Sec 501(c)(3) Organization H&W plans subject to ERISA?

[Guest RLewis]

Daughter is hourly employee at a large (100 plus employees) sec 501©(3) exempt private foundation in Calif. Daughter injured in car crash, is temporarily disabled and is receiving Calif state disability benefits. Employer is making up difference between disability benefits and regular pay and is charging against her accrued sick leave. The makeup pay is equivalent to about 4 hours of pay per day, but she is being charged a full day against her sick leave.

Daughter's question to me - can they do that? My response - first we have to detremine whether foundation ee h&w benefits subject to ERISA or state law.

My question to you - is an exempt private foundation subject to ERISA? If so, is a sick pay plan required to have a plan document? And should the disability supplemental pay plan have a plan document?

Employee handbook contains vague statement about sick pay and nothing re disability makeup.

Employer is somewhat defensive when daughter tries to get info as to what defines her entitlements (and they admit this is the first time they have dealt with this type of situation). Will appreciate any comments.

[Ron Snyder]

1. ERISA provides specific exemption for governmental plans. A tax-exempt entity may not need to comply with some portions of the Internal Revenue Code (dealing with deductions, ie), other would need to be complied with to aviod immediate taxability of benefits to participants. No blanket exemption from ERISA application.

2. As with other plans, a sick pay plan required to have a summary plan description and a plan document.

The daughter should make written requests for documents and clarification. She should be careful to preserve her appeal rights and comply with the requirements.

[sloble@crowleyfleck.com]

Sick pay/disability plans can be exempt from ERISA if they meet the "payroll practice" exemption in the regs.

[GBurns]

AshleyL

Any suggestions or references as to how this might be done?

[oriecat]

The reg is 29CFR2510.3-1(b). But it specifically says "Payment of an employee's normal compensation" in the section on sick/disability pay (2510.3-1(b)(2)), so I am wondering if since they are only paying a partial amount to make up with the state amount, then maybe it wouldn't qualify under the reg?