those investments during the blackout period. For your long-term
retirement security, you should give careful consideration to the
importance of a well-balanced and diversified investment portfolio,
taking into account all your assets, income and investments.] [If the
plan permits investments in individual securities, add the following:
You should be aware that there is a risk to holding substantial portions
of your assets in the securities of any one company, as individual
securities tend to have wider price swings, up and down, in short
periods of time, than investments in diversified funds. Stocks that have
wide price swings might have a large loss during the blackout period,
and you would not be able to direct the sale of such stocks from your
account during the blackout period.]
5. [If timely notice cannot be provided (see paragraph (b)(1)(v) of
this section) enter: (A) Federal law generally requires that you be
furnished notice of a blackout period at least 30 days in advance of the
last date on which you could exercise your affected rights immediately
before the commencement of any blackout period in order to provide you
with sufficient time to consider the effect of the blackout period on
your retirement and financial plans. (B) [Enter explanation of reasons
for inability to furnish 30 days advance notice.]]
6. If you have any questions concerning this notice, you should
contact [enter name, address and telephone number of the plan
administrator or other contact responsible for answering questions about
the blackout period].
(f) Effective date. This section shall be effective and shall apply
to any blackout period commencing on or after January 26, 2003. For the
period January 26, 2003 to February 25, 2003, plan administrators shall
furnish notice as soon as reasonably possible.
[68 FR 3727, Jan. 24, 2003, as amended at 85 FR 31922, May 27, 2020]
Sec. 2520.101-4 [Reserved]
Sec. 2520.101-5 Annual funding notice for defined benefit pension plans.
(a) In general. (1) Except as provided in paragraphs (a)(2) and (3)
of this section, pursuant to section 101(f) of the Act, the
administrator of a defined benefit plan to which title IV of the Act
applies shall furnish annually to each person specified in paragraph (f)
of this section a funding notice that
[[Page 162]]
conforms to the requirements of this section.
(2) A plan administrator shall not be required to furnish a funding
notice--
(i) In the case of a multiemployer plan, for a plan year if the due
date for such notice is on or after the earlier of:
(A) The date the plan complies with the insolvency notice
requirements of section 4245(e) or 4281(d)(3) of the Act and regulations
thereunder; or
(B) The date the plan has distributed assets in satisfaction of all
nonforfeitable benefits under the plan pursuant to section 4041A of the
Act and the regulations thereunder.
(ii) In the case of a single-employer plan, for a plan year if the
due date for the funding notice is on or after the date:
(A) The Pension Benefit Guaranty Corporation is appointed as trustee
of the plan pursuant to section 4042 of the Act;
(B) The plan has distributed assets in satisfaction of all benefit
liabilities in a distress termination pursuant to section
4041(c)(3)(B)(i) of the Act or of all guaranteed benefits in a distress
termination pursuant to section 4041(c)(3)(B)(ii) of the Act; or
(C) The plan administrator filed a standard termination notice with
the Pension Benefit Guaranty Corporation pursuant to 29 CFR 4041.25,
provided that the proposed termination date is on or before the due date
of the funding notice and a final distribution of assets in satisfaction
of all benefit liabilities proceeds in accordance with section 4041(b)
of the Act.
(3) In the case of a merger or consolidation of two or more plans--
(i) The plan administrator of a non-successor plan shall not be
required to furnish a funding notice for the plan year in which the
merger or consolidation occurred; and
(ii) The funding notice of the successor plan, for the plan year in
which the merger or consolidation occurred, must, in addition to the
requirements of paragraph (b) of this section, contain a general
explanation, including the effective date, of the merger or
consolidation and an identification of each plan (e.g., name and plan
number) involved in the merger or consolidation.
(b) Content of notice. A funding notice shall include the following
information:
(1) Identifying information. The name of the plan, the name,
address, and phone number of the plan administrator and the plan's
principal administrative officer (if different than the plan
administrator), each plan sponsor's name and employer identification
number, and the plan number.
(2) Funding percentage--(i) Single-employer plans. For single-
employer plans, a statement as to whether the plan's funding target
attainment percentage (as defined in section 303(d)(2) of the Act) for
the notice year, and for each of the two preceding plan years, is at
least 100 percent (and, if not, the actual percentages).
(ii) Multiemployer plans. For multiemployer plans, a statement as to
whether the plan's funded percentage (as defined in section 305(i) of
the Act) for the notice year, and for each of the two preceding plan
years, is at least 100 percent (and, if not, the actual percentages).
(3) Assets and liabilities--(i) Single-employer plans. For single-
employer plans--
(A) A statement of the total assets (separately stating the
prefunding balance and the funding standard carryover balance) and
liabilities of the plan, determined in the same manner as under section
303 of the Act, as of the valuation date of the notice year and for each
of the two preceding plan years, as reported in the annual report filed
under section 104 of the Act for each such preceding plan year, and
(B) A statement of the value of the plan's assets and liabilities
determined as of the last day of the notice year. For purposes of this
statement, the value of the plan's assets is the fair market value of
plan assets. Plan liabilities are equal to the present value of benefits
accrued through the last day of the notice year determined in the same
manner as liabilities are calculated under section 303 of the Act
(including actuarial assumptions and methods), but using the interest
rate under section 4006(a)(3)(E)(iv) of the Act in effect for the last
month of the notice year.
[[Page 163]]
(ii) Multiemployer plans. For multiemployer plans--
(A) A statement of the value of the plan's assets (determined in the
same manner as under section 304(c)(2) of the Act) and liabilities
(determined in the same manner as under section 305(i)(8) of the Act,
using reasonable actuarial assumptions as required under section
304(c)(3) of the Act) as of the valuation date of the notice year and
each of the two preceding plan years, and
(B) A statement of the fair market value of plan assets as of the
last day of the notice year, and as of the last day of each of the two
preceding plan years as reported in the annual report filed under
section 104(a) of the Act for each such preceding plan year.
(iii) Contributions receivable. For purposes of determining the fair
market value of plan assets as of the last day of the notice year under
paragraphs (b)(3)(i)(B) and (b)(3)(ii)(B) of this section, the plan
administrator may, but is not required to, include contributions made
after the notice year and before the notice is furnished to recipients,
but only to the extent such contributions are treated for funding
purposes as having been made on account of the notice year under section
303(g)(4) of the Act, in the case of a single-employer plan, or under
section 304(c)(8) of the Act, in the case of a multiemployer plan.
(4) Demographic information. A statement of the number of
participants and beneficiaries who, as of the valuation date of the
notice year, are: Retired or separated from service and receiving
benefits; retired or separated from service and entitled to future
benefits (but currently not receiving benefits); or active participants
under the plan. The statement shall indicate the number of participants
and beneficiaries in each category and the sum of all such participants
and beneficiaries. The terms ``active'' and ``retired or separated''
shall have the same meaning given to those terms in instructions to the
annual report filed under section 104(a) of the Act.
(5) Funding policy. A statement setting forth--
(i) The funding policy of the plan;
(ii) The asset allocation of investments under the plan (expressed
as percentages of total assets) as of the end of the notice year; and
(iii) A general description of any investment policy of the plan as
it relates to the funding policy in paragraph (b)(5)(i) of this section
and the asset allocation of investments under paragraph (b)(5)(ii) of
this section.
(6) Endangered, critical, or critical and declining status. In the
case of a multiemployer plan, a statement whether the plan was in
endangered, critical, or critical and declining status under section 305
of the Act for the notice year and, if so--
(i) A statement describing how a person may obtain a copy of the
plan's funding improvement plan or rehabilitation plan, as appropriate,
adopted under section 305 of the Act and the actuarial and financial
data that demonstrate any action taken by the plan toward fiscal
improvement;
(ii) A summary of the plan's funding improvement plan or
rehabilitation plan, including any update or modification of such
funding improvement or rehabilitation plan adopted under section 305 of
the Act during the notice year; and
(iii) In the case of a multiemployer plan in critical and declining
status:
(A) The projected date of insolvency;
(B) A clear statement that such insolvency may result in benefit
reductions; and
(C) A statement describing whether the plan sponsor has taken
legally permitted actions to prevent insolvency.
(7) Events having a material effect on liabilities or assets.
Subject to paragraph (g) of this section, in the case of any plan
amendment, scheduled benefit increase or reduction, or other known event
taking effect in the current plan year and having a material effect on
plan liabilities or assets for the year, an explanation of the
amendment, scheduled benefit increase or reduction, or event, and a
projection to the end of such plan year of the effect of the amendment,
scheduled benefit increase or reduction, or event on plan liabilities.
(8) Rules on termination or insolvency--(i) Single-employer plans.
In the case of a single-employer plan, a summary of
[[Page 164]]
the rules governing termination of single-employer plans under subtitle
C of title IV of the Act.
(ii) Multiemployer plans. In the case of a multiemployer plan, a
summary of the rules governing insolvency, including the limitations on
benefit payments.
(9) PBGC guarantees. A general description of the benefits under the
plan which are eligible to be guaranteed by the Pension Benefit Guaranty
Corporation, along with an explanation of the limitations on the
guarantee and the circumstances under which such limitations apply.
(10) Annual report information. A statement that a person entitled
to notice under paragraph (f) of this section may obtain a copy of the
annual report of the plan filed under section 104(a) of the Act upon
request, through the Internet Web site of the Department of Labor, or
through any Intranet Web site maintained by the applicable plan sponsor
(or plan administrator on behalf of the plan sponsor).
(11) Information disclosed to PBGC. In the case of a single-employer
plan, if applicable, a statement that the contributing sponsor of the
plan or a member of the contributing sponsor's controlled group was
required to provide information under section 4010 of the Act for the
information year ending in the notice year (see 29 CFR 4010.5).
(12) Additional information. Any additional information that the
plan administrator elects to include, provided that such information is
necessary or helpful to understanding the mandatory information in the
notice, or is otherwise permitted by law.
(c) Style and format of notice. Funding notices shall be written in
a manner that is consistent with the style and format requirements of
Sec. 2520.102-2 of this chapter.
(d) When to furnish notice. (1) Except as provided in paragraph
(d)(2) of this section, a funding notice shall be provided not later
than 120 days after the end of the notice year.
(2) In the case of a small plan, a funding notice shall be provided
not later than the earlier of the date on which the annual report is
filed under section 104(a) of the Act or the latest date the annual
report must be filed under that section (including extensions). For this
purpose, a single-employer plan is a small plan if it meets the
exception in section 303(g)(2)(B) of the Act, and a multiemployer plan
is a small plan if it had 100 or fewer participants on each day during
the plan year preceding the notice year.
(e) Manner of furnishing notice. (1) [Reserved]
(2) A funding notice must be furnished to the Pension Benefit
Guaranty Corporation in a manner consistent with the requirements of
part 4000 of title IV of the Act. The date that the notice is furnished
to the Pension Benefit Guaranty Corporation is determined consistent
with that part.
(f) Persons entitled to notice. Persons entitled to a funding notice
under this section are:
(1) Each participant covered under the plan on the last day of the
notice year;
(2) Each beneficiary receiving benefits under the plan on the last
day of the notice year;
(3) Each alternate payee under the plan on the last day of the
notice year;
(4) Each labor organization representing participants under the plan
on the last day of the notice year;
(5) In the case of a multiemployer plan, each employer that, as of
the last day of the notice year, is a party to the collective bargaining
agreement(s) pursuant to which the plan is maintained or who otherwise
may be subject to withdrawal liability pursuant to section 4203 of the
Act; and
(6) The Pension Benefit Guaranty Corporation.
(g) Special rules and definitions for material effect disclosures.
(1) The term ``current plan year'' means the plan year after the notice
year. Thus, for example, if the notice year is January 1, 2017 through
December 31, 2017, then the current plan year would be January 1, 2018
through December 31, 2018.
(2) An event described in paragraph (b)(7) of this section is
recognized as ``taking effect'' in the current plan year if the effect
of the event is taken into account for the first time for funding under
section 430 or 431 of the Internal Revenue Code, as applicable, in such
year.
[[Page 165]]
(3) An event described in paragraph (b)(7) of this section has a
``material effect'' if it results, or is projected to result, in an
increase or decrease of five percent or more in the value of assets or
liabilities from the valuation date of the notice year. For this
measurement, calculate assets and liabilities in the same manner as
under paragraph (b)(2) of this section.
(4) An event described in paragraph (b)(7) of this section has a
``material effect'' if, in the judgment of the plan's enrolled actuary,
the effect of the event is considered material for purposes of the
plan's funding status under section 430 or 431, as applicable, of the
Internal Revenue Code, without regard to paragraph (g)(3) of this
section.
(5) An event described in paragraph (b)(7) of this section is
``known'' only if it is known by the plan administrator prior to 120
days before the due date of the notice. Thus, if an event otherwise
described in paragraph (b)(7) first becomes known to a plan
administrator 120 days or less before the due date of a notice, the plan
administrator is not required to explain, or project the effect of, the
event in that notice.
(6) The term ``other known event'' includes, but is not limited to,
an extension of coverage under the existing terms of the plan to a new
group of employees; a plan merger, consolidation, or spinoff pursuant to
regulations under section 414(l) of the Internal Revenue Code; or, a
shutdown of any facility, plant, store, or such other similar corporate
event that creates immediate eligibility for benefits that would not
otherwise be immediately payable for participants separating from
service. The term does not include market fluctuations.
(7) With respect to events described in paragraph (g)(4) of this
section, the plan administrator may, instead of projecting the effect on
plan liabilities to the end of the current plan year, include an
explanation why the event is considered material by the enrolled
actuary.
(8) Example. The following example illustrates the special rules and
definitions of paragraph (g) of this section:
Example. Plan Y is a single-employer calendar year plan. Company X,
the sponsor of Plan Y, adopts an amendment on June 1, 2017, offering a
subsidized early retirement benefit to participants age 50 or older who
retire on or after September 1, 2017 and before March 1, 2018. The
amendment increases the liabilities of Plan Y by an amount greater than
5% of the value of Plan Y's liabilities on January 1, 2017. Company X
does not make an election under Code section 412(d)(2) to accelerate
recognition of the event for funding. The amendment is taken into
account for the first time under section 430 of the Code as of the
January 1, 2018 valuation date. Therefore, the amendment is recognized
as taking effect under the final rule in 2018. Since the amendment
adopted on June 1, 2017, is known more than 120 days prior to the April
30, 2018 due date of the 2017 funding notice, the amendment must be
disclosed in the 2017 funding notice under paragraph (b)(7) of the final
regulations as a material effect event taking effect in 2018 (i.e., the
current plan year).
(h) Model notices. (1) The appendices to this section contain a
model notice for single-employer plans and a model notice for
multiemployer plans. These models are intended to assist plan
administrators in discharging their notice obligations under this
section. Use of a model notice is not mandatory. However, subject to
paragraph (h)(2) of this section, use of a model notice will be deemed
to satisfy the requirements of paragraphs (b)(1) through (b)(11) and
paragraph (c) of this section.
(2) To the extent a plan administrator elects to include in a model
notice information described in paragraph (b)(12) of this section, such
additional information must be consistent with the style and format
requirements in paragraph (c) of this section.
(i) Notice year. For purposes of this section, the term ``notice
year'' means the plan year to which the notice relates. For example, for
a calendar year plan that must furnish its 2010 funding notice no later
than the 120th day of 2011, the ``notice year'' is the 2010 plan year.
(j) Alternative method of compliance for furnishing notice to PBGC
for certain single-employer plans. Notwithstanding any other provision
of this section, the plan administrator of a single-employer plan is not
required to furnish a notice to the Pension Benefit Guaranty Corporation
annually if, based on the data described in paragraph (b)(3)(i)(A) of
this section for the notice year, plan
[[Page 166]]
liabilities do not exceed total plan assets by more than $50 million,
provided that the plan administrator furnishes the latest available
funding notice to the Pension Benefit Guaranty Corporation within 30
days of a written request.
(k) Alternative method of compliance for multiemployer plans
terminated by mass withdrawal. (1) Notwithstanding any other provision
of this section, for plan years beginning after the date specified in
section 4041A(b)(2) of the Act, an alternative method of compliance is
available in the case of a multiemployer plan that terminates as a
result of the withdrawal of every employer from the plan or the
cessation of the obligation of all employers to contribute under the
plan, as described in section 4041A(a)(2) of the Act. Under this
alternative method, the plan administrator shall furnish annually to
each person described in paragraph (f)(1) through (3) of this section a
notice that complies with paragraphs (c), (d), (e), and (k)(2) of this
section.
