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Regulation and Compliance > State Regulation

Labor: ERISA Preempts Ky. Contribution Consent Rule

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A federal official says state efforts to regulate employee benefit plan contributions violate the Employee Retirement Income Security Act.

Lisa Alexander, coverage division chief at the Employee Benefits Security Administration, an arm of the U.S. Labor Department, has delivered that opinion in a letter responding to a query from Eugene Scalia, a Washington labor lawyer who is the son of U.S. Supreme Court Justice Antonin Scalia.

Eugene Scalia had asked on behalf of a telecommunications company benefit plan whether Kentucky can make employers get written consent before withholding benefit plan contributions from employees’ wages.

Scalia noted that his client gives employees a choice of health plans but provides default coverage for employees who fail to choose their coverage or show that they already have coverage.

Section 514 of ERISA preempts state regulation of employee benefits and puts the federal government in charge of regulating benefit plans.

States retain the right to regulate insurance.

The Kentucky contribution consent law “has a prohibited connection with ERISA plans because it prohibits automatic enrollment arrangements in such plans,” Alexander writes in the advisory opinion letter.

Because the language of the Kentucky law directly affects benefit plan requirements, it violates the ERISA preemption provision, Alexander writes.


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