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Nelson Mullins COVID-19 Resources

Nelson Mullins is continuing to monitor developments related to COVID-19, including guidance from the Centers for Disease Control and various federal, state, and local government authorities. The firm is taking appropriate precautionary actions and has implemented plans to ensure the continuation of all firm services to clients from both in office and remote work arrangements across our 25 offices. 

In addition, click the link below to access extensive resources to address a wide variety of topics resulting from the virus, in general and by industry,  including topics such as essential businesses, force majeure, business interruption insurance, CARES Act and FFCRA, and others. 

Nelson Mullins COVID-19 Resources

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Bostock v. Clayton County and Implications for Title VII Litigation

July 6, 2020

Bostock v. Clayton County and Implications for Title VII Litigation
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Additional Nelson Mullins Alerts

May 27, 2020

New DOL E-Disclosure Rules Finally Bring Plan Administration Into the 21st Century

Late last week the U.S. Department of Labor (“DOL”) announced a final rule that brings retirement plan disclosures into the 21st Century by allowing widespread electronic delivery to workers (“Final E-Disclosure Rule”). These relaxed e-delivery rules are expected to simplify administration and save you, the employer, the time and cost that was previously required to mail materials for your ERISA-covered retirement plans (e.g., 401(k)) to your plan participants, alternate payees, beneficiaries and other persons.

As background, ERISA-covered retirement plans must furnish multiple disclosures each year to participants, alternate payees and beneficiaries. The exact number of disclosures that you are required to make each year depends on your specific type of retirement plan, its features, and in some cases the plan’s funding status. Under existing law, delivery methods for ERISA disclosures must be reasonably calculated to ensure that workers actually receive the disclosures. To deliver disclosures electronically, plan administrators, until now, could rely an existing regulatory safe harbor established by the Department in 2002 (see 29 CFR 2520.104b-1(c)). This existing regulatory safe harbor was narrowly-drawn and it was arguably almost impossible to implement e-delivery on a plan-wide basis in reliance on the safe harbor, except for disclosures to active employees with computer access as part of their regular job responsibilities. For many employers with a blue collar workforce, e-delivery was not possible without considerable risk.

Taking a more relaxed approach, the Final E-Disclosure Rule’s two new safe harbor electronic disclosure methods allow an employer to choose default delivery methods consisting of either website posting or delivery by e-mail or text. These new methods should make e-delivery a viable option for all plan administrators to satisfy their ERISA disclosure obligations. If you want to take advantage of the two new safe harbor e-delivery methods offered by the Final E-Disclosure Rule, below are the key highlights:

What Disclosures Can Be E-Delivered Using the Safe Harbors?

  • The safe harbors are only available to employee pension benefit plans (as defined in ERISA) and only for covered documents.[1] These e-delivery safe harbors are not available to welfare benefit plans (the DOL has reserved this for future study).
  • Only “covered documents” can be provided using e-delivery. “Covered documents” means documents required to be furnished under Title I of ERISA (other than those only furnished upon request), such as the summary plan description (SPD), summaries of material modifications (SMMs), the summary annual report (SAR), the annual funding notice, fee disclosures, quarterly benefit statements, blackout notices and claims and appeals.
  • The safe harbors do not apply to disclosures required under the Internal Revenue Code or other applicable laws, such as the annual 401(k) plan safe harbor notice.
  • Both e-delivery methods are available only for “covered individuals.” A “covered individual” is a person who is entitled to the disclosure document under ERISA and who has provided his or her valid e-mail (or has a company-assigned e-mail) or has provided a valid internet-connected mobile- computing-device (e.g., smartphone/text) number that is capable of receiving written materials. 
    • You must provide each covered individual with an initial notice of default electronic delivery and the right to opt out, which must be furnished on paper. This initial notice is required to identify the electronic address to which the e-delivered notices or documents will be delivered for the individual.
    • Your e-delivery system must be designed to alert you if a participant’s electronic address is invalid or inoperable. If alerted that an electronic address is invalid or inoperable, you must take specific actions to attempt to promptly cure the problem, or treat the participant as opting out of electronic delivery. In addition, if you are required to deliver materials to a former employee, you must take (reasonable) measures to ensure the continued accuracy and availability of electronic addresses or to obtain a new electronic address.

It is important to note that the covered individual who receives disclosures via e-delivery still retains the right to request a paper copy and can choose to opt out of e-delivery altogether at any time (with no charge for opting out or for receipt of the paper delivery method). You can not require a person to receive all disclosures electronically.

