By Christina Cerasale, Kelly Rourke, and Richard G. Schwartz

Seyfarth Synopsis: The Department of Labor (“DOL”) just issued proposed rule changes governing the disclosure of ERISA-required notices via an electronic format (e.g., emails, intranet sites, etc.). These proposed rules update final regulations issued by the DOL in 2002, which given the pace at which employers and employees were then transitioning to the use of computers and the internet as the principal means of communication, were pretty much outdated by the time the DOL issued them in final form. The new proposal establishes a safe harbor standard that employers should find more useful than the previous safe harbor rules, resulting in cost and administrative burden savings for retirement plan sponsors and administrators.

ERISA generally requires that certain retirement plan information be disclosed to participants and beneficiaries (e.g., summary plan descriptions, summary of material modifications, blackout notices, etc.). Historically, that meant distribution of required notices by hand (e.g., with paychecks) or by first-class mail.  By the late 1990s – early 2000s, the use of desktop computers was exploding across the working world, and hand-delivery or delivery via the US mail of ERISA-required notices was becoming more expensive and more time-consuming than need be.

To address these concerns, in 2002, the DOL established a safe harbor rule for the distribution of ERISA-required disclosures through electronic “media” (e.g., such as by email or posting on an Intranet website). While that safe harbor was somewhat helpful, actual use of the safe harbor required burdensome consent obligations with respect to employees who were not using a computer at their desk or work-station as an integral requirement of their job. While it seems almost inconceivable in 2019 that computers weren’t always an integral part of most jobs only 17 years ago, the fact is that many employers had not yet fully integrated the use of computers into employees’ daily work routines at that time. Further, given the frantic pace at which the computer age was progressing at the time, the 2002 DOL regulations were outdated in short order.

The DOL’s new (and long-awaited) proposal establishes a new “notice and access” safe harbor for the use of electronic media communications for ERISA-required notices. Under these proposed rules, a plan administrator may generally default a participant or beneficiary into electronic delivery, unless the individual affirmatively opts out. The proposed rules also require an initial paper notification for administrators transitioning to the new safe harbor and provide guidance on treatment of terminated employees.

The proposed rule will only become effective 60 days after the final rule is published in the Federal Register, and does not apply to ERISA-required employee welfare benefit plan communications.  Employers and plan administrators should find the proposal to be helpful in communicating with plan participants electronically, but the proposal includes specific standards that will need to be understood and adapted to specific situations.