(2) The notice includes:
(i) A statement of the fair market value of the plan's assets as of
the last day of the notice year, and as of the last day of each of the
two preceding plan years as reported in the annual report filed under
section 104(a) of the Act for each such preceding plan year;
(ii) A statement of the amount of benefit payments made during the
notice year and each of the two preceding plan years;
(iii) If a notice has not already been furnished pursuant to 29 CFR
4281.32, a statement that benefits may be reduced pursuant to section
4281(c) of the Act and a summary of the rules governing such reductions;
(iv) A summary of the rules governing insolvency, including the
limitations on benefit payments, pursuant to paragraph (b)(8)(ii) of
this section;
(v) The information described in paragraphs (b)(1), (b)(9), and
(b)(10) of this section; and
(vi) Any additional information that the plan administrator elects
to include, subject to the requirements of paragraph (b)(12) of this
section.
(l) Alternative method of compliance for Internal Revenue Code
section 412(e)(3) plans. (1) Notwithstanding any other provision of this
section, an alternative method of compliance is available in the case of
an insurance contract plan described in section 412(e)(3) of the
Internal Revenue Code of 1986. Under this alternative method, the plan
administrator shall furnish annually to each person described in
paragraph (f) of this section a notice that complies with paragraphs
(c), (d), (e), and (l)(2) of this section.
(2) The notice includes:
(i) An explanation that the plan is funded exclusively by an
insurance contract or contracts, that such contract or contracts provide
for the benefit payments to participants and beneficiaries, that such
benefit payments are guaranteed by a licensed insurance company or
companies, and the name of the insurance company or companies;
(ii) A statement whether, as of the last day of the notice year,
there were any delinquent premiums and, if so, the amount and date of
the delinquency and the effect on the plan and on participants and
beneficiaries in the event of a policy lapse;
(iii) The information described in paragraph (b)(1), (b)(9), and
(b)(10) of this section; and
(iv) Any additional information that the plan administrator elects
to include, provided that such information meets the standard in
paragraph (b)(12) of this section.
(m) CSEC plans. [Reserved]
[[Page 167]]
Appendix A to Sec. 2520.101-5--Single-Employer Plan Model Annual
Funding Notice
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Appendix B to Sec. 2520.101-5--Multiemployer Plan Model Annual Funding
Notice
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[80 FR 5645, Feb. 2, 2015]
Sec. 2520.101-6 Multiemployer pension plan information made available
on request.
(a) In general. For purposes of compliance with the requirements of
section 101(k) of the Employee Retirement Income Security Act of 1974,
as amended (the Act), 29 U.S.C. 1001, et seq., the administrator of a
multiemployer pension plan shall, in accordance with the requirements of
this section, furnish copies of reports and applications described in
paragraph (c) of this section to plan participants, beneficiaries,
employee representatives and contributing employers, described in
paragraph (e) of this section.
(b) Obligation to furnish. (1) Except as provided in paragraph (d)
of this section, the administrator of a multiemployer pension plan
shall, not later than 30 days after receipt of a written request for a
report(s) or application(s) described in paragraph (c) of this section
from a plan participant, beneficiary, employee representative or
contributing employer described in paragraph (e) of this section,
furnish the requested document or documents to the requester.
(2) The plan administrator shall furnish reports and applications
pursuant to paragraph (b)(1) of this section in a manner consistent with
the requirements of 29 CFR 2520.104b-1, including paragraph (c) of that
section relating to the use of electronic media.
(3) The plan administrator may impose a reasonable charge to cover
the costs of furnishing documents pursuant to this section, but in no
event may such charge exceed--
(i) The lesser of: (A) The actual cost to the plan for the least
expensive means of acceptable reproduction of the document(s) or (B) 25
cents per page; plus
(ii) The cost of mailing or delivery of the document.
(c) Documents to be furnished. For purposes of paragraph (a) of this
section, and subject to paragraph (d) of this section, a plan
participant, beneficiary, employee representative or contributing
employer described in paragraph (e) of this section, shall be entitled
to request and receive a copy of any:
(1) Periodic actuarial report. For this purpose the term ``periodic
actuarial report'' means any--
(i) Actuarial report prepared by an actuary of the plan and received
by the plan at regularly scheduled, recurring intervals; and
(ii) Study, test (including a sensitivity test), document, analysis
or
[[Page 182]]
other information (whether or not called a ``report'') received by the
plan from an actuary of the plan that depicts alternative funding
scenarios based on a range of alternative actuarial assumptions, whether
or not such information is received by the plan at regularly scheduled,
recurring intervals.
(2) Quarterly, semi-annual, or annual financial report prepared for
the plan by any plan investment manager or advisor (without regard to
whether such advisor is a fiduciary within the meaning of section 3(21)
of the Act) or other fiduciary; and
(3) Application filed with the Secretary of the Treasury requesting
an extension under section 304 of the Act or section 431(d) of the
Internal Revenue Code of 1986 and the determination of such Secretary
pursuant to such application.
(d) Limitations and exceptions. For purposes of this section,
reports and applications (and related determinations) required to be
disclosed under this section shall not include:
(1) Any report or application that was furnished to the requester
within the 12-month period immediately preceding the date on which the
request is received by the plan;
(2) Any report or application that, as of the date on which the
request is received by the plan, has been in the plan's possession for 6
years or more;
(3) Any report described in paragraph (c)(1) and (c)(2) of this
section that, as of the date on which the request is received by the
plan, has not been in the plan's possession for at least 30 days; except
that, if the plan administrator elects not to furnish any such document,
the administrator shall furnish a notice, not later than 30 days after
the date on which request is received by the plan, informing the
requester of the existence of the document and the earliest date on
which the document can be furnished by the plan.
(4) Any information or data which served as the basis for any report
or application described in paragraph (c) of this section, although
nothing herein shall limit any other right that a person may have to
review or obtain such information under the Act; or
(5)(i) Any information within a report or application that the plan
administrator reasonably determines to be either:
(A) individually identifiable information with respect to any plan
participant, beneficiary, employee, fiduciary, or contributing employer,
except that such limitation shall not apply to an investment manager,
adviser, or other person (other than an employee of the plan) preparing
a financial report described in paragraph (c)(2) of this section; or
(B) proprietary information regarding the plan, any contributing
employer, or entity providing services to the plan.
(ii) For purposes of paragraph (d)(5)(i)(B) of this section, the
term ``proprietary information'' means trade secrets and other non-
public information (e.g., processes, procedures, formulas,
methodologies, techniques, strategies) that, if disclosed by the plan,
may cause, or increase a reasonable risk of, financial harm to the plan,
a contributing employer, or entity providing services to the plan.
(iii) The plan administrator may treat information relating to a
contributing employer or entity providing services to the plan as other
than proprietary if the contributing employer or service provider has
not identified such information as proprietary.
(iv) A plan administrator shall inform the requester if the plan
administrator withholds any information described in paragraph (d)(5)(i)
of this section from a report or application requested under paragraph
(b) of this section.
(e) Persons entitled to request documents. For purposes of this
section, a plan participant, beneficiary, employee representative or
contributing employer entitled to request and receive reports and
applications includes:
(1) Any participant within the meaning of section 3(7) of the Act;
(2) Any beneficiary receiving benefits under the plan;
(3) Any labor organization representing participants under the plan;
(4) Any employer that is a party to the collective bargaining
agreement(s) pursuant to which the plan is maintained or who otherwise
may be subject
[[Page 183]]
to withdrawal liability pursuant to section 4203 of the Act.
[75 FR 9341, Mar. 2, 2010]
Subpart B_Contents of Plan Descriptions and Summary Plan Descriptions
Sec. 2520.102-1 [Reserved]
Sec. 2520.102-2 Style and format of summary plan description.
(a) Method of presentation. The summary plan description shall be
written in a manner calculated to be understood by the average plan
participant and shall be sufficiently comprehensive to apprise the
plan's participants and beneficiaries of their rights and obligations
under the plan. In fulfilling these requirements, the plan administrator
shall exercise considered judgment and discretion by taking into account
such factors as the level of comprehension and education of typical
participants in the plan and the complexity of the terms of the plan.
Consideration of these factors will usually require the limitation or
elimination of technical jargon and of long, complex sentences, the use
of clarifying examples and illustrations, the use of clear cross
references and a table of contents.
(b) General format. The format of the summary plan description must
not have the effect to misleading, misinforming or failing to inform
participants and beneficiaries. Any description of exception,
limitations, reductions, and other restrictions of plan benefits shall
not be minimized, rendered obscure or otherwise made to appear
unimportant. Such exceptions, limitations, reductions, or restrictions
of plan benefits shall be described or summarized in a manner not less
prominent than the style, captions, printing type, and prominence used
to describe or summarize plan benefits. The advantages and disadvantages
of the plan shall be presented without either exaggerating the benefits
or minimizing the limitations. The description or summary of restrictive
plan provisions need not be disclosed in the summary plan description in
close conjunction with the description or summary of benefits, provided
that adjacent to the benefit description the page on which the
restrictions are described is noted.
(c) Foreign languages. In the case of either--
(1) A plan that covers fewer than 100 participants at the beginning
of a plan year, and in which 25 percent or more of all plan participants
are literate only in the same non-English language, or
(2) A plan which covers 100 or more participants at the beginning of
the plan year, and in which the lesser of (i) 500 or more participants,
or (ii) 10% or more of all plan participants are literate only in the
same non-English language, so that a summary plan description in English
would fail to inform these participants adequately of their rights and
obligations under the plan, the plan administrator for such plan shall
provide these participants with an English-language summary plan
description which prominently displays a notice, in the non-English
language common to these participants, offering them assistance. The
assistance provided need not involve written materials, but shall be
given in the non-English language common to these participants and shall
be calculated to provide them with a reasonable opportunity to become
informed as to their rights and obligations under the plan. The notice
offering assistance contained in the summary plan description shall
clearly set forth in the non-English language common to such
participants offering them assistance. The assistance provided need not
involve written materials, but shall be given in the non-English
language common to these participants and shall be calculated to provide
them with a reasonable opportunity to become informed as to their rights
and obligations under the plan. The notice offering assistance contained
in the summary plan description shall clearly set forth in the non-
English language common to such participants the procedures they must
follow in order to obtain such assistance.
Example. Employer A maintains a pension plan which covers 1000
participants. At the beginning of a plan year five hundred of Employer
A's covered employees are literate only in Spanish, 101 are literate
only in Vietnamese, and the remaining 399 are literate in
[[Page 184]]
English. Each of the 1000 employees receives a summary plan description
in English, containing an assistance notice in both Spanish and
Vietnamese stating the following:
``This booklet contains a summary in English of your plan rights and
benefits under Employer A Pension Plan. If you have difficulty
understanding any part of this booklet, contact Mr. John Doe, the plan
administrator, at his office in Room 123, 456 Main St., Anywhere City,
State 20001. Office hours are from 8:30 A.M. to 5:00 P.M. Monday through
Friday. You may also call the plan administrator's office at (202) 555-
2345 for assistance.''
[42 FR 37180, July 19, 1977]
Sec. 2520.102-3 Contents of summary plan description.
Section 102 of the Act specifies information that must be included
in the summary plan description. The summary plan description must
accurately reflect the contents of the plans as of the date not earlier
than 120 days prior to the date such summary plan description is
disclosed. The following information shall be included in the summary
plan description of both employee welfare benefit plans and employee
pension benefit plans, except as stated otherwise in paragraphs (j)
through (n):
(a) The name of the plan, and, if different, the name by which the
plan is commonly known by its participants and beneficiaries;
(b) The name and address of--
(1) In the case of a single employer plan, the employer whose
employees are covered by the plan,
(2) In the case of a plan maintained by an employee organization for
its members, the employee organization that maintains the plan,
(3) In the case of a collectively-bargained plan established or
maintained by one or more employers and one or more employee
organizations, the association, committee, joint board of trustees,
parent or most significantly employer of a group of employers all of
which contribute to the same plan, or other similar representative of
the parties who established or maintain the plan, as well as
(i) A statement that a complete list of the employers and employee
organizations sponsoring the plan may be obtained by participants and
beneficiaries upon written request to the plan administrator, and is
available for examination by participants and beneficiaries, as required
by Sec. Sec. 2520.104b-1 and 2520.104b-30; or
(ii) A statement that participants and beneficiaries may receive
from the plan administrator, upon written request, information as to
whether a particular employer or employee organization is a sponsor of
the plan and, if the employer or employee organization is a plan
sponsor, the sponsor's address.
(4) In the case of a plan established or maintained by two or more
employers, the association, committee, joint board of trustees, parent
or most significant employer of a group of employers all of which
contribute to the same plan, or other similar representative of the
parties who established or maintain the plan, as well as
(i) A statement that a complete list of the employers sponsoring the
plan may be obtained by participants and beneficiaries upon written
request to the plan administrator, and is available for examination by
participants and beneficiaries, as required by Sec. Sec. 2520.104b-1
and 2520.104b-30, or,
(ii) A statement that participants and beneficiaries may receive
from the plan administrator, upon written request, information as to
whether a particular employer is a sponsor of the plan and, if the
employer is a plan sponsor, the sponsor's address.
(c) The employer identification number (EIN) assigned by the
Internal Revenue Service to the plan sponsor and the plan number
assigned by the plan sponsor. (For further detailed explanation, see the
instructions to the plan description Form EBS-1 and ``Identification
Numbers Under ERISA'' (Publ. 1004), published jointly by DOL, IRS, and
PBGC);
(d) The type of pension or welfare plan, e.g. pension plans--defined
benefit, defined contribution, 401(k), cash balance, money purchase,
profit sharing, ERISA section 404(c) plan, etc., and for welfare plans--
group health plans, disability, pre-paid legal services, etc.
(e) The type of administration of the plan, e.g., contract
administration, insurer administration, etc.;
(f) The name, business address and business telephone number of the
plan
[[Page 185]]
administrator as that term is defined by section 3(16) of the Act;
(g) The name of the person designated as agent for service of legal
process, and the address at which process may be served on such person,
and in addition, a statement that service of legal process may be made
upon a plan trustee or the plan administrator;
(h) The name, title and address of the principal place of business
of each trustee of the plan;
(i) If a plan is maintained pursuant to one or more collective
bargaining agreements, a statement that the plan is so maintained, and
that a copy of any such agreement may be obtained by participants and
beneficiaries upon written request to the plan administrator, and is
available for examination by participants and beneficiaries, as required
by Sec. Sec. 2520.104b-1 and 2520.104b-30. For the purpose of this
paragraph, a plan is maintained pursuant to a collective bargaining
agreement if such agreement controls any duties, rights or benefits
under the plan, even though such agreement has been superseded in part
for other purposes;
(j) The plan's requirements respecting eligibility for participation
and for benefits. The summary plan description shall describe the plan's
provisions relating to eligibility to participate in the plan and the
information identified in paragraphs (j)(1), (2) and (3) of this
section, as appropriate.
(1) For employee pension benefit plans, it shall also include a
statement describing the plan's normal retirement age, as that term is
defined in section 3(24) of the Act, and a statement describing any
other conditions which must be met before a participant will be eligible
to receive benefits. Such plan benefits shall be described or
summarized. In addition, the summary plan description shall include a
description of the procedures governing qualified domestic relations
order (QDRO) determinations or a statement indicating that participants
and beneficiaries can obtain, without charge, a copy of such procedures
from the plan administrator.
(2) For employee welfare benefit plans, it shall also include a
statement of the conditions pertaining to eligibility to receive
benefits, and a description or summary of the benefits. In the case of a
welfare plan providing extensive schedules of benefits (a group health
plan, for example), only a general description of such benefits is
required if reference is made to detailed schedules of benefits which
are available without cost to any participant or beneficiary who so
requests. In addition, the summary plan description shall include a
description of the procedures governing qualified medical child support
order (QMCSO) determinations or a statement indicating that participants
and beneficiaries can obtain, without charge, a copy of such procedures
from the plan administrator.
(3) For employee welfare benefit plans that are group health plans,
as defined in section 733(a)(1) of the Act, the summary plan description
shall include a description of: any cost-sharing provisions, including
premiums, deductibles, coinsurance, and copayment amounts for which the
participant or beneficiary will be responsible; any annual or lifetime
caps or other limits on benefits under the plan; the extent to which
preventive services are covered under the plan; whether, and under what
circumstances, existing and new drugs are covered under the plan;
whether, and under what circumstances, coverage is provided for medical
tests, devices and procedures; provisions governing the use of network
providers, the composition of the provider network, and whether, and
under what circumstances, coverage is provided for out-of-network
services; any conditions or limits on the selection of primary care
providers or providers of speciality medical care; any conditions or
limits applicable to obtaining emergency medical care; and any
provisions requiring preauthorizations or utilization review as a
condition to obtaining a benefit or service under the plan. In the case
of plans with provider networks, the listing of providers may be
furnished as a separate document that accompanies the plan's SPD,
provided that the summary plan description contains a general
description of the provider network and provided further that the SPD
contains a statement that provider lists are furnished automatically,
[[Page 186]]
without charge, as a separate document.
