In Advisory Opinion 2008-02A (click here for a copy), the Department of Labor issued its first advisory opinion addressing the scope of ERISA’s preemption provisions since the enactment of the Pension Protection Act in 2006.
At issue was the applicability of a Kentucky wage withholding law, requiring express written authorization by the employee, for an automatic enrollment arrangement under a cafeteria plan. Under that arrangement, employees who neither elected medical coverage nor certified that they had coverage from another source, were automatically enrolled in a default medical coverage. That automatic enrollment was confirmed in a written statement to the employee and was binding, generally, until the next annual enrollment period. Concluding that the Kentucky law had a prohibited nexus to ERISA plans because it prohibited automatic enrollment arrangements and regulated the employer’s decisions as to employee medical coverage and funding, DOL opined that the Kentucky law was preempted by ERISA to the extent it applied to ERISA plans.
In a footnote, DOL stated that no contrary inference should be drawn from the amendment enacted in the PPA that expressly preempts any State law that directly or indirectly prohibits or restricts automatic contribution arrangements. While DOL observed that, in its view, the PPA provision addresses only individual account retirement plans, it noted the “no inference” language in the Joint Committee Staff explanation of the legislation. Thus, DOL concluded that automatic enrollment arrangements for welfare plans remained subject to ERISA’s general preemption provision.