OLR Bill Analysis

sSB 911

AN ACT CONCERNING CIVIL ACTIONS TO COLLECT PAST DUE PAYMENTS TO EMPLOYEE WELFARE FUNDS.

SUMMARY:

This bill allows an employee to bring a civil action for an employer's past due payments to an employee welfare fund (i.e., a fund that provides healthcare, disability, or retirement benefits for the employee). The payment must be past due under a written contract's terms or the rules and regulations adopted by the fund's trustees. In such actions, the employee can be awarded up to twice the amount owed, plus costs and attorney's fees. Under the bill, the labor commissioner can also (1) collect the past due payments, plus interest or (2) bring a legal action to recover up to twice the amount owed, plus costs and attorney's fees. The bill applies to all employers; however, it appears that the federal Employee Retirement Income Security Act (ERISA) may preempt this provision from applying to private sector employers and employees (see BACKGROUND).

The bill also allows such an aggrieved employee to alternatively bring a civil action against (1) a sole proprietor or general partner, or officer, director, or member of a corporation or LLC who failed to make the required payment or (2) any employee of a corporation or LLC, who was designated to make the payment but failed. Under the bill, these people can be found personally liable for the amount due, plus costs and attorney's fees. It appears that ERISA may also preempt this provision from applying to private sector employers and their employees.

EFFECTIVE DATE: October 1, 2015

BACKGROUND

ERISA Preemption

ERISA is a federal regulatory scheme for private sector employee benefit plans. Among other things, it sets forth requirements for benefit plan funding and fiduciary duties and specifies the civil remedies available to address violations. In general, the U.S. Supreme Court has ruled that state laws providing alternative enforcement mechanisms to ERISA are preempted because they undermine Congress's intent to replace conflicting or inconsistent state and local regulations with a uniform body of federal law and regulation (see Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990)). The U.S. Second Circuit Court of Appeals also found that ERISA preempted a New York law that made corporate officers personally liable for a failure to contribute to an employee welfare fund (see Romney v. Lin, 94 F.3d 74 (1996)).

Because ERISA generally does not apply to public employers and their employees, ERISA preemption for the above reasons may limit the bill's applicability to public employers and employees.

COMMITTEE ACTION

Labor and Public Employees Committee

Joint Favorable Substitute

Yea

6

Nay

3

(03/12/2015)