(k) In the case of an employee pension benefit plan, a statement
describing any joint and survivor benefits provided under the plan,
including any requirement that an election be made as a condition to
select or reject the joint and survivor annuity;
(l) For both pension and welfare benefit plans, a statement clearly
identifying circumstances which may result in disqualification,
ineligibility, or denial, loss, forfeiture, suspension, offset,
reduction, or recovery (e.g., by exercise of subrogation or
reimbursement rights) of any benefits that a participant or beneficiary
might otherwise reasonably expect the plan to provide on the basis of
the description of benefits required by paragraphs (j) and (k) of this
section. In addition to other required information, plans must include a
summary of any plan provisions governing the authority of the plan
sponsors or others to terminate the plan or amend or eliminate benefits
under the plan and the circumstances, if any, under which the plan may
be terminated or benefits may be amended or eliminated; a summary of any
plan provisions governing the benefits, rights and obligations of
participants and beneficiaries under the plan on termination of the plan
or amendment or elimination of benefits under the plan, including, in
the case of an employee pension benefit plan, a summary of any
provisions relating to the accrual and the vesting of pension benefits
under the plan upon termination; and a summary of any plan provisions
governing the allocation and disposition of assets of the plan upon
termination. Plans also shall include a summary of any provisions that
may result in the imposition of a fee or charge on a participant or
beneficiary, or on an individual account thereof, the payment of which
is a condition to the receipt of benefits under the plan. The foregoing
summaries shall be disclosed in accordance with the requirements under
29 CFR 2520.102-2(b).
(m) For an employee pension benefit plan the following information:
(1) If the benefits of the plan are not insured under title IV of
the Act, a statement of this fact, and reason for the lack of insurance;
and
(2) If the benefits of the plan are insured under title IV of the
Act, a statement of this fact, a summary of the pension benefit guaranty
provisions of title IV, and a statement indicating that further
information on the provisions of title IV can be obtained from the plan
administrator or the Pension Benefit Guaranty Corporation. The address
of the PBGC shall be provided.
(3) A summary plan description for a single-employer plan will be
deemed to comply with paragraph (m)(2) of this section if it includes
the following statement:
Your pension benefits under this plan are insured by the Pension
Benefit Guaranty Corporation (PBGC), a federal insurance agency. If the
plan terminates (ends) without enough money to pay all benefits, the
PBGC will step in to pay pension benefits. Most people receive all of
the pension benefits they would have received under their plan, but some
people may lose certain benefits.
The PBGC guarantee generally covers: (1) Normal and early retirement
benefits; (2) disability benefits if you become disabled before the plan
terminates; and (3) certain benefits for your survivors.
The PBGC guarantee generally does not cover: (1) Benefits greater
than the maximum guaranteed amount set by law for the year in which the
plan terminates; (2) some or all of benefit increases and new benefits
based on plan provisions that have been in place for fewer than 5 years
at the time the plan terminates; (3) benefits that are not vested
because you have not worked long enough for the company; (4) benefits
for which you have not met all of the requirements at the time the plan
terminates; (5) certain early retirement payments (such as supplemental
benefits that stop when you become eligible for Social Security) that
result in an early retirement monthly benefit greater than your monthly
benefit at the plan's normal retirement age; and (6) non-pension
benefits, such as health insurance, life insurance, certain death
benefits, vacation pay, and severance pay.
Even if certain of your benefits are not guaranteed, you still may
receive some of those benefits from the PBGC depending on how much money
your plan has and on how much the PBGC collects from employers.
For more information about the PBGC and the benefits it guarantees,
ask your plan administrator or contact the PBGC's Technical Assistance
Division, 1200 K Street N.W., Suite 930, Washington, D.C. 20005-4026 or
call 202-326-4000 (not a toll-free number). TTY/TDD users may call the
federal relay service
[[Page 187]]
toll-free at 1-800-877-8339 and ask to be connected to 202-326-4000.
Additional information about the PBGC's pension insurance program is
available through the PBGC's website on the Internet at http://
www.pbgc.gov.
(4) A summary plan description for a multiemployer plan will be
deemed to comply with paragraph (m)(2) of this section if it includes
the following statement:
Your pension benefits under this multiemployer plan are insured by
the Pension Benefit Guaranty Corporation (PBGC), a federal insurance
agency. A multiemployer plan is a collectively bargained pension
arrangement involving two or more unrelated employers, usually in a
common industry.
Under the multiemployer plan program, the PBGC provides financial
assistance through loans to plans that are insolvent. A multiemployer
plan is considered insolvent if the plan is unable to pay benefits (at
least equal to the PBGC's guaranteed benefit limit) when due.
The maximum benefit that the PBGC guarantees is set by law. Under
the multiemployer program, the PBGC guarantee equals a participant's
years of service multiplied by (1) 100% of the first $5 of the monthly
benefit accrual rate and (2) 75% of the next $15. The PBGC's maximum
guarantee limit is $16.25 per month times a participant's years of
service. For example, the maximum annual guarantee for a retiree with 30
years of service would be $5,850.
The PBGC guarantee generally covers: (1) Normal and early retirement
benefits; (2) disability benefits if you become disabled before the plan
becomes insolvent; and (3) certain benefits for your survivors.
The PBGC guarantee generally does not cover: (1) Benefits greater
than the maximum guaranteed amount set by law; (2) benefit increases and
new benefits based on plan provisions that have been in place for fewer
than 5 years at the earlier of: (i) The date the plan terminates or (ii)
the time the plan becomes insolvent; (3) benefits that are not vested
because you have not worked long enough; (4) benefits for which you have
not met all of the requirements at the time the plan becomes insolvent;
and (5) non-pension benefits, such as health insurance, life insurance,
certain death benefits, vacation pay, and severance pay.
For more information about the PBGC and the benefits it guarantees,
ask your plan administrator or contact the PBGC's Technical Assistance
Division, 1200 K Street, N.W., Suite 930, Washington, D.C. 20005-4026 or
call 202-326-4000 (not a toll-free number). TTY/TDD users may call the
federal relay service toll-free at 1-800-877-8339 and ask to be
connected to 202-326-4000. Additional information about the PBGC's
pension insurance program is available through the PBGC's website on the
Internet at http://www.pbgc.gov.
(n) In the case of an employee pension benefit plan, a description
and explanation of the plan provisions for determining years of service
for eligibility to participate, vesting, and breaks in service, and
years of participation for benefit accrual. The description shall state
the service required to accrue full benefits and the manner in which
accrual of benefits is prorated for employees failing to complete full
service for a year.
(o) In the case of a group health plan, within the meaning of
section 607(1) of the Act, subject to the continuation coverage
provisions of Part 6 of Title I of ERISA, a description of the rights
and obligations of participants and beneficiaries with respect to
continuation coverage, including, among other things, information
concerning qualifying events and qualified beneficiaries, premiums,
notice and election requirements and procedures, and duration of
coverage.
(p) The sources of contributions to the plan--for example, employer,
employee organization, employees--and the method by which the amount of
contribution is calculated. Defined benefit pension plans may state
without further explanation that the contribution is actuarially
determined.
(q) The identity of any funding medium used for the accumulation of
assets through which benefits are provided. The summary plan description
shall identify any insurance company, trust fund, or any other
institution, organization, or entity which maintains a fund on behalf of
the plan or through which the plan is funded or benefits are provided.
If a health insurance issuer, within the meaning of section 733(b)(2) of
the Act, is responsible, in whole or in part, for the financing or
administration of a group health plan, the summary plan description
shall indicate the name and address of the issuer, whether and to what
extent benefits under the plan are guaranteed under a contract or policy
of insurance issued by the issuer, and the nature of any administrative
services (e.g., payment of claims) provided by the issuer.
[[Page 188]]
(r) The date of the end of the year for purposes of maintaining the
plan's fiscal records;
(s) The procedures governing claims for benefits (including
procedures for obtaining preauthorizations, approvals, or utilization
review decisions in the case of group health plan services or benefits,
and procedures for filing claim forms, providing notifications of
benefit determinations, and reviewing denied claims in the case of any
plan), applicable time limits, and remedies available under the plan for
the redress of claims which are denied in whole or in part (including
procedures required under section 503 of Title I of the Act). The plan's
claims procedures may be furnished as a separate document that
accompanies the plan's SPD, provided that the document satisfies the
style and format requirements of 29 CFR 2520.102-2 and, provided further
that the SPD contains a statement that the plan's claims procedures are
furnished automatically, without charge, as a separate document.
(t)(1) The statement of ERISA rights described in section 104(c) of
the Act, containing the items of information applicable to the plan
included in the model statement of paragraph (t)(2) of this section.
Items which are not applicable to the plan are not required to be
included. The statement may contain explanatory and descriptive
provisions in addition to those prescribed in paragraph (t)(2) of this
section. However, the style and format of the statement shall not have
the effect of misleading, misinforming or failing to inform participants
and beneficiaries of a plan. All such information shall be written in a
manner calculated to be understood by the average plan participant,
taking into account factors such as the level of comprehension and
education of typical participants in the plan and the complexity of the
items required under this subparagraph to be included in the statement.
Inaccurate, incomprehensible or misleading explanatory material will
fail to meet the requirements of this section. The statement of ERISA
rights (the model statement or a statement prepared by the plan), must
appear as one consolidated statement. If a plan finds it desirable to
make additional mention of certain rights elsewhere in the summary plan
description, it may do so. The summary plan description may state that
the statement of ERISA rights is required by Federal law and regulation.
(2) A summary plan description will be deemed to comply with the
requirements of paragraph (t)(1) of this section if it includes the
following statement; items of information which are not applicable to a
particular plan should be deleted:
As a participant in (name of plan) you are entitled to certain
rights and protections under the Employee Retirement Income Security Act
of 1974 (ERISA). ERISA provides that all plan participants shall be
entitled to:
Receive Information About Your Plan and Benefits
Examine, without charge, at the plan administrator's office and at
other specified locations, such as worksites and union halls, all
documents governing the plan, including insurance contracts and
collective bargaining agreements, and a copy of the latest annual report
(Form 5500 Series) filed by the plan with the U.S. Department of Labor
and available at the Public Disclosure Room of the Pension and Welfare
Benefit Administration.
Obtain, upon written request to the plan administrator, copies of
documents governing the operation of the plan, including insurance
contracts and collective bargaining agreements, and copies of the latest
annual report (Form 5500 Series) and updated summary plan description.
The administrator may make a reasonable charge for the copies.
Receive a summary of the plan's annual financial report. The plan
administrator is required by law to furnish each participant with a copy
of this summary annual report.
Obtain a statement telling you whether you have a right to receive a
pension at normal retirement age (age * * *) and if so, what your
benefits would be at normal retirement age if you stop working under the
plan now. If you do not have a right to a pension, the statement will
tell you how many more years you have to work to get a right to a
pension. This statement must be requested in writing and is not required
to be given more than once every twelve (12) months. The plan must
provide the statement free of charge.
Continue Group Health Plan Coverage
Continue health care coverage for yourself, spouse or dependents if
there is a loss of coverage under the plan as a result of a qualifying
event. You or your dependents may
[[Page 189]]
have to pay for such coverage. Review this summary plan description and
the documents governing the plan on the rules governing your COBRA
continuation coverage rights.
Reduction or elimination of exclusionary periods of coverage for
preexisting conditions under your group health plan, if you have
creditable coverage from another plan. You should be provided a
certificate of creditable coverage, free of charge, from your group
health plan or health insurance issuer when you lose coverage under the
plan, when you become entitled to elect COBRA continuation coverage,
when your COBRA continuation coverage ceases, if you request it before
losing coverage, or if you request it up to 24 months after losing
coverage. Without evidence of creditable coverage, you may be subject to
a preexisting condition exclusion for 12 months (18 months for late
enrollees) after your enrollment date in your coverage.
Prudent Actions by Plan Fiduciaries
In addition to creating rights for plan participants ERISA imposes
duties upon the people who are responsible for the operation of the
employee benefit plan. The people who operate your plan, called
``fiduciaries'' of the plan, have a duty to do so prudently and in the
interest of you and other plan participants and beneficiaries. No one,
including your employer, your union, or any other person, may fire you
or otherwise discriminate against you in any way to prevent you from
obtaining a (pension, welfare) benefit or exercising your rights under
ERISA.
Enforce Your Rights
If your claim for a (pension, welfare) benefit is denied or ignored,
in whole or in part, you have a right to know why this was done, to
obtain copies of documents relating to the decision without charge, and
to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce the above
rights. For instance, if you request a copy of plan documents or the
latest annual report from the plan and do not receive them within 30
days, you may file suit in a Federal court. In such a case, the court
may require the plan administrator to provide the materials and pay you
up to $110 a day until you receive the materials, unless the materials
were not sent because of reasons beyond the control of the
administrator. If you have a claim for benefits which is denied or
ignored, in whole or in part, you may file suit in a state or Federal
court. In addition, if you disagree with the plan's decision or lack
thereof concerning the qualified status of a domestic relations order or
a medical child support order, you may file suit in Federal court. If it
should happen that plan fiduciaries misuse the plan's money, or if you
are discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file suit in a
Federal court. The court will decide who should pay court costs and
legal fees. If you are successful the court may order the person you
have sued to pay these costs and fees. If you lose, the court may order
you to pay these costs and fees, for example, if it finds your claim is
frivolous.
Assistance with Your Questions
If you have any questions about your plan, you should contact the
plan administrator. If you have any questions about this statement or
about your rights under ERISA, or if you need assistance in obtaining
documents from the plan administrator, you should contact the nearest
office of the Employee Benefits Security Administration, U.S. Department
of Labor, listed in your telephone directory or the Division of
Technical Assistance and Inquiries, Employee Benefits Security
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W.,
Washington, D.C. 20210. You may also obtain certain publications about
your rights and responsibilities under ERISA by calling the publications
hotline of the Employee Benefits Security Administration.
(u)(1) For a group health plan, as defined in section 733(a)(1) of
the Act, that provides maternity or newborn infant coverage, a statement
describing any requirements under federal or state law applicable to the
plan, and any health insurance coverage offered under the plan, relating
to hospital length of stay in connection with childbirth for the mother
or newborn child. If federal law applies in some areas in which the plan
operates and state law applies in other areas, the statement should
describe the different areas and the federal or state law requirements
applicable in each.
(2) In the case of a group health plan subject to section 711 of the
Act, the summary plan description will be deemed to have complied with
paragraph (u)(1) of this section relating to the required description of
federal law requirements if it includes the following statement in the
summary plan description:
Group health plans and health insurance issuers generally may not,
under Federal law, restrict benefits for any hospital length of stay in
connection with childbirth for the mother or newborn child to less than
48 hours following a vaginal delivery, or less than 96 hours following a
cesarean section.
[[Page 190]]
However, Federal law generally does not prohibit the mother's or
newborn's attending provider, after consulting with the mother, from
discharging the mother or her newborn earlier than 48 hours (or 96 hours
as applicable). In any case, plans and issuers may not, under Federal
law, require that a provider obtain authorization from the plan or the
insurance issuer for prescribing a length of stay not in excess of 48
hours (or 96 hours).
(Approved by the Office of Management and Budget under control number
1210-0039)
[42 FR 37180, July 19, 1977, as amended at 62 FR 16984, Apr. 8, 1997; 62
FR 31695, June 10, 1997; 62 FR 36205, July 7, 1997; 63 FR 48375, Sept.
9, 1998; 65 FR 70241, Nov. 21, 2000; 66 FR 34994, July 2, 2001; 66 FR
36368, July 11, 2001]
Sec. 2520.102-4 Option for different summary plan descriptions.
In some cases an employee benefit plan may provide different
benefits for various classes of participants and beneficiaries. For
example, a plan amendment altering benefits may apply to only those
participants who are employees of an employer when the amendment is
adopted and to employees who later become participants, but not to
participants who no longer are employees when the amendment is adopted.
