Understanding the Revised Employer Definition for MEPs and MEWAs

Multiple employer plans (MEPs) and multiple employer welfare arrangements (“MEWAs”) allow workers greater access to retirement programs. However, the Department of Labor recently proposed a revised definition of the term “employer” that may bring about changes to MEPs and MEWAs. Companies that currently participate in MEPs or MEWAs, or who wish to participate in such a plan, need to learn more about the revised employer definition for MEPs and MEWAs.


Current Employer Definition

ERISA Section 3(5), 29 U.S.C. 1002(5) states:

“The term ‘employer’ means any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity.”

Vague and ambiguous terms like “acting directly as an employer” or “group or association of employers” have given rise to litigation. Because of the confusion, the Department of Labor (DOL) proposed new regulations on October 23, 2018.

Proposed Revised Employer Definition

This new proposed regulation may change the interpretation of the term “employer.” The new definition could create flexible criteria for MEP sponsorship, which will increase the number of workers who can participate in a MEP or MEWA.

In addition, the proposed rule would allow working owners – sole proprietors and self-employed workers – to be treated as employers. This, in turn, would allow them to participate in a bona fide employer group or association. However, this type of worker/employer could also participate in a MEP as an employee. A working owner would have to maintain at least one employee to become a member of a professional employer organization (PEO)’s MEP. The proposed change will not affect MEPs sponsored by PEOs.

How Will the Proposed Change Affect Your Plan?

In addition to the confusing, limited definition of employer noted above, the new, broader definition of employer is expected to expand workers’ access to employer-provided health care coverage.

The attorneys at Hall Benefits Law have the keen understanding of laws and regulations related to employee benefit plans. In fact, we work extensively with employee benefit plans including MEPs and MEWAs. Please call 678-439-6236 to discuss your concerns with an experienced attorney. Our website contains more information about our firm, a Contact Form, and free resources for your review. From our home office in Georgia, we assist clients throughout the United States, from North Carolina to Oregon.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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