Railroad insurance premium payroll checkoff

P/OPINION 75-144


                                                       3(1)
                                                       3(2)✓


                         March 28, 1975


Dear           :

This is in response to your letter requesting an opinion
as to whether the provision of deduction check-offs by
an employing railroad for insurance premiums of workers
constitutes an employee benefit plan under the Employee
Retirement Income Security Act of 1974 (ERISA).

Under the ERISA, one of the essential elements for an
employee benefit plan is that it be established or main-
tained by an employer, an employee organization, or both.
To meet this criterion, there must exist some involvement
by either the employer or the union or both. According
to the statement of facts in your letter, check-off
of premium payments for insured benefits is the employing
railroads' only connection with provision of insurance
to employees. Your letter is silent on union involvement
with any aspect to the provisions of insurance to employees.
The facts presented do not demonstrate establishment or
maintenance of an employee benefit plan under the ERISA.
They show only a vehicle (employer check-off) for payment
of individual insurance contracts.

Coverage would not be precluded if other employer or
union involvement exists. Our position is based solely
on the following statements in your letter: Employees
of the railroads have a payroll deduction check-off
privilege for payment of premiums for various types of
life insurance and accident and health insurance policies;
the policies are sold directly by insurance companies on
an individual basis to railroad workers and the decisions
of whether to purchase insurance, to determine the type
of coverage, and to maintain or drop the policy remain
with the individual worker; the policies vary in benefits,
premiums and provisions, are individually underwritten by
the insurance companies and are issued directly to employees
and the entire premium is paid, via the check-off vehicle,
directly to the insurers by the