(See Sec. 2520.104b-4). Similarly, a plan may provide for different
benefits for participants employed at different plants of the employer,
or for different classes of participants in the same plant. In such
cases the plan administrator may fulfill the requirement to furnish a
summary plan description to participants covered under the plan and
beneficiaries receiving benefits under the plan by furnishing to each
member of each class of participants and beneficiaries a copy of a
summary plan description appropriate to that class. Each summary plan
description so prepared shall follow the style and format prescribed in
Sec. 2520.102-2, and shall contain all information which is required to
be contained in the summary plan description under Sec. 2520.102-3. It
may omit information which is not applicable to the class of
participants or beneficiaries to which it is furnished. It should also
clearly identify on the first page of the text the class of participants
and beneficiaries for which it has been prepared and the plan's coverage
of other classes. If the classes which the employee benefit plan covers
are too numerous to be listed adequately on the first page of the text
of the summary plan description, they may be listed elsewhere in the
text so long as the first page of the text contains a reference to the
page or pages in the text which contain this information.
[67 FR 775, Jan. 7, 2002]
Subpart C_Annual Report Requirements
Source: 43 FR 10140, Mar. 10, 1978, unless otherwise noted.
Sec. 2520.103-1 Contents of the annual report.
(a) Except as provided in Sec. Sec. 2520.104-43, 2520.104-51,
2520.104a-6, and 2520.104a-9, the administrator of a plan required to
file an annual report in accordance with section 104(a)(1) of the Act
shall include with the annual report the information prescribed in
paragraph (a)(1) of this section or in the simplified report, limited
exemption or alternative method of compliance described in paragraph
(a)(2) of this section.
(1) The annual report shall contain the information prescribed in
section 103 of the Act.
(2) Under the authority of subsections 104(a)(2), 104(a)(3), and 110
of the Act, section 1103(b) of the Pension Protection Act of 2006, and
section 202 of the SECURE Act, a simplified report, limited exemption,
or alternative method of compliance is prescribed for employee welfare
and pension benefit plans, as applicable. A plan filing a simplified
report or electing the limited exemption, or an alternative method of
compliance shall file an annual report containing the information
prescribed in paragraph (b) or (c) of this section, as applicable, and
shall furnish a summary annual report as prescribed in Sec. 2520.104b-
10.
(b) Contents of the annual report for plans with 100 or more
participants electing the limited exemption or alternative method of
compliance. Except as provided in paragraphs (d) and (f) of this section
and in Sec. Sec. 2520.103-2, 2520.103-14, and 2520.104-44, the annual
report of an employee benefit plan covering 100 or
[[Page 191]]
more participants at the beginning of the plan year which elects the
limited exemption or alternative method of compliance described in
paragraph (a)(2) of this section shall include:
(1) A Form 5500 ``Annual Return/Report of Employee Benefit Plan''
and any statements or schedules required to be attached to the form,
completed in accordance with the instructions for the form, including
Schedule A (Insurance Information), Schedule C (Service Provider
Information), Schedule D (DFE/Participating Plan Information), Schedule
G (Financial Transaction Schedules), Schedule H (Financial Information),
Schedule MEP (Multiple-Employer Plan), Schedule MB (Multiemployer
Defined Benefit Plan and Certain Money Purchase Plan Actuarial
Information), Schedule SB (Single-Employer Defined Benefit Plan
Actuarial Information), Schedule R (Retirement Plan Information), and
other financial schedules described in Sec. 2520.103-10. See the
instructions for this form.
(2) Separate financial statements (in addition to the information
required by paragraph (b)(1) of this section), if such financial
statements are prepared in order for the independent qualified public
accountant to form the opinion required by section 103(a)(3)(A) of the
Act and Sec. 2520.103-1(b)(5). These statements shall include the
following:
(i) A statement of assets and liabilities at current value presented
in comparative form for the beginning and end of the year. The statement
of plan assets and liabilities shall include the assets and liabilities
required to be reported on the Form 5500; however, the assets and
liabilities may be aggregated into categories in a manner other than
that used on Form 5500.
(ii) Separate or combined statements of plan income and expenses and
of changes in net assets which include the categories of income,
expense, and changes in assets required to be reported on the Form 5500;
however the income, expense, and changes in net assets may be aggregated
into categories in a manner other than that used on Form 5500.
(3) Notes to the financial statements described in paragraph (b)(1)
or (2) of this section which contain a description of the accounting
principles and practices reflected in the financial statements and, if
applicable, variances from generally accepted accounting principles; a
description of the plan, including any significant changes in the plan
made during the period and the impact of such changes on benefits; the
funding policy (including policy with respect to prior service cost) and
any changes in such policy from the prior year, a description of
material lease commitments, other commitments, and contingent
liabilities; a description of agreements and transactions with persons
known to be parties in interest; a general description of priorities
upon termination of the plan; information concerning whether or not a
tax ruling or determination letter has been obtained; an explanation of
the differences, if any, between the information contained in the
separate financial statements and the assets, liabilities, income,
expenses and changes in the net assets as required to be reported on the
Form 5500, and any other matters necessary to fully and fairly present
the financial condition of the plan.
(4) In the case of a plan, some or all of the assets of which are
held in a pooled separate account maintained by an insurance company, or
a common or collective trust maintained by a bank or similar
institution, a copy of the annual statement of assets and liabilities of
such account or trust for the fiscal year of the account or trust which
ends with or within the plan year for which the annual report is made as
required to be furnished to the administrator by such account or trust
under Sec. 2520.103-5(c). Although the statement of assets and
liabilities referred to in Sec. 2520.103-5(c) shall be considered part
of the plan's annual report, such statement of assets and liabilities
need not be filed with the plan's annual report. See Sec. Sec.
2520.103-3 and 2520.103-4 for reporting requirements for plans some or
all of the assets of which are held in a pooled separate account
maintained by an insurance company, or a common or collective trust
maintained by a bank or similar institution.
(5) A report of an independent qualified public accountant.
[[Page 192]]
(i) Technical requirements. The accountant's report--
(A) Shall be dated;
(B) Shall be signed manually;
(C) Shall indicate the city and state where issued; and
(D) Shall identify without detailed enumeration the financial
statements and schedules covered by the report.
(ii) Representations as to the audit. The accountant's report--
(A) Shall state whether the audit was made in accordance with
generally accepted auditing standards; and
(B) Shall designate any auditing procedures deemed necessary by the
accountant under the circumstances of the particular case which have
been omitted, and the reasons for their omission. Authority for the
omission of certain procedures which independent accountants might
ordinarily employ in the course of an audit made for the purpose of
expressing the opinions required by paragraph (b)(5)(iii) of this
section is contained in Sec. Sec. 2520.103-8 and 2520.103-12.
(iii) Opinion to be expressed. The accountant's report shall state
clearly:
(A) The opinion of the accountant in respect of the financial
statements and schedules covered by the report and the accounting
principles and practices reflected therein; and
(B) The opinion of the accountant as to the consistency of the
application of the accounting principles with the application of such
principles in the preceding year or as to any changes in such principles
which have a material effect on the financial statements.
(iv) Exceptions. Any matters to which the accountant takes exception
shall be clearly identified, the exception thereto specifically and
clearly stated, and, to the extent practicable, the effect of the
matters to which the accountant takes exception on the related financial
statements given. The matters to which the accountant takes exception
shall be further identified as (A) those that are the result of DOL
regulations, and (B) all others.
(c) Contents of the annual report for plans with fewer than 100
participants. (1) Except as provided in paragraphs (c)(2), (d), (e), and
(f) of this section, and in Sec. Sec. 2520.104-43, 2520.104-44,
2520.104-51, 2520.104a-6, and 2520.104a-9, the annual report of an
employee benefit plan that covers fewer than 100 participants at the
beginning of the plan year shall include a Form 5500 ``Annual Return/
Report of Employee Benefit Plan'' and any statements or schedules
required to be attached to the form, completed in accordance with the
instructions for the form, including Schedule A (Insurance Information),
Schedule D (DFE/Participating Plan Information), Schedule I (Financial
Information--Small Plan), Schedule MEP (Multiple-Employer Plan),
Schedule MB (Multiemployer Defined Benefit Plan and Certain Money
Purchase Plan Actuarial Information), Schedule SB (Single-Employer
Defined Benefit Plan Actuarial Information) and Schedule R (Retirement
Plan Information). See the instructions for this form.
(2)(i) The annual report of an employee pension benefit plan or
employee welfare benefit plan and that covers fewer than 100
participants at the beginning of the plan year and that meets the
conditions in paragraph (c)(2)(ii) of this section with respect to a
plan year may, as an alternative to the requirements of paragraph (c)(1)
of this section, meet its annual reporting requirements by filing the
Form 5500-SF ``Short Form Annual Return/Report of Small Employee Benefit
Plan'' and any statements or schedules required to be attached to the
form, Schedule MEP (Multiple-Employer Pension Plan), Schedule MB
(Multiemployer Defined Benefit Plan and Certain Money Purchase Plan
Actuarial Information) and Schedule SB (Single-Employer Defined Benefit
Plan Actuarial Information), completed in accordance with the
instructions for the form. See the instructions for this form.
(ii) A plan meets the conditions in this paragraph (c)(2)(ii) with
respect to the year if the plan:
(A) Does not hold any employer securities at any time during the
year;
(B) Satisfies the audit waiver conditions in Sec. Sec. 2520.104-
46(b)(1)(i)(A)(1), (b)(1)(i)(B) and (b)(1)(i)(C);
(C) Had at all times during the plan year 100 percent of the plan's
assets held for investment purposes invested
[[Page 193]]
in assets that have a readily determinable fair market value. For
purposes of this section, the following shall be treated as assets that
have a readily determinable fair market value: Shares issued by an
investment company registered under the Investment Company Act of 1940;
investment and annuity contracts issued by any insurance company,
qualified to do business under the laws of a State, that provides
valuation information at least annually to the plan administrator; bank
investment contracts issued by a bank or similar financial institution,
as defined in Sec. 2550.408b-4(c) of this chapter, that provides
valuation information at least annually to the plan administrator;
securities (except employer securities) traded on a public exchange;
government securities issued by the United States or by a State; cash or
cash equivalents held by a bank or similar financial institution, as
defined in Sec. 2550.408b-4(c) of this chapter, by an insurance
company, qualified to do business under the law of a State, by an
organization registered as a broker-dealer under the Securities Exchange
Act of 1934, or by any other organization authorized to act as a trustee
for individual retirement accounts under section 408 of the Internal
Revenue Code; and any loan meeting the requirements of section 408(b)(1)
of the Act and the regulations issued thereunder;
(D) Is not a multiemployer plan;
(E) Is not a plan subject to the Form M-1 requirements under Sec.
2520.101-2;
(F) Is not a multiple-employer pension plan that is a pooled
employer plan described in section 3(43) of the Act; and
(G) Is not a DCG reporting arrangement described in Sec. 2520.104-
51.
(d) Special rule. If a plan has between 80 and 120 participants
(inclusive) as of the beginning of the plan year, the plan administrator
may elect to file the same category of annual report (i.e., the annual
report for plans with 100 or more participants under paragraph (b) of
this section or the annual report for plans with fewer than 100
participants under paragraph (c) of this section) that was filed for the
previous plan year.
(e) Plans which participate in a master trust. The plan
administrator of a plan which participates in a master trust shall file
an annual report on Form 5500 in accordance with the instructions for
the form relating to master trusts and master trust investment accounts.
For purposes of annual reporting, a master trust is a trust for which a
regulated financial institution serves as trustee or custodian
(regardless of whether such institution exercises discretionary
authority or control respecting the management of assets held in the
trust) and in which assets of more than one plan sponsored by a single
employer or by a group of employers under common control are held. For
purpose of this paragraph, a regulated financial institution is a bank,
trust company, or similar financial institution regulated, supervised,
and subject to periodic examination by a State or Federal agency. Common
control is determined on the basis of all relevant facts and
circumstances (whether or not such employers are incorporated).
(f) Plans subject to the Form M-1 filing requirements under Sec.
2520.101-2. The annual report of an employee welfare benefit plan that
is subject to the Form M-1 requirements under Sec. 2520.101-2 (Filing
by Multiple Employer Welfare Arrangements and Certain Other Related
Entities) during the plan year shall also include any statements or
information required by the instructions to the Form 5500 relating to
compliance with the Form M-1 filing requirements under Sec. 2520.101-2.
(g) Electronic filing. See Sec. 2520.104a-2 and the instructions
for the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' for
electronic filing requirements. The plan administrator must maintain an
original copy, with all required signatures, as part of the plan's
records.
[43 FR 10140, Mar. 10, 1978, as amended at 45 FR 51446, Aug. 1, 1980; 46
FR 61079, Dec. 15, 1981; 51 FR 41288, Nov. 13, 1986; 54 FR 8627, Mar. 1,
1989; 65 FR 21080, Apr. 19, 2000; 71 FR 41368, July 21, 2006; 72 FR
64727, Nov. 16, 2007; 78 FR 13796, Mar. 1, 2013; 88 FR 11810, Feb. 24,
2023]
[[Page 194]]
Sec. 2520.103-2 Contents of the annual report for a group insurance arrangement.
(a) General. (1) A trust or other entity described in Sec.
2520.104-43(b) that files an annual report for purposes of Sec.
2520.104-43 shall include in such report the items set forth in
paragraph (b) of this section.
(2) [Reserved]
(b) Contents. (1) A Form 5500 ``Annual Return/Report of Employee
Benefit Plan'' and any statements or schedules required to be attached
to the form, completed in accordance with the instructions for the form,
including Schedule A (Insurance Information), Schedule C (Service
Provider Information), Schedule D (DFE/Participating Plan Information),
Schedule G (Financial Transaction Schedules), Schedule H (Financial
Information), and the other financial schedules described in Sec.
2520.103-10. See the instructions for this form.
(2) Separate financial statements (in addition to the information
required by paragraph (b)(1) of this section), if such financial
statements are prepared in order for the independent qualified public
accountant to form the opinion required by section 103(a)(3)(A) of the
Act and Sec. 2520.103-2(b)(5). These financial statements shall include
the following:
(i) A statement of all trust assets and liabilities at current value
presented in comparative form for the beginning and end of the year. The
statement of trust assets and liabilities shall include the assets and
liabilities required to be reported on the Form 5500; however, the
assets and liabilities may be aggregated into categories in a manner
other than that used on Form 5500.
(ii) Separate or combined statements of all trust income and
expenses and changes in net assets which includes the categories of
income, expense, and changes in assets required to be reported on the
Form 5500; however, the income, expense, and changes in assets may be
aggregated into categories in a manner other than that used on Form
5500.
(3) Notes to the financial statements described in paragraph (b)(1)
or (2) of this section which contain a description of the accounting
principles and practices reflected in the financial statements and, if
applicable, variances from generally accepted accounting principles; a
description of the group insurance arrangement including any significant
changes in the group insurance arrangement made during the period and
the impact of such changes on benefits; a description of material lease
commitments, other commitments, and contingent liabilities; a
description of agreements and transactions with persons known to be
parties in interest; a general description of priorities upon
termination of the plan; an explanation of the differences, if any,
between the information contained in the separate financial statements
and the assets, liabilities, income, expenses and changes in net assets
as required to be reported on the Form 5500; and any other matters
necessary to fully and fairly present the financial condition of the
plan.
(4) In the case of a group insurance arrangement some or all of the
assets of which are held in a pooled separate account maintained by an
insurance carrier, or in a common or collective trust maintained by a
bank, trust company or similar institution, a copy of the annual
statement of assets and liabilities of such account or trust for the
fiscal year of the account or trust which ends with or within the plan
year for which the annual report is made as required to be furnished by
such account or trust under Sec. 2520.103-5(c). Although the statement
of assets and liabilities referred to in Sec. 2520.103-5(c) shall be
considered part of the group insurance arrangement's annual report, such
statement of assets and liabilities need not be filed with its annual
report. See Sec. Sec. 2520.103-3 and 2520.103-4 for reporting
requirements for plans some or all of the assets of which are held in a
pooled separate account maintained by an insurance company, or a common
or collective trust maintained by a bank or similar institution, and see
Sec. 2520.104-43(b)(2) for when the terms ``group insurance
arrangement'' or ``trust or other entity'' shall be, respectively, used
in place of the terms ``plan'' and ``plan administrator.''
(5) A report of an independent qualified public accountant.
[[Page 195]]
(i) Technical requirements. The accountant's report--
(A) Shall be dated;
(B) Shall be signed manually;
(C) Shall indicate the city and State where issued; and
(D) Shall identify without detailed enumeration the financial
statements and schedules covered by the report.
(ii) Representations as to the audit. The accountant's report--
(A) Shall state whether the audit was made in accordance with
generally accepted auditing standards; and
(B) Shall designate any auditing procedures deemed necessary by the
accountant under the circumstances of the particular case, which have
been omitted, and the reasons for their omission. Authority for the
omission of certain procedures which independent accountants might
ordinarily employ in the course of an audit made for the purpose of
expressing the opinions required by paragraph (b)(5)(iii) of this
section is contained in Sec. 2520.103-8.
