§ 4.3.5.4 PLANS EXEMPT FROM ERISA.

JurisdictionArizona

§ 4.3.5.4 Plans Exempt from ERISA. There are a number of employee benefit plans which are statutorily exempt from ERISA coverage.58 Some of these exceptions are rarely encountered by the labor practitioner; others are of greater significance.

Plans maintained by governmental entities for their own employees are exempt from ERISA.59 The statutory definition of a government plan is contained in 29 U.S.C. § 1002(32). Among the governmental plans which the courts have found to be exempt are those maintained by public school districts,60 the Long Island Railway Pension Plan,61 and plans maintained by cities.62

Another significant exception exists for those plans which are maintained solely for the purpose of complying with applicable workers' compensation laws, unemployment compensation laws, or disability insurance laws.63 This group of exceptions can become more applicable in the context of larger employers that have state approved self-insured unemployment or workers compensation programs.

ERISA also excludes from coverage those plans maintained outside the United States primarily for the benefit of persons substantially all of whom are nonresident aliens.64 This provision has the greatest significance for United States employees of small subsidiaries of foreign corporations. For example, the severance pay plan of Potash Corporation of Saskatchewan was not an ERISA covered plan under this exemption. The district court found that fewer than 30 of the 1,668 participants in the plan were United States citizens and the plan was maintained outside the United States.65 Arizona practitioners may encounter this issue in scenarios where there are commercial operations that transcend the border.

Other exceptions to ERISA coverage which may be encountered apply to church pension plans that have not made an election pursuant to I.R.C. § 410(d) and unfunded excess benefit plans.66


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Notes:

[58] See 29 U.S.C. § 1003(b).

[59] See 29 U.S.C. § 1003(b)(1).

[60] Shirley v. MaxiCare Texas, Inc., 921 F.2d 565 (5th Cir. 1991); Roy v. Teacher's Ins. & Annuity Ass'n, 878 F.2d 47, 50 (2d Cir. 1989); Smith v. Regional Transit Auth., 756 F.3d 340 (8th Cir. 2014).

[61] Rose v. Long Island R.R. Pension Plan, 828 F.2d 910 (2d Cir. 1987); Koval v. Washington Cty. Redev. Auth., 574 F.3d 238 (3rd Cir. 2009).

[62] Silvera v. Mut. Life Ins. Co., 884 F.2d 423 (9th Cir. 1989); Pacificare v. Martin, 34 F.3d 834 (9th Cir. 1994).

[63] Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981...

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