Safe Harbor #1: Posting to Website

You can deliver covered documents using a designated website as follows:

  • You may post covered documents to your company intranet or website, or you may use a third-party provider’s website (or a mobile app). Note, however, that if you use a third-party provider’s website, your fiduciary obligations under ERISA will require that you prudently select and oversee the provider.
  • Each time you make a covered document available on your designated website, you must furnish a Notice of Internet Availability (NOIA) to each covered individual. 
  • Your NOIA must meet certain content requirements, including certain required statements set forth in the Final E-Disclosure Rule and the website address or a hyperlink for the covered document. Note that the DOL has not provided a “model” NOIA at this point.
  • You may deliver the NOIA using e-mail or text message, but you are not permitted to mail the NOIA unless you are sending the initial notice to the covered individual (see above).
  • You must continue to make the covered document available on your designated website until it is superseded by a subsequent version, but in no event for less than one year from the date you first made it available on the website For example, you must post your SPD on your designated website until it is superseded, even if this means it must be posted for longer than one year.
  • Under a special rule, you can opt to provide consolidated NOIAs each plan year for certain covered documents, such as the SPD, SMMs, SAR, annual funding notice, fee disclosures, annual QDIA notice and annual pension benefit statement. Special rules apply if you issue consolidated NOIAs, including:
    • A consolidated NOIA may not be used for quarterly benefit statements or blackout notices, or for notices that are required under the Internal Revenue Code (e.g., 401(k) safe harbor notice) unless the IRS issues future written guidance allowing inclusion in a consolidated NOIA.
    • If you choose to use annual consolidated NOIAs, there can be no more than 14 months between issuing annual consolidated NOIAs.

Safe Harbor #2: Delivery By E-mail or Text

You can deliver covered documents using e-mail or text as follows:

  • You can use a third-party provider to send emails or texts, or you can handle in-house.
  • You may deliver the covered document using either the covered individual’s personal e-mail address provided to you (or your designee) by the covered individual or a company-assigned e-mail address (e.g., an e-mail notice with an attached PDF version of the covered document). 
  • To obtain personal e-mail, you can include a line requesting this information in plan enrollment paperwork or you could obtain this information from online access to account information.
  • A company-assigned e-mail address must be one that is used for employment-related purposes (you may not assign an e-mail solely for delivery of plan documents). 
  • You may not issue company-assigned e-mail addresses to non-employees, such as spouses, alternate payees or other beneficiaries. These non-employee individuals will need to affirmatively provide their personal email or text address information.
  • If you choose to use text, you will need to take steps to confirm that phone numbers are mobile, not landlines.
  • Direct e-delivery under this safe harbor must be accompanied by an e-mail/text that satisfies certain content requirements, including a subject line that reads: "Disclosure About Your Retirement Plan," a brief description of the covered document, a statement of the recipient’s rights, and certain contact information.

EMPLOYER ACTION STEPS

If you wish to move to e-delivery, there are a number of steps that you should take:

  1. Decide what method you will use for e-delivery (e-mail, text, intranet posting, third-party provider website posting, mobile app). If you use a third-party provider for your current notices, check to see what methods they will offer to you.
  2. Identify all covered individuals (e.g., participants, alternate payees, beneficiaries) who are eligible to receive covered documents from your plan and update mailing lists to include e-mail and/or text addresses.
  3. Consider how you will obtain and update e-mail or text addresses. For example:
    • Do you already request this in new hire materials or in plan enrollment paperwork? If you use a third-party recordkeeper, was this information collected during registration for online access?
    • If you choose to use text, determine how you will confirm mobile phone numbers.
    • Determine how you will handle bouncebacks and changes and updates.
    • Update your various company procedures to obtain a personal e-mail or text address from terminated employees as part of your termination process, from alternate payees as part of your QDRO review process, and from beneficiaries as part of your beneficiary designation and/or death processes.
  4. Decide if you should consolidate disclosures in an annual NOIA during your next open enrollment or at another time, or keep them separate. Consider the number of disclosures and whether covered individuals could get overwhelmed with the number of notifications.
  5. Determine how you will track and manage disclosures where the individual does not qualify as a covered individual (e.g., he/she does not have a valid e-mail address/access) or opts out of e-delivery.
  6. Establish an e-mail or text address capable of e-delivering the NOIA and/or disclosures, and assign someone to handle any requests for paper copies and make sure that person understands the requirements.
  7. Have your IT department review the e-delivery safe harbors and confirm that your IT system is compliant with the requirements set forth in the Final E-Disclosure Rule. If you are using a third-party provider to handle delivery or posting, confirm their system is compliant.
  8. Review your current third-party administrator and recordkeeper service agreements to identify any fees for mailing required legal disclosures that might be included in your current monthly or annual fixed fees. If these costs were included in establishing your fixed administration or recordkeeping fee, consider requesting a fee reduction.

The Final E-Disclosure Rule is scheduled to be published today and to take effect 60 days thereafter. However, the DOL has issued a non-enforcement policy that allows you to start taking advantage of the two new safe harbors immediately. These new safe harbors are in addition to (and not in replacement of) the existing 2002 regulatory safe harbor, so if you currently rely on the 2002 safe harbor you can continue to do so.

The Nelson Mullins Employee Benefits Group is ready to assist with questions or compliance steps. Please contact one of our Employee Benefits attorneys or the Nelson Mullins attorney with whom you work. 


[1] Note, however, that the IRS and DOL have issued joint guidance allowing the good faith use of e-delivery during the “outbreak period” resulting from the COVID-19 national emergency.