(iii) Opinion to be expressed. The accountant's report shall state
clearly:
(A) The opinion of the accountant in respect of the financial
statements and schedules covered by the report and the accounting
principles and practices reflected therein; and
(B) The opinion of the accountant as to the consistency of the
application of the accounting principles with the application of such
priniciples in the preceding year, or as to any changes in such
principles which have a material effect on the financial statements.
(iv) Exceptions. Any matters to which the accountant takes exception
shall be clearly identified, the exception thereto specifically and
clearly stated, and, to the extent practicable, the effect of the
matters to which the accountant takes exception on the related financial
statements given. The matters to which the accountant takes exception
shall be further identified as to (A) those that are the result of DOL
regulations and (B) all others.
(c) Electronic filing. See Sec. 2520.104a-2 and the instructions
for the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' for
electronic filing requirements. The trust or other entity described in
Sec. 2520.104-43(b) filing under this section must maintain an original
copy, with all required signatures, as part of its records.
[43 FR 10140, Mar. 10, 1978, as amended at 54 FR 8627, Mar. 1, 1989; 65
FR 21080, Apr. 19, 2000; 71 FR 41368, July 21, 2006]
Sec. 2520.103-3 Exemption from certain annual reporting
requirements for assets held in a common or collective trust.
(a) General. Under the authority of sections 103(b)(3)(G),
103(b)(4), 104(a)(2)(B), 104(a)(3), 110 and 505 of the Act, a plan whose
assets are held in whole or in part in a common or collective trust
maintained by a bank, trust company, or similar institution which meets
the requirements of paragraph (b) of this section shall include as part
of the annual report required to be filed under Sec. 2520.104a-5 or
Sec. 2520.104a-6 the information described in paragraph (c) of this
section. Such plan is not required to include in its annual report
information concerning the individual transactions of the common or
collective trust. This exemption has no application to assets not held
in such trusts.
(b) Application. This provision applies only to a plan some or all
of the assets of which are held in a common or collective trust
maintained by a bank, trust company, or similar institution regulated
and supervised and subject to periodic examination by a State or Federal
agency. For purposes of this section,
(1) A common or collective trust is a trust which consists of the
assets of two or more participating entities and is maintained for the
collective investment and reinvestment of assets contributed thereto,
and
(2) Plans maintained by a single employer or by the members of a
controlled group of corporations, as defined in section 1563(a) of the
Internal Revenue Code of 1954, shall be deemed to be a single
participating entity.
(c) Contents. (1) A plan which meets the requirements of paragraph
(b) of this section, and which invests in a common or collective trust
that files a Form 5500 report in accordance with Sec. 2520.103-9, shall
include in its annual
[[Page 196]]
report: information required by the instructions to Schedule H
(Financial Information) or Schedule I (Financial Information--Small
Plan) about the current value of and net investment gain or loss
relating to the units of participation in the common or collective trust
held by the plan; identifying information about the common or collective
trust including its name, employer identification number, and any other
information required by the instructions to the Schedule D (DFE/
Participating Plan Information); and such other information as is
required in the separate statements and schedules of the annual report
about the value of the plan's units of participation in the common or
collective trust and transactions involving the acquisition and
disposition by the plan of units of participation in the common or
collective trust.
(2) A plan which meets the requirements of paragraph (b) of this
section, and which invests in a common or collective trust that does not
file a Form 5500 report in accordance with Sec. 2520.103-9, shall
include in its annual report: information required by the instructions
to Schedule H (Financial Information) or Schedule I (Financial
Information--Small Plan) about the current value of the plan's allocable
portion of the underlying assets and liabilities of the common or
collective trust and the net investment gain or loss relating to the
units of participation in the common or collective trust held by the
plan; identifying information about the common or collective trust
including its name, employer identification number, and any other
information required by the instructions to the Schedule D (DFE/
Participating Plan Information); and such other information as is
required in the separate statements and schedules of the annual report
about the value of the plan's units of participation in the common or
collective trust and transactions involving the acquisition and
disposition by the plan of units of participation in the common or
collective trust.
[43 FR 10140, Mar. 10, 1978, as amended at 65 FR 21081, Apr. 19, 2000]
Sec. 2520.103-4 Exemption from certain annual reporting requirements
for assets held in an insurance company pooled separate account.
(a) General. Under the authority of sections 103(b)(3)(G),
103(b)(4), 104(a)(2)(B), 104(a)(3), 110 and 505 of the Act, a plan whose
assets are held in whole or in part in a pooled separate account of an
insurance carrier which meets the requirements of paragraph (b) of this
section shall include as part of the annual report required to be filed
under Sec. 2520.104a-5 or Sec. 2520.104a-6 the information described
in paragraph (c) of this section. Such plan is not required to include
in its annual report information concerning the individual transactions
of the pooled separate account. This exemption has no application to
assets not held in such a pooled separate account.
(b) Application. This provision applies only to a plan some or all
of the assets of which are held in a pooled separate account of an
insurance carrier regulated and supervised and subject to periodic
examination by a State agency. For purposes of this section, (1) a
pooled separate account is an account which consists of the assets of
two or more participating entities and is maintained for the collective
investment and reinvestment of assets contributed thereto, and (2) plans
maintained by a single employer or by members of a controlled group of
corporations, as defined in section 1563(a) of the Internal Revenue Code
of 1954, shall be deemed to be a single participating entity.
(c) Contents. (1) A plan which meets the requirements of paragraph
(b) of this section, and which invests in a pooled separate account that
files a Form 5500 report in accordance with Sec. 2520.103-9, shall
include in its annual report: information required by the instructions
to Schedule H (Financial Information) or Schedule I (Financial
Information--Small Plan) about the current value of, and net investment
gain or loss relating to, the units of participation in the pooled
separate account held by the plan; identifying information about the
pooled separate account including its name, employer identification
number, and any other information required by the instructions to
[[Page 197]]
the Schedule D (DFE/Participating Plan Information); and such other
information as is required in the separate statements and schedules of
the annual report about the value of the plan's units of participation
in the pooled separate accounts and transactions involving the
acquisition and disposition by the plan of units of participation in the
pooled separate account.
(2) A plan which meets the requirements of paragraph (b) of this
section, and which invests in a pooled separate account that does not
file a Form 5500 report in accordance with Sec. 2520.103-9, shall
include in its annual report: information required by the instructions
to Schedule H (Financial Information) or Schedule I (Financial
Information--Small Plan) about the current value of the plan's allocable
portion of the underlying assets and liabilities of the pooled separate
account and the net investment gain or loss relating to the units of
participation in the pooled separate account held by the plan;
identifying information about the pooled separate account including its
name, employer identification number, and any other information required
by the instructions to the Schedule D (DFE/Participating Plan
Information); and such other information as is required in the separate
statements and schedules of the annual report about the value of the
plan's units of participation in the pooled separate account and
transactions involving the acquisition and disposition by the plan of
units of participation in the pooled separate account.
[43 FR 10140, Mar. 10, 1978, as amended at 65 FR 21081, Apr. 19, 2000]
Sec. 2520.103-5 Transmittal and certification of information to plan
administrator for annual reporting purposes.
(a) General. In accordance with section 103(a)(2) of the Act, an
insurance carrier or other organization which provides benefits under
the plan or holds plan assets, a bank or similar institution which holds
plan assets, or a plan sponsor shall transmit and certify such
information as needed by the administrator to file the annual report
under section 104(a)(1) of the Act and Sec. 2520.104a-5, Sec.
2520.104a-6, or Sec. 2520.104a-9:
(1) Within 9 months after the close of the plan year which begins in
1975 or September 30, 1976, whichever is later, and
(2) Within 120 days after the close of any plan year which begins
after December 31, 1975.
(b) Application. This requirement applies with respect to--
(1) An insurance carrier or other organization which:
(i) Provides from its general asset account funds for the payment of
benefits under a plan, or
(ii) Holds assets of a plan in a separate account;
(2) A bank, trust company, or similar institution which holds assets
of a plan in a common or collective trust, separate trust, or custodial
account; and
(3) A plan sponsor as defined in section 3(16)(B) of the Act.
(c) Contents. The information required to be provided to the
administrator shall include--
(1) In the case of an insurance carrier or other organization which:
(i) Provides funds from its general asset account for the payment of
benefits under a plan, upon request of the plan administrator, such
information as is contained within the ordinary business records of the
insurance carrier or other organization and is needed by the plan
administrator to comply with the requirements of section 104(a)(1) of
the Act and Sec. 2520.104a-5 or Sec. 2520.104a-6;
(ii) Holds assets of a plan in a pooled separate account and files a
Form 5500 report pursuant to Sec. 2520.103-9 for the participating
plan's plan year--
(A) A copy of the annual statement of assets and liabilities of the
separate account for the fiscal year of such account ending with or
within the plan year for which the participating plan's annual report is
made,
(B) A statement of the value of the plan's units of participation in
the separate account,
(C) The Employer Identification Number (EIN) of the separate
account, entity number required for purposes of completing the Form 5500
and any other identifying number assigned by
[[Page 198]]
the insurance carrier to the separate account,
(D) A statement that a filing pursuant to Sec. 2520.103-9(c) will
be made for the separate account (for its fiscal year ending with or
within the participating plan's plan year) on or before the filing due
date for such account in accordance with the Form 5500 instructions, and
(E) Upon request of the plan administrator, any other information
that can be obtained from the ordinary business records of the insurance
carrier and that is needed by the plan administrator to comply with the
requirements of section 104(a)(1) of the Act and Sec. 2520.104a-5 or
Sec. 2520.104a-6;
(iii) Holds assets of a plan in a pooled separate account and does
not file a Form 5500 report pursuant to Sec. 2520.103-9 for the
participating plan's plan year--
(A) A copy of the annual statement of assets and liabilities of the
separate account for the fiscal year of such account that ends with or
within the plan year for which the participating plan's annual report is
made,
(B) A statement of the value of the plan's units of participation in
the separate account,
(C) The EIN of the separate account and any other identifying number
assigned by the insurance carrier to the separate account,
(D) A statement that a filing pursuant to Sec. 2520.103-9(c) will
not be made for the separate account for its fiscal year ending with or
within the participating plan's plan year, and
(E) Upon request of the plan administrator, any other information
that can be obtained from the ordinary business records of the insurance
carrier and that is needed by the plan administrator to comply with the
requirements of section 104(a)(1) of the Act and Sec. 2520.104a-5 or
Sec. 2520.104a-6.
(iv) Holds assets of a plan in a separate account which is not
exempted from certain reporting requirements under Sec. 2520.103-4, a
listing of all transactions of the separate account and, upon request of
the plan administrator, such information as is contained within the
ordinary business records of the insurance carrier and is needed by the
plan administrator to comply with the requirements of section 104(a)(1)
of the Act and Sec. 2520.104a-5 or Sec. 2520.104a-6.
(2) In the case of a bank, trust company, or similar institution
holding assets of a plan--
(i) In a common or collective trust that files a Form 5500 report
pursuant to Sec. 2520.103-9 for the participating plan's plan year--
(A) A copy of the annual statement of assets and liabilities of the
common or collective trust for the fiscal year of such trust ending with
or within the plan year for which the participating plan's annual report
is made,
(B) A statement of the value of the plan's units of participation in
the common or collective trust,
(C) The EIN of the common or collective trust, entity number
assigned for purposes of completing the Form 5500 and any other
identifying number assigned by the bank, trust company, or similar
institution,
(D) A statement that a filing pursuant to Sec. 2520.103-9(c) will
be made for the common or collective trust (for its fiscal year ending
with or within the participating plan's plan year) on or before the
filing due date for such trust in accordance with the Form 5500
instructions, and
(E) Upon request of the plan administrator, any other information
that can be obtained from the ordinary business records of the bank,
trust company or similar institution and that is needed by the plan
administrator to comply with the requirements of section 104(a)(1) of
the Act and Sec. 2520.104a-5 or Sec. 2520.104a-6.
(ii) In a common or collective trust that does not file a Form 5500
report pursuant to Sec. 2520.103-9 for the participating plan's plan
year--
(A) A copy of the annual statement of assets and liabilities of the
common or collective trust for the fiscal year of such account that ends
with or within the plan year for which the participating plan's annual
report is made,
(B) A statement of the value of the plan's units of participation in
the common or collective trust,
(C) The EIN of the common or collective trust and any other
identifying number assigned by the bank, trust company or similar
institution,
[[Page 199]]
(D) A statement that a filing pursuant to Sec. 2520.103-9(c) will
not be made for the common or collective trust for its fiscal year
ending with or within the participating plan's plan year, and
(E) Upon request of the plan administrator, any other information
that can be obtained from the ordinary business records of the bank,
trust company or similar institution and that is needed by the plan
administrator to comply with the requirements of section 104(a)(1) of
the Act and Sec. 2520.104a-5 or Sec. 2520.104a-6.
(iii) In a trust which is not exempted from certain reporting
requirements under Sec. 2520.103-3, a listing of all transactions of
the separate trust and, upon request of the plan administrator, such
information as is contained within the ordinary business records of the
bank, trust company, or similar institution and is needed by the plan
administrator to comply with the requirements of section 104(a)(1) of
the Act and Sec. 2520.104a-5.
(iv) In a custodial account, upon request of the plan administrator,
such information as is contained within the ordinary business records of
the bank, trust company, or similar institution and is needed by the
plan administrator to comply with the requirements of section 104(a)(1)
of the Act and Sec. 2520.104a-5 or Sec. 2520.104a-6.
(3) In the case of a plan sponsor, a listing of all transactions
directly or indirectly involving plan assets engaged in by the plan
sponsor and such information as is needed by the plan administrator to
comply with the requirements of section 104(a)(1) of the Act and Sec.
2520.104a-5 or Sec. 2520.104a-6.
(d) Certification. (1) An insurance carrier or other organization, a
bank, trust company, or similar institution, or plan sponsor, as
described in paragraph (b) of this section, shall certify to the
accuracy and completeness of the information described in paragraph (c)
of this section by a written declaration which is signed by a person
authorized to represent the insurance carrier, bank, or plan sponsor.
Such certification will serve as a written assurance of the truth of the
facts stated therein.
(2) Example of Certification. The XYZ Bank (Insurance Carrier)
hereby certifies that the foregoing statement furnished pursuant to 29
CFR 2520.103-5(c) is complete and accurate.
[43 FR 10140, Mar. 10, 1978, as amended at 65 FR 21082, Apr. 19, 2000;
88 FR 11811, Feb. 24, 2023]
Sec. 2520.103-6 Definition of reportable transaction for Annual
Return/Report.
(a) General. For purposes of preparing the schedule of reportable
transactions described in Sec. 2520.103-10(b)(6), and subject to the
exceptions provided in Sec. Sec. 2520.103-3, 2520.103-4 and 2520.103-
12, with respect to individual transactions by a common or collective
trust, pooled separate account, or a 103-12 investment entity, a
reportable transaction includes any transaction or series of
transactions described in paragraph (c) of this section.
(b) Definitions. (1)(i) Except as provided in paragraphs (c)(2) and
(d)(1)(vi) of this section (relating to assets acquired or disposed of
during the plan year), ``current value'' shall mean the current value,
as defined in section 3(26) of the Act, of plan assets as of the
beginning of the plan year, or the end of the previous plan year.
(ii) Except as provided in paragraphs (c)(2) and (d)(1)(vi) of this
section (relating to assets acquired or disposed of during the plan
year), with respect to schedules of reportable transactions for the
initial plan year of a plan, ``current value'' shall mean the current
value, as defined in section 3(26) of the Act, of plan assets at the end
of a plan's initial plan year.
(2)(i) A ``transaction with respect to securities'' is any purchase,
sale, or exchange of securities. A transaction with respect to
securities for purposes of this section occurs on either the trade date
or settlement date of a purchase, sale, or exchange of securities;
either the trade date or settlement date must be used consistently
during the plan year for the purposes of this section. For the purposes
of this section, except as provided in paragraph (b)(2)(ii) of this
section, ``securities'' includes a unit of participation in a common or
collective trust or a pooled separate account.
