ERISA Section 104(b)(4): What Documents Do Employees Have a Right to Demand from Their Employers?

Article excerpt

The American worker has an undeniable fear regarding his future pension benefits. As the following sample demonstrates, this fear has manifested itself frequently in all parts of the country: the Santa Fe New Mexican reported that state prison guards fear the loss of their pensions under a new system;(1) the Cincinnati Business Courier recently wrote about hospital employees who fear a loss of their pension funds under the hospital's privatization plan;(2) the Spartanburg Herald-Journal reported that Buffalo mill workers recently received notice that their pensions "are in jeopardy."(3) The fear of pension loss extends beyond just small pockets of individual workers. Some claim that uncertainty about pensions partially explains flagging consumer confidence in 1995.(4)

The University of Wisconsin published a recent study on the length of time spent at one job by the average American worker.(5) The study showed that job mobility greatly decreases in pension-covered jobs.(6) According to the authors, this study confirmed the conclusions of other studies that pension benefits have a greater impact on worker retention than an added dollar of wage, longer tenure, or union membership.(7)

Are workers' fears over the possible loss of benefits unfounded? Varity Corp. v. Howe(8) would seem to suggest otherwise. In Varity, the employer misrepresented the financial situation of a functionally insolvent subsidiary.(9) The employer's goal was to encourage workers to shift their nonpension benefits from a solvent subsidiary to a newly-incorporated, money-losing subsidiary in order to release the solvent subsidiary from the obligation to pay these benefits.(10) In an unprecedented decision, the Supreme Court allowed workers an individual remedy under section 502 of the Employee Retirement Income Security Act (ERISA) in order to provide equitable relief for these workers.(11)

The fear of losing pension and welfare benefits also has resulted in litigation initiated by workers who demand disclosure by their employer of documents under ERISA section 104(b)(4)(12) which would allow them to monitor their pension plans in order to avoid the Varity scenario. This Note examines the implications of ERISA for a worker seeking full document disclosure. The first section presents an overview of ERISA, explaining its basic structure and the plans that can be constructed under the statute. The next section analyzes recent court decisions regarding disclosure requirements under ERISA section 104(b)(4) and discusses the current circuit split involving this section.(13) The third section addresses Department of Labor (DOL) opinion letters written in response to attorneys seeking to advise clients regarding disclosure obligations.

This Note then turns to an analysis of the traditional judicial methods of statutory interpretation in the area: first, a textualist approach, and second, an approach that looks to legislative history and to the purposes of ERISA. This section also critiques both methods in order to demonstrate that although both methods of statutory interpretation are useful, neither is able to address disclosure requirements adequately under the statute. Finally, this Note proposes a third-tier pragmatic judicial inquiry as an alternate method of interpreting the ERISA disclosure requirements. This section specifically includes a five-part inquiry that courts should use to review litigation and addresses the possibility of congressional intervention by way of amending ERISA if this dilemma remains unresolved by the courts.

AN OVERVIEW OF ERISA

Before President Gerald Ford signed ERISA into law in 1974,(14) the gift theory predominated in the area of pension benefits: employers could choose to provide benefits but could set any limits they thought appropriate.(15) This laissez-faire approach, however, allowed 6,900 Studebaker Corporation employees to lose their pensions in 1963 because of an underfunded plan. …