[[Page 200]]
(ii) Solely for purposes of paragraph (c)(1)(iv) of this section,
the term ``securities'', as it applies to any transaction involving a
bank or insurance company regulated by a Federal or State agency, an
investment company registered under the Investment Company Act of 1940,
or a broker-dealer registered under the Securities Exchange Act of 1934,
shall not include:
(A) Debt obligations of the United States or any United States
agency with a maturity of not more than one year;
(B) Debt obligations of the United States or any United States
agency with a maturity of more than one year if purchased or sold under
a repurchase agreement having a term of less than 91 days;
(C) Interests issued by a company registered under the Investment
Company Act of 1940;
(D) Bank certificates of deposit with a maturity of not more than
one year;
(E) Commercial paper with a maturity of not more than nine months if
it is ranked in the highest rating category for commercial paper by at
least two nationally recognized statistical rating services and is
issued by a company required to file reports under section 13 of the
Securities Exchange Act of 1934;
(F) Participations in a bank common or collective trust;
(G) Participations in an insurance company pooled separate account;
(3)(i) Except as provided by paragraph (b)(3)(ii) of this section, a
transaction is ``with or in conjunction with a person'' for purposes of
this section if that person benefits from, executes, facilitates,
participates, promotes, or solicits a transaction or part of a
transaction involving plan assets.
(ii) Solely for the purposes of paragraph (c)(1)(iv) of this
section, a transaction shall not be considered ``with or in conjunction
with a person'' if:
(A) That person is a broker-dealer registered under the Securities
Exchange Act of 1934;
(B) The transaction involves the purchase or sale of securities
listed on a national securities exchange registered under section 6 of
the Securities Exchange Act of 1934 or quoted on NASDAQ; and
(C) The broker-dealer does not purchase or sell securities involved
in the transaction for its own account or the account of an affiliated
person.
(c) Application. (1) Except as provided in paragraph (c)(4) of this
section, this provision applies to--
(i) A transaction within the plan year, with respect to any plan
asset, involving an amount in excess of 3 percent of the current value
of plan assets;
(ii) Any series of transactions (other than transactions with
respect to securities) within the plan year with or in conjunction with
the same person which, when aggregated, regardless of the category of
asset and the gain or loss on any transaction, involves an amount in
excess of 3 percent of the current value of plan assets;
(iii) Any transaction within the plan year involving securities of
the same issue if within the plan year any series of transactions with
respect to such securities, when aggregated, involves an amount in
excess of 3 percent of the current value of plan assets; and
(iv) Any transaction within the plan year with respect to securities
with or in conjunction with a person if any prior or subsequent single
transaction within the plan year with such person with respect to
securities exceeds 3 percent of the current value of plan assets.
(2) For purposes of determining whether any 3 percent transactions
occur, the ``current value'' of an asset acquired or disposed of during
the plan year is the current value, as defined in section 3(26) of the
Act, at the time of acquisition or disposition of such asset.
(3) Plans whose assets are held in whole or in part in a common or
collective trust or a pooled separate account, as provided in Sec. Sec.
2520.103-3 and 2520.103-4, and which satisfy the requirements of those
sections, are not required to prepare schedules of reportable
transactions with respect to the individual transactions of the common
or collective trust or pooled separate account.
(4) For plan years beginning on or after January 1, 1988, 5 percent
shall be substituted for 3 percent in paragraphs (c)(1) and (2) of this
section for purposes of determining whether a transaction or series of
transactions constitutes a reportable transaction under this section.
[[Page 201]]
(d) Contents. (1) The schedule of transactions shall include the
following information as to each transaction or series of transactions:
(i) The name of each party, except that in the case of a transaction
or series of transactions involving a purchase or sale of a security on
the market, the schedule need not include the person from whom it was
purchased or to whom it was sold. A purchase or sale on the market is a
purchase or sale of a security through a registered broker-dealer acting
as a broker under the Securities Exchange Act of 1934;
(ii) A brief description of each asset;
(iii) The purchase or selling price in the case of a purchase or
sale, the rental in the case of a lease, and the amount of principal,
interest rate, payment schedule (e.g., fully amortized, partly amortized
with balloon) and maturity date in the case of a loan;
(iv) Expenses incurred, including, but not limited to, any fees or
commissions;
(v) The cost of any asset;
(vi) The current value of any asset acquired or disposed of at the
time of acquisition or disposition; and
(vii) The net gain or loss.
(2) The schedule of transactions with respect to a series of
transactions described in paragraph (c)(1)(iii) may include the
following information for each issue in lieu of the information
prescribed in paragraphs (d)(1)(i) through (vii):
(i) The total number of purchases of such securities made by the
plan within the plan year;
(ii) The total number of sales of such securities made by the plan
within the plan year;
(iii) The total dollar value of such purchases;
(iv) The total dollar value of such sales;
(v) The net gain or loss as a result of these transactions.
(e) Examples. These examples are effective for reporting for plan
years beginning on or after January 1, 1988.
(1) At the beginning of the plan year, XYZ plan has 10 percent of
the current value of its plan assets invested in ABC common stock.
Halfway through the plan year, XYZ purchases ABC common stock in a
single transaction in an amount equal to 6 percent of the current value
of plan assets. At about this time, XYZ plan also purchases a commercial
development property in an amount equal to 8 percent of the current
value of plan assets. Under paragraph (c)(1)(i) of this section, the 6
percent stock transaction is a reportable transaction for the plan year
because it exceeds 5 percent of the current value of plan assets. The 8
percent land transaction is also reportable under paragraph (c)(1)(i) of
this section because it exceeds 5 percent of the current value of plan
assets.
(2) During the plan year, AAA plan purchases a commercial lot from
ZZZ corporation at a cost equal to 2 percent of the current value of the
plan assets. Two months later, AAA plan loans ZZZ corporation an amount
of money equal to 3.5 percent of the current value of plan assets. Under
the provisions of paragraph (c)(1)(ii) of this section, the plan has
engaged in a reportable series of transactions with or in conjunction
with the same person, ZZZ corporation, which when aggregated involves
5.5 percent of plan assets.
(3) During the plan year NMN plan sells to OPO corporation a
commercial property that represents 3.5 percent of the current value of
plan assets. OPO simultaneously executes a note and mortgage on the
purchased property to NMN which represents 3 percent of the current
value of plan assets. Under the provisions of paragraph (c)(1)(ii) of
this section, NMN has engaged in a reportable series of transactions
with or in conjunction with the same person, OPO corporation, consisting
of a simultaneous sale of property and a loan, which, when aggregated,
involves 6.5 percent of the current value of plan assets.
(4) At the beginning of the plan year, ABC plan has 10 percent of
the current value of plan assets invested equally in a combination of
XYZ Corporation common stock and XYZ preferred stock. One month into the
plan year, ABC sells some of its XYZ common stock in an amount equal to
2 percent of the current value of plan assets.
(i) Six weeks later the plan sells XYZ preferred stock in an amount
equal to 4 percent of the current value of plan
[[Page 202]]
assets. A reportable series of transactions has not occurred because
only transactions involving securities of the same issue are to be
aggregated under paragraph (c)(1)(iii) of this section.
(ii) Two weeks later when the ABC plan purchases XYZ common stock in
an amount equal to 3.5 percent of the current value of plan assets, a
reportable series of transactions under paragraph (c)(1)(iii) of this
section has occurred. The sale of XYZ common stock worth 2 percent of
plan assets and the purchase of XYZ common stock worth 3.5 percent of
plan assets aggregate to exceed 5 percent of the total value of plan
assets.
(5) At the beginning of the plan year, Plan X purchases through
broker-dealer Y common stock of Able Industries in an amount equal to 6
percent of plan assets. The common stock of Able Industries is not
listed on any national securities exchange or quoted on NASDAQ. This
purchase is a reportable transaction under paragraph (c)(1)(i) of this
section. Three months later, Plan X purchases short term debt
obligations of Charley Company through broker-dealer Y in the amount of
0.2 percent of plan assets. This purchase is also a reportable
transaction under the provisions of paragraph (c)(1)(iv) of this
section.
(6) At the beginning of the plan year, Plan X purchases from Bank B
certificates of deposit having a 180 day maturity in an amount equal to
6 percent of plan assets. Bank B is a national bank regulated by the
Comptroller of the Currency. This purchase is a reportable transaction
under paragraph (c)(1)(i) of this section. Three months later, Plan X
purchases through Bank B 91-day Treasury bills in the amount of 0.2
percent of plan assets. This purchase is not a reportable transaction
under paragraph (c)(1)(iv) of this section because the purchase of the
Treasury bills as well as the purchase of the certificates of deposit
are not considered to involve a security under the definition of
``securities'' in paragraph (b)(2)(ii) of this section.
(7) At the beginning of the plan year, Plan X purchases through
broker-dealer Y common stock of Able Industries, a New York Stock
Exchange listed security, in an amount equal to 6 percent of plan
assets. This purchase is a reportable transaction under paragraph
(c)(1)(i) of this section. Three months later, Plan X purchases through
broker-dealer Y, acting as agent, common stock of Baker Corporation,
also a New York Stock Exchange listed security, in an amount equal to
0.2 percent of plan assets. This latter purchase is not a reportable
transaction under paragraph (c)(1)(iv) of this section because it is not
a transaction ``with or in conjunction with a person'' pursuant to
paragraph (b)(3)(ii) of this section.
(f) Special rule for certain participant-directed transactions.
Participant or beneficiary directed transactions under an individual
account plan shall not be taken into account under paragraph (c)(1) of
this section for purposes of preparing the schedule of reportable
transactions described in this section. For purposes of this section
only, a transaction will be considered directed by a participant or
beneficiary if it has been authorized by such participant or
beneficiary.
[43 FR 10140, Mar. 10, 1978; 43 FR 14009, Apr. 4, 1978, as amended at 54
FR 8628, Mar. 1, 1989; 61 FR 33849, July 1, 1996; 65 FR 21082, Apr. 19,
2000]
Sec. 2520.103-8 Limitation on scope of accountant's examination.
(a) General. Under the authority of section 103(a)(3)(C) of the Act,
the examination and report of an independent qualified public accountant
need not extend to any statement or information prepared and certified
by a bank or similar institution or insurance carrier. A plan, trust or
other entity which meets the requirements of paragraph (b) of this
section is not required to have covered by the accountant's examination
or report any of the information described in paragraph (c) of this
section.
(b) Application. This section applies to any plan, trust or other
entity some or all of the assets of which are held by a bank or similar
institution or insurance carrier which is regulated and supervised and
subject to periodic examination by a State or Federal agency.
(c) Excluded information. Any statements or information certified to
by a bank or similar institution or insurance carrier described in
paragraph (b)
[[Page 203]]
of this section, provided that the statements or information regarding
assets so held are prepared and certified to by the bank or insurance
carrier in accordance with Sec. 2520.103-5.
Sec. 2520.103-9 Direct filing for bank or insurance carrier trusts
and accounts.
(a) General. Under the authority of sections 103(b)(4), 104(a)(3),
110 and 505 of the Act, an employee benefit plan, some or all of the
assets of which are held in a common or collective trust or a pooled
separate account described in section 103(b)(3)(G) of the Act and
Sec. Sec. 2520.103-3 and 2520.103-4, is relieved from including in its
annual report information about the current value of the plan's
allocable portion of assets and liabilities of the common or collective
trust or pooled separate account and information concerning the
individual transactions of the common or collective trust or pooled
separate account, provided that the plan meets the requirements of
paragraph (b) of this section, and, provided further, that the bank or
insurance carrier which holds the plan's assets meets the requirements
of paragraph (c) of this section.
(b) Application. A plan whose assets are held in a common or
collective trust or a pooled separate account described in section
103(b)(3)(G) of the Act and Sec. Sec. 2520.103-3 and 2520.103-4,
provided the plan administrator, on or before the end of the plan year,
provides the bank or insurance carrier which maintains the common or
collective trust or pooled separate account with the plan number, and
name and Employer Identification Number of the plan sponsor as will be
reported on the plan's annual report.
(c) Separate filing by common or collective trusts and pooled
separate accounts. The bank or insurance carrier which maintains the
common or collective trust or pooled separate account in which assets of
the plan are held shall file, in accordance with the instructions for
the form, a completed Form 5500 ``Annual Return/Report of Employee
Benefit Plan'' and any statements or schedules required to be attached
to the form for the common or collective trust or pooled separate
account, including Schedule D (DFE/Participating Plan Information) and
Schedule H (Financial Information). See the instructions for this form.
The information reported shall be for the fiscal year of such trust or
account ending with or within the plan year for which the annual report
of the plan is made.
(d) Electronic filing. See Sec. 2520.104a-2 and the instructions
for the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' for
electronic filing requirements. The bank or insurance company which
maintains the common or collective trust or pooled separate account must
maintain an original copy, with all required signatures, as part of its
records.
[65 FR 21082, Apr. 19, 2000, as amended at 71 FR 41368, July 21, 2006]
Sec. 2520.103-10 Annual report financial schedules.
(a) General. The administrator of a plan filing an annual report
pursuant to Sec. 2520.103-1(a)(2), the report for a group insurance
arrangement pursuant to Sec. 2520.103-2, or the report for a defined
contribution group (DCG) reporting arrangement pursuant to Sec.
2520.103-14, shall, as provided in the instructions to the Form 5500
``Annual Return/Report of Employee Benefit Plan,'' include as part of
the report the separate financial schedules described in paragraph (b)
of this section.
(b) Schedules--(1) Assets held for investment. (i) A schedule of all
assets held for investment purposes at the end of the plan year (see
Sec. 2520.103-11) with assets aggregated and identified by:
(A) Identity of issue, borrower, lessor or similar party to the
transaction (including a notation as to whether such party is known to
be a party in interest);
(B) Description of investment including maturity date, rate of
interest, collateral, par, or maturity value;
(C) Cost; and
(D) Current value, and, in the case of a loan, the payment schedule.
(ii) Except as provided in the Form 5500 and the instructions
thereto, in the case of assets or investment interests of two or more
plans maintained in one trust, all entries on the schedule of assets
held for investment purposes
[[Page 204]]
that relate to the trust shall be completed by including the plan's
allocable portion of the trust.
(2) Assets acquired and disposed within the plan year. (i) A
schedule of all assets acquired and disposed of within the plan year
(see Sec. 2520.103-11) with assets aggregated and identified by:
(A) Identity of issue, borrower, issuer or similar party;
(B) Descriptions of investment including maturity date, rate of
interest, collateral, par, or maturity value;
(C) Cost of acquisitions; and
(D) Proceeds of dispositions.
(ii) Except as provided in the Form 5500 and the instructions
thereto, in the case of assets or investment interests of two or more
plans maintained in one trust, all entries on the schedule of assets
held for investment purposes that relate to the trust shall be completed
by including the plan's allocable portion of the trust.
(3) Party in interest transactions. A schedule of each transaction
involving a person known to be a party in interest except do not
include:
(i) A transaction to which a statutory exemption under part 4 of
title I applies;
(ii) A transaction to which an administrative exemption under
section 408(a) of the Act applies; or
(iii) A transaction to which the exemptions of section 4975(c) or
4975(d) of the Internal Revenue Code (Title 26 of the United States
Code) applies.
(4) Obligations in default. A schedule of all loans or fixed income
obligations which were in default as of the end of the plan year or were
classified during the year as uncollectible.
(5) Leases in default. A schedule of all leases which were in
default or were classified during the year as uncollectible.
(6) Reportable transactions. A schedule of all reportable
transactions as defined in Sec. 2520.103-6.
(c) Presentation of investment assets in commingled trusts and
direct filing entities (DFEs). (1) Except as provided in the Form 5500
and the instructions thereto or for filings by direct filing entities
(including DCG reporting arrangements), in the case of assets or
investment interests of two or more plans maintained in one trust,
entries on the schedule of assets held for investment purposes at the
end of the plan year and the schedule of assets acquired and disposed of
during the plan year shall be completed by including the plan's
allocable portion of the trust.
(2) In the case of direct filing entities (including DCG reporting
arrangements) required to file a schedule of assets held for investment
purposes at the end of the plan year and the schedule of assets acquired
and disposed of during the plan year, the entries on the schedules shall
be completed by including the assets held by the DFE or held in the DCG
reporting arrangement's trust or trusts for the individual plans that
report in the DCG, and shall include the number of plans with an
allocable interest in each listed investment.
(d) Format requirements for certain schedules. See the instructions
to the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' as to
the format requirement for the schedules referred to in paragraphs
(b)(1), (b)(2) or (b)(6) of this section.
[65 FR 21083, Apr. 19, 2000, as amended at 88 FR 11811, Feb. 24, 2023]
Sec. 2520.103-11 Assets held for investment purposes.
(a) General. For purposes of preparing the schedule of assets held
for investment purposes described in Sec. 2520.103-10(b)(1) and (2),
assets held for investment purposes include those assets described in
paragraph (b) of this section.
(b) Definitions. (1) Assets held for investment purposes shall
include:
(i) Any investment asset held by the plan on the last day of the
plan year; and
(ii) Any investment asset which was purchased at any time during the
plan year and was sold at any time before the last day of the plan year,
except as provided by paragraphs (b)(2) and (b)(3) of this section.
(2) Assets held for investment purposes shall not include any
investment which was not held by the plan on the last day of the plan
year for which the annual report is filed if that investment falls
within any of the following categories:
[[Page 205]]
(i) Debt obligations of the United States or any agency of the
United States;
(ii) Interests issued by a company registered under the Investment
Company Act of 1940;
(iii) Bank certificates of deposit with a maturity of not more than
one year;
(iv) commercial paper with a maturity of not more than nine months
if it is ranked in the highest rating category by at least two
nationally recognized statistical rating services and is issued by a
company required to file reports with the Securities and Exchange
Commission under section 13 of the Securities Exchange Act of 1934;
(v) Participations in a bank common or collective trust;
(vi) Participations in an insurance company pooled separate account;
(vii) Securities purchased from a person registered as a broker-
dealer under the Securities Exchange Act of 1934 and listed on a
national securities exchange registered under section 6 of the
Securities Exchange Act of 1934 or quoted on NASDAQ;
(3) Assets held for investment purposes shall not include any
investment which was not held by the plan on the last day of the plan
year for which the annual report is filed if that investment is reported
on the annual report of that same plan in any of the following:
(i) The schedule of each transaction involving a person known to be
a party in interest required by section 103(b)(3)(D) of the Act and
Sec. 2520.103-10(b)(3);
(ii) The schedule of loans or fixed income obligations in default
required by section 103(b)(3)(E) of the Act and Sec. 2520.103-10(b)(4);
(iii) The schedule of leases in default or classified as
uncollectible required by section 103(b)(3)(F) of the Act and Sec.
2520.103-10(b)(5); or
(iv) The schedule of reportable transactions required by section
103(b)(3)(H) of the Act and Sec. 2520.103-10(b)(6).
(c) Examples. (1) On February 1, 1977, plan N purchases an interest
in registered investment company F (fund F). Fund F is not a party in
interest with respect to plan N. On November 1, 1977, plan N sells this
interest in fund F and purchases 1,000 shares of stock S, which the plan
holds for the rest of the plan year. Plan N must include in its schedule
of assets held for investment purposes the 1,000 shares of stock S under
paragraph (b)(1) of this section, but need not include the interest in
fund F because of paragraph (b)(2)(ii) of this section.
(2) On February 1, 1977, plan N purchases a parcel of real estate
from Mr. M, who is not a party in interest with respect to plan N. On
November 1, 1977, plan N sells the parcel of real estate for cash to Mr.
X, who is not a party in interest with respect to plan N. Plan N uses
the cash from this transaction to purchase a 1-year certificate of
deposit in bank B, which it holds until maturity in 1978. Plan N must
include in its schedule of assets held for investment purposes the 1-
year certificate of deposit in bank B under paragraph (b)(1)(i) of this
section, and must also include the parcel of real estate under paragraph
(b)(1)(ii) of this section.
(d) Special rule for certain participant-directed transactions. Cost
information may be omitted from the schedule of assets held for
investment purposes for assets described in paragraphs (b)(1)(i) and
(b)(1)(ii) of this section only with respect to participant or
beneficiary directed transactions under an individual account plan. For
purposes of this section only, a transaction will be considered directed
by a participant or beneficiary if it has been authorized by such
participant or beneficiary.
[43 FR 10140, Mar. 10, 1978, as amended at 65 FR 21083, Apr. 19, 2000]
Sec. 2520.103-12 Limited exemption and alternative method of compliance
for annual reporting of investments in certain entities.
(a) This section prescribes an exemption from and alternative method
of compliance with the annual reporting requirements of part 1 of title
I of ERISA for employee benefit plans whose assets are invested in
certain entities described in paragraph (c). A plan utilizing this
method of reporting shall include as part of its annual report the
current value of its investment or units of participation in the entity
in the manner prescribed by the Return/Report Form and the instructions
[[Page 206]]
thereto. The plan is not required to include in its annual report any
information regarding the underlying assets or individual transactions
of the entity, provided the information described in paragraph (b)
regarding the entity is reported directly to the Department on behalf of
the plan administrator on or before the filing due date for the entity
in accordance with the instructions to the Form 5500 Annual Return/
Report. The information described in paragraph (b), however, shall be
considered as part of the annual report for purposes of the requirements
of section 104(a)(1) of the Act and Sec. Sec. 2520.104a-5 and
2520.104a-6.
(b) The following information must be filed regarding the entity
described in paragraph (c) of this section:
(1) A Form 5500 ``Annual Return/Report of Employee Benefit Plan''
and any statements or schedules required to be attached to the form for
such entity, completed in accordance with the instructions for the form,
including Schedule A (Insurance Information), Schedule C (Service
Provider Information), Schedule D (DFE/Participating Plan Information),
Schedule G (Financial Transaction Schedules), Schedule H (Financial
Information), and the schedules described in Sec. 2520.103-10(b)(1) and
(b)(2). See the instructions for this form. The information reported
shall be for the fiscal year of such entity ending with or within the
plan year for which the annual report of the plan is made.
(2) A report of an independent qualified public accountant regarding
the financial statements and schedules described in paragraph (b)(1) of
this section which meets the requirements of Sec. 2520.103-1(b)(5).
(c) This method of reporting is available to any employee benefit
plan which has invested in an entity the assets of which are deemed to
include plan assets under Sec. 2510.3-101, provided the entity holds
the assets of two or more plans which are not members of a ``related
group'' of employee benefit plans as that term is defined in paragraph
(e) of this section. The method of reporting is not available for
investments in an insurance company pooled separate account or a common
or collective trust maintained by a bank, trust company, or similar
institution.
(d) The examination and report of an independent qualified public
accountant required by Sec. 2520.103-1 for a plan utilizing the method
of reporting described in this section need not extend to any
information concerning an entity which is reported directly to the
Department under paragraph (b) of this section.
(e) A ``related group'' of employee benefit plans consists of every
group of two or more employee benefit plans--
(1) Each of which receives 10 percent or more of its aggregate
contributions from the same employer or from members of the same
controlled group of corporations (as determined under section 1563(a) of
the Internal Revenue Code, without regard to section 1563(a)(4)
thereof); or
(2) Each of which is either maintained by, or maintained pursuant to
a collective bargaining agreement negotiated by, the same employee
organization or affiliated employee organizations. For purposes of this
paragraph, an ``affiliate'' of an employee organization means any person
controlling, controlled by, or under common control with such
organization, and includes any organization chartered by the same parent
body, or governed by the same constitution and bylaws, or having the
relation of parent and subordinate.
(f) Electronic filing. See Sec. 2520.104a-2 and the instructions
for the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' for
electronic filing requirements. The entity described in paragraph (c) of
this section must maintain an original copy, with all required
signatures, as part of its records.
[51 FR 41287, Nov. 13, 1986, as amended at 65 FR 21083, Apr. 19, 2000;
71 FR 41368, July 21, 2006]
Sec. 2520.103-13 Special terminal report for abandoned plans.
(a) General. The terminal report required to be filed by the
qualified termination administrator pursuant to Sec. 2578.1(d)(2)(viii)
of this chapter shall consist of the items set forth in paragraph (b) of
this section. Such report shall be filed in accordance with the
[[Page 207]]
method of filing set forth in paragraph (c) of this section and at the
time set forth in paragraph (d) of this section.
(b) Contents. The terminal report described in paragraph (a) of this
section shall contain:
(1) Identification information concerning the qualified termination
administrator and the plan being terminated.
(2) The total assets of the plan as of the date the plan was deemed
terminated under Sec. 2578.1(c) of this chapter, prior to any reduction
for termination expenses and distributions to participants and
beneficiaries.
(3) The total termination expenses paid by the plan and a separate
schedule identifying each service provider and amount received, itemized
by expense.
(4) The total distributions made pursuant to Sec. 2578.1(d)(2)(vii)
of this chapter and a statement regarding whether any such distributions
were transfers under Sec. 2578.1(d)(2)(vii)(B) of this chapter.
(5) The identification, fair market value and method of valuation of
any assets with respect to which there is no readily ascertainable fair
market value.
(c) Method of filing. The terminal report described in paragraph (a)
shall be filed:
(1) On the most recent Form 5500 available as of the date the
qualified termination administrator satisfies the requirements in Sec.
2578.1(d)(2)(i) through Sec. 2578.1(d)(2)(vii) of this chapter; and
(2) In accordance with the Form's instructions pertaining to
terminal reports of qualified termination administrators.
(d) When to file. The qualified termination administrator shall file
the terminal report described in paragraph (a) within two months after
the end of the month in which the qualified termination administrator
satisfies the requirements in Sec. 2578.1(d)(2)(i) through Sec.
2578.1(d)(2)(vii) of this chapter.
(e) Limitation. (1) Except as provided in this section, no report
shall be required to be filed by the qualified termination administrator
under part 1 of title I of ERISA for a plan being terminated pursuant to
Sec. 2578.1 of this chapter.
(2) Filing of a report under this section by the qualified
termination administrator shall not relieve any other person from any
obligation under part 1 of title I of ERISA.
[71 FR 20853, Apr. 21, 2006]
Sec. 2520.103-14 Contents of the annual report for defined contribution
group (DCG) reporting arrangements.
(a) General. A defined contribution group reporting arrangement as
described in Sec. 2520.104-51(c) (``DCG reporting arrangement'' or
``DCG'') that files a consolidated annual report pursuant to Sec.
2520.104-51 shall include in such report the items set forth in
paragraph (b) of this section.
(b) Contents of the annual report for DCG reporting arrangement. (1)
A Form 5500 ``Annual Return/Report of Employee Benefit Plan'' and any
statements or schedules required to be attached to the form, completed
in accordance with the instructions for the form, including Schedule A
(Insurance Information), Schedule C (Service Provider Information),
Schedule D (DFE/Participating Plan Information), Schedule DCG
(Individual Plan Information), Schedule G (Financial Transaction
Schedules), Schedule H (Financial Information), and other applicable
financial schedules referred to in Sec. 2520.103-10, completed in
accordance with the instructions for the form.
(2) Where some or all of the assets of plans participating in the
DCG are held in a pooled separate account maintained by an insurance
carrier, or in a common or collective trust maintained by a bank, trust
company or similar institution, a copy of the annual statement of assets
and liabilities of such account or trust for the fiscal year of the
account or trust which ends with or within the plan year for which the
DCG's annual report is made is required to be furnished by such account
or trust under Sec. 2520.103-5(c). Although the statement of assets and
liabilities referred to in Sec. 2520.103-5(c) shall be considered part
of the DCG's consolidated annual report, such statement of assets and
liabilities need not be filed with the DCG's annual report. See
Sec. Sec. 2520.103-3 and 2520.103-4 for reporting requirements for
plans some or all of
[[Page 208]]
the assets of which are held in a pooled separate account maintained by
an insurance company, or a common or collective trust maintained by a
bank or similar institution; and see Sec. 2520.104-51(b)(2) for when
the term ``DCG reporting arrangement'' or ``DCG'' shall be used in place
of the term ``plan.''
(3)(i) Except for employee pension benefit plans that cover fewer
than 100 participants at the beginning of the plan year that meet the
conditions for being eligible for a waiver of the audit and accountant
opinion requirements in section 103(a)(3)(A) of the Act pursuant to
Sec. 2520.104-46, the Schedule DCG for each participating plan shall
include:
(A) A report of an independent qualified public accountant for the
participating plan that meets the requirements in Sec. 2520.103-
1(a)(5).
(B) Separate financial statements meeting the requirements of Sec.
2520.103-1(b)(2) if such financial statements and schedules are prepared
in order for the independent qualified public accountant to form the
opinion required by section 103(a)(3)(A) of the Act and this paragraph.
(C) Notes to the financial statements described in paragraph (b)(1)
or (b)(3)(i)(B) of this section, which contain the information set forth
in Sec. 2520.103-1(b)(3).
(ii) For purposes of this section, an employee pension benefit plan
described in Sec. 2520.103-1(d) will be treated as a plan that covers
fewer than 100 participants as of the beginning of the plan year.
(c) Electronic filing requirement. See Sec. 2520.104a-2 and the
instructions for the Form 5500 ``Annual Return/Report of Employee
Benefit Plan'' for electronic filing requirements. The common plan
administrator for each plan whose reporting obligations are satisfied by
a DCG filing under this section must maintain an original copy of the
DCG filing, with all required signatures, as part of each plan's
records. A single copy of the DCG consolidated Form 5500 filing, that
includes all schedules and attachments maintained by the common plan
administrator on behalf of all the plans will satisfy this requirement.
[88 FR 11811, Feb. 24, 2023, as amended at 88 FR 31610, May 18, 2023]
Subpart D_Provisions Applicable to Both Reporting and Disclosure
Requirements
(The information collection requirements contained in subpart D were
approved by the Office of Management and Budget under control number
1210-0016)
Sec. 2520.104-1 General.
The administrator of an employee benefit plan covered by part 1 of
title I of the Act must file reports and additional information with the
Secretary of Labor, and disclose reports, statements, and documents to
plan participants and to beneficiaries receiving benefits from the plan.
The regulations contained in this subpart are applicable to both the
reporting and disclosure requirements of part 1 of title I of the Act.
Regulations concerning only a plan administrator's duty of reporting to
the Secretary of Labor are set forth in subpart E of this part, and
those applicable only to the duty of disclosure to participants and
beneficiaries are set forth in subpart F of this part.
[41 FR 16962, Apr. 23, 1976]
Sec. Sec. 2520.104-2--2520.104-3 [Reserved]
Sec. 2520.104-4 Alternative method of compliance for certain
successor pension plans.
(a) General. Under the authority of section 110 of the Act, this
section sets forth an alternative method of compliance for certain
successor pension plans in which some participants and beneficiaries not
only have their rights set out in the plan, but also retain eligibility
for certain benefits under the terms of a former plan which has been
merged into the successor. This section is applicable only to plan
mergers which occur after the issuance by the successor plan of the
initial summary plan description under the Act. Under the alternative
method, the plan administrator of the successor plan is not required to
describe relevant provisions of merged plans in summary plan
[[Page 209]]
descriptions of the successor plan furnished after the merger to that
class of participants and beneficiaries still affected by the terms of
the merged plans.
(b) Scope and application. This alternative method of compliance is
available only if:
(1) The plan administrator of the successor plan furnishes to the
participants covered under the predecessor plan and beneficiaries
receiving pension benefits under the merged plan within 90 days after
the effective date of the merger:
(i) A copy of the most recent summary plan description of the
successor plan;
(ii) A copy of any summaries of material modifications to the
successor plan not incorporated in the most recent summary plan
description; and
(iii) A separate statement containing a brief description of the
merger, a description of the provisions of, and benefits provided by,
the merged and successor plans which are applicable to the participants
and beneficiaries of the merged plan; and a notice that copies of the
merged and successor plan documents, as well as the plan merger
documents (including the portions of any corporate merger documents
which describe or control the plan merger), are available for inspection
and that copies may be obtained upon written request for a duplication
charge (pursuant to Sec. 2520.104b-30); and
(2) After the merger, the plan administrator, in all subsequent
summary plan descriptions furnished pursuant to Sec. 2520.104b-2(a)--
(i) Clearly and conspicuously identifies the class of participants
and beneficiaries affected by the provisions of the merged plan, and
(ii) States that the documents described in paragraph (b)(1) of this
section are available for inspection and that copies may be obtained
upon written request for a duplication charge (pursuant to Sec.
2520.104b-30).
[42 FR 37182, July 19, 1977, as amended at 67 FR 776, Jan. 7, 2002]
Sec. Sec. 2520.104-5--2520.104-6 [Reserved]
Sec. 2520.104-20 Limited exemption for certain small welfare plans.
(a) Scope. Under the authority of section 104(a)(3) of the Act, the
administrator of any employee welfare benefit plan which covers fewer
than 100 participants at the beginning of the plan year and which meets
the requirements of paragraph (b) of this section is exempted from
certain reporting and disclosure provisions of the Act. Specifically,
the administrator of such plan is not required to file with the
Secretary an annual or terminal report. In addition, the administrator
of a plan exempted under this section--
(1) Is not required to furnish participants covered under the plan
and beneficiaries receiving benefits under the plan with statements of
the plan's assets and liabilities and receipts and disbursements and a
summary of the annual report required by section 104(b)(3) of the Act;
(2) Is not required to furnish upon written request of any
participant or beneficiary a copy of the annual report and any terminal
report, as required by section 104(b)(4) of the Act;
(3) Is not required to make copies of the annual report available
for examination by any participant or beneficiary in the principal
office of the administrator and such other places as may be necessary,
as required by section 104(b)(2) of the Act.
(b) Application. This exemption applies only to welfare benefit
plans--
(1) Which have fewer than 100 participants at the beginning of the
plan year;
(2)(i) For which benefits are paid as needed solely from the general
assets of the employer or employee organization maintaining the plan, or
(ii) The benefits of which are provided exclusively through
insurance contracts or policies issued by an insurance company or
similar organization which is qualified to do business in any State or
through a qualified health maintenance organization as defined in
section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C.
300e-9(d), the premiums for which are paid directly by the employer or
employee organization from its general assets or partly from its general
assets
[[Page 210]]
and partly from contributions by its employees or members, Provided,
That contributions by participants are forwarded by the employer or
employee organization within three months of receipt, or
(iii) Both;
(3) For which, in the case of an insured plan--
(i) Refunds, to which contributing participants are entitled, are
returned to them within three months of receipt by the employer or
employee organization, and
(ii) Contributing participants are informed upon entry into the plan
of the provisions of the plan concerning the allocation of refunds; and
(4) Which are not subject to the Form M-1 requirements under Sec.
2520.101-2 (Filing by Multiple Employer Welfare Arrangements and Certain
Other Related Entities).
(c) Limitations. This exemption does not exempt the administrator of
an employee benefit plan from any other requirement of title I of the
Act, including the provisions which require that plan administrators
furnish copies of the summary plan description to participants and
beneficiaries (section 104(b)(1)) and furnish certain documents to the
Secretary of Labor upon request (section 104(a)(6)), and which authorize
the Secretary of Labor to collect information and data from employee
benefit plans for research and analysis (section 513).
(d) Examples. (1) A welfare plan has 75 participants at the
beginning of the plan year and 105 participants at the end of the plan
year. Plan benefits are fully insured and premiums are paid directly to
the insurance company by the employer pursuant to an insurance contract
purchased with premium payments derived half from the general assets of
the employer and half from employee contributions (which the employer
forwards within three months of receipt). Refunds to the plan are paid
to participating employees within three months of receipt as provided in
the plan and as described to each participant upon entering the plan.
The plan appoints the employer as its plan administrator. The employer,
as plan administrator, provides summary plan descriptions to
participants and beneficiaries. He also makes copies of certain plan
documents available at the plan's principal office and such other places
as necessary to give participants reasonable access to them. The
exemption provided by Sec. 2520.104-20 applies even though the plan has
more than 100 participants by the end of the plan year, because it had
fewer than 100 participants at the beginning of the plan year and
otherwise satisfied the conditions of the exemption.
(2) A welfare plan is established and maintained in the same way as
the plan described in example (1), except that a trade association which
sponsors the plan is the holder of the insurance contract. Since the
plan still sends the premium payments directly to the insurance company,
the exemption applies, as in example (1).
[43 FR 10148, Mar. 10, 1978, as amended at 46 FR 5884, Jan. 21, 1981; 67
FR 776, Jan. 7, 2002; 78 FR 13796, Mar. 1, 2013]
Sec. 2520.104-21 Limited exemption for certain group insurance arrangements.
(a) Scope. Under the authority of section 104(a)(3) of the Act, the
administrator of any employee welfare benefit plan which covers fewer
than 100 participants at the beginning of the plan year and which meets
the requirements of paragraph (b) of this section is exempted from
certain reporting and disclosure provisions of the Act. Specifically,
the administrator of such plan is not required to file with the
Secretary a terminal report or furnish upon written request of any
participant or beneficiary a copy of any terminal report as required by
section 104(b)(4) of the Act.
(b) Application. This exemption applies only to welfare plans, each
of which has fewer than 100 participants at the beginning of the plan
year and which are part of a group insurance arrangement if such
arrangement:
(1) Provides benefits to the employees of two or more unaffiliated
employers, but not in connection with a multiemployer plan as defined in
section 3(37) of the Act and any regulations prescribed under the Act
concerning section 3(37);
(2) Fully insures one or more welfare plans of each participating
employer through insurance contracts purchased
[[Page 211]]
solely by the employers or purchased partly by the employers and partly
by their participating employees, with all benefit payments made by the
insurance company: Provided, That--
(i) Contributions by participating employees are forwarded by the
employers within three months of receipt,
(ii) Refunds, to which contributing participants are entitled, are
returned to them within three months of receipt, and
(iii) Contributing participants are informed upon entry into the
plan of the provisions of the plan concerning the allocation of refunds;
and
(3) Uses a trust (or other entity such as a trade association) as
the holder of the insurance contracts and uses a trust as the conduit
for payment of premiums to the insurance company.
(c) Limitations. This exemption does not exempt the administrator of
an employee benefit plan from any other requirement of title I of the
Act, including the provisions which require that plan administrators
furnish copies of the summary plan description to participants and
beneficiaries (section 104(b)(1)), file an annual report with the
Secretary of Labor (section 104(a)(1)) and furnish certain documents to
the Secretary of Labor upon request (section 104(a)(6)), and authorize
the Secretary of Labor to collect information and data from employee
benefit plans for research and analysis (section 513).
(d) Examples. (1) A welfare plan has 25 participants at the
beginning of the plan year. It is part of a group insurance arrangement
of a trade association which provides benefits to employees of two or
more unaffiliated employers, but not in connection with a multiemployer
plan as defined in the Act. Plan benefits are fully insured pursuant to
insurance contracts purchased with premium payments derived half from
employee contributions (which the employer forwards within three months
of receipt) and half from the general assets of each participating
employer. Refunds to the plan are paid to participating employees within
three months of receipt as provided in the plan and as described to each
participant upon entering the plan. The trade association holds the
insurance contracts. A trust acts as a conduit for payments, receiving
premium payments from participating employers and paying the insurance
company. The plan appoints the trade association as its plan
administrator. The association, as plan administrator, provides summary
plan descriptions to participants and beneficiaries, enlisting the help
of participating employers in carrying out this distribution. The plan
administrator also makes copies of certain plan documents available to
the plan's principal office and such other places as necessary to give
participants reasonable access to them. The plan administrator files
with the Secretary an annual report covering activities of the plan, as
required by the Act and such regulations as the Secretary may issue. The
exemption provided by this section applies because the conditions of
paragraph (b) have been satisfied.
(2) Assume the same facts as paragraph (d)(1) of this section except
that the premium payments for the insurance company are paid from the
trust to an independent insurance brokerage firm acting as the agent of
the insurance company. The trade association is the holder of the
insurance contract. The plan appoints an officer of the participating
employer as the plan administrator. The officer, as plan administrator,
performs the same reporting and disclosure functions as the
administrator in paragraph (d)(1) of this section, enlisting the help of
the association in providing summary plan descriptions and necessary
information. The exemption provided by this section applies.
(3) The facts are the same as paragraph (d)(1) of this section
except the welfare plan has 125 participants at the beginning of the
plan year. The exemption provided by this section does not apply because
the plan had 100 or more participants at the beginning of the plan year.
See, however, Sec. 2520.104-43.
(4) The facts are the same as paragraph (d)(2) of this section
except the welfare plan has 125 participants. The exemption provided by
this section does not apply because the plan had 100 or more
participants at the beginning of the plan year. See, however, Sec.
2520.104-43.
[[Page 212]]
(e) Applicability date. For purposes of paragraph (b)(3) of this
section, the arrangement may continue to use an entity (such as a trade
association) as the conduit for the payment of insurance premiums to the
insurance company for reporting years of the arrangement beginning
before January 1, 2001.
[43 FR 10149, Mar. 10, 1978, as amended at 65 FR 21084, Apr. 19, 2000;
67 FR 776, Jan. 7, 2002]
Sec. 2520.104-22 Exemption from reporting and disclosure requirements
for apprenticeship and training plans.
(a) An employee welfare benefit plan that provides exclusively
apprenticeship training benefits or other training benefits or that
provides exclusively apprenticeship and training benefits shall not be
required to meet any requirement of part 1 of the Act, provided that the
administrator of such plan:
(1) Has filed with the Secretary the notice described in paragraph
(b) of this section;
(2) Takes steps reasonably designed to ensure that the information
required to be contained in such notice is disclosed to employees of
employers contributing to the plan who may be eligible to enroll in any
course of study sponsored or established by the plan; and
(3) Makes such notice available to such employees upon request.
(b) The notice referred to in paragraph (a) of this section shall
contain accurate information concerning:
(1) The name of the plan;
(2) The Employer Identification Number (EIN) of the plan sponsor;
(3) The name of the plan administrator;
(4) The name and location of an office or person from whom an
interested individual can obtain:
(i) A description of any existing or anticipated future course of
study sponsored or established by the plan, including any prerequisites
for enrolling in such course; and
(ii) A description of the procedure by which to enroll in such
course.
(c) The notice referred to in paragraph (a) of this section shall be
filed with the Secretary electronically in accordance with the
instructions published by the Department.
[45 FR 15529, Mar. 11, 1980, as amended at 45 FR 27933, Apr. 25, 1980;
54 FR 8629, Mar. 1, 1989; 68 FR 16400, Apr. 3, 2003; 84 FR 27955, June
17, 2019]
Sec. 2520.104-23 Alternative method of compliance for pension plans
for certain selected employees.
(a) Purpose and scope. (1) This section contains an alternative
method of compliance with the reporting and disclosure requirements of
part 1 of title I of the Employee Retirement Income Security Act of 1974
for unfunded or insured pension plans maintained by an employer for a
select group of management or highly compensated employees, pursuant to
the authority of the Secretary of Labor under section 110 of the Act (88
Stat. 851).
(2) Under section 110 of the Act, the Secretary is authorized to
prescribe an alternative method for satisfying any requirement of part 1
of title I of the Act with respect to any pension plans, or class of
pension plans, subject to such requirement.
(b) Filing obligation. Under the authority of section 110 of the
Act, an alternative form of compliance with the reporting and disclosure
requirements of part 1 of the Act is provided for certain pension plans
for a select group of management or highly compensated employees. The
administrator of a pension plan described in paragraph (d) shall be
deemed to satisfy the reporting and disclosure provisions of part 1 of
title I of the Act by--
(1) Filing a statement with the Secretary of Labor that includes the
name and address of the employer, the employer identification number
(EIN) assigned by the Internal Revenue Service, a declaration that the
employer maintains a plan or plans primarily for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees, and a statement of the number of such
plans and the number of employees in each, and
(2) Providing plan documents, if any, to the Secretary upon request
as required by section 104(a)(6) of the Act. Only one statement need be
filed for each employer maintaining one or
[[Page 213]]
more of the plans described in paragraph (d) of this section. For plans
in existence on May 4, 1975, the statement shall be filed on or before
August 31, 1975. For a plan to which part 1 of title I of the Act
becomes applicable after May 4, 1975, the statement shall be filed
within 120 days after the plan becomes subject to part 1.
(c) Electronic filing of statement. Statements referred to in
paragraph (b) of this section shall be filed with the Secretary
electronically in accordance with the instructions published by the
Department.
(d) Application. The alternative form of compliance described in
paragraph (b) of this section is available only to employee pension
benefit plans--
(1) Which are maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees, and
(2) For which benefits (i) are paid as needed solely from the
general assets of the employer, (ii) are provided exclusively through
insurance contracts or policies, the premiums for which are paid
directly by the employer from its general assets, issued by an insurance
company or similar organization which is qualified to do business in any
State, or (iii) both.
[40 FR 34533, Aug. 15, 1975, as amended at 54 FR 8629, Mar. 1, 1989; 67
FR 776, Jan. 7, 2002; 68 FR 16400, Apr. 3, 2003; 84 FR 27955, June 17,
2019]
Sec. 2520.104-24 Exemption for welfare plans for certain selected employees.
(a) Purpose and scope. (1) This section, under the authority of
section 104(a)(3) of the Employee Retirement Income Security Act of
1974, exempts unfunded or insured welfare plans maintained by an
employer for the purpose of providing benefits for a select group of
management or highly compensated employees from the reporting and
disclosure provisions of part 1 of title I of the Act, except for the
requirement to provide plan documents to the Secretary of Labor upon
request under section 104(a)(1) of the Act.
(2) Under section 104(a)(3) of the Act, the Secretary is authorized
to exempt by regulation any welfare benefit plan from all or part of the
reporting and disclosure requirements of title I of the Act.
(b) Exemption. Under the authority of section 104(a)(3) of the Act,
each employee welfare benefit plan described in paragraph (c) of this
section is exempted from the reporting and disclosure provisions of part
1 of title I of the Act, except for providing plan documents to the
Secretary of Labor upon request as required by section 104(a)(6).
(c) Application. This exemption is available only to employee
welfare benefit plans:
(1) Which are maintained by an employer primarily for the purpose of
providing benefits for a select group of management or highly
compensated employees, and
(2) For which benefits (i) are paid as needed solely from the
general assets of the employer, (ii) are provided exclusively through
insurance contracts or policies, the premiums for which are paid
directly by the employer from its general assets, issued by an insurance
company or similar organization which is qualified to do business in any
State, or (iii) both.
[40 FR 34533, Aug. 15, 1975, as amended at 67 FR 776, Jan. 7, 2002]
Sec. 2520.104-25 Exemption from reporting and disclosure for
day care centers.
Under the authority of section 104(a)(3) of the Act, day care
centers are exempted from the reporting and disclosure provisions of
part 1 of title I of the Act, except for providing plan documents to the
Secretary upon request as required under section 104(a)(6) of the Act.
[40 FR 34533, Aug. 15, 1975, as amended at 67 FR 776, Jan. 7, 2002]
Sec. 2520.104-26 Limited exemption for certain unfunded dues financed
welfare plans maintained by employee organizations.
(a) Scope. Under the authority of section 104(a)(3) of the Act, a
welfare benefit plan that meets the requirements of paragraph (b) of
this section is exempted from the provisions of the Act that require
filing with the Secretary an annual report and furnishing a summary
annual report to participants and
[[Page 214]]
beneficiaries. Such plans may use a simplified method of reporting and
disclosure to comply with the requirement to furnish a summary plan
description to participants and beneficiaries, as follows:
(1) In lieu of filing an annual report with the Secretary or
distributing a summary annual report, a filing is made of Report Form
LM-2 or LM-3, pursuant to the Labor-Management Reporting and Disclosure
Act (LMRDA) and regulations thereunder, and
(2) In lieu of a summary plan description, the employee organization
constitution or by-laws may be furnished in accordance with Sec.
2520.104b-2 to participants and beneficiaries together with any
supplement to such document necessary to meet the requirements of
Sec. Sec. 2520.102-2 and 2520.102-3.
(b) Application. This exemption is available only to welfare benefit
plans maintained by an employee organization, as that term is defined in
section 3(4) of the Act, paid for out of the employee organization's
general assets, which are derived wholly or partly from membership dues,
and which cover employee organization members and their beneficiaries.
(c) Limitations. This exemption does not exempt the administrator
from any other requirement of part 1 of title I of the Act.
[42 FR 37184, July 19, 1977, as amended at 67 FR 776, Jan. 7, 2002]
Sec. 2520.104-27 Alternative method of compliance for certain
unfunded dues financed pension plans maintained by employee
organizations.
(a) Scope. Under the authority of section 110 of the Act, a pension
benefit plan that meets the requirements of paragraph (b) of this
section is exempted from the provisions of the Act that require filing
with the Secretary an annual report and furnishing a summary annual
report to participants and beneficiaries receiving benefits. Such plans
may use a simplified method of reporting and disclosure to comply with
the requirement to furnish a summary plan description to participants
and beneficiaries receiving benefits, as follows:
(1) In lieu of filing an annual report with the Secretary or
distributing a summary annual report, a filing is made of Report Form
LM-2 or LM-3, pursuant to the Labor-Management Reporting and Disclosure
Act (LMRDA) and regulations thereunder, and
(2) In lieu of a summary plan description, the employee organization
constitution or bylaws may be furnished in accordance with Sec.
2520.104b-2 to participants and beneficiaries together with any
supplement to such document necessary to meet the requirements of
Sec. Sec. 2520.102-2 and 2520.102-3.
(b) Application. This exemption is available only to pension benefit
plans maintained by an employee organization, as that term is defined in
section 3(4) of the Act, paid for out of the employee organization's
general assets, which are derived wholly or partly from membership dues,
and which cover employee organization members and their beneficiaries.
(c) Limitations. This exemption does not exempt the administrator
from any other requirement of part 1 of title I of the Act.
[42 FR 37184, July 19, 1977, as amended at 67 FR 777, Jan. 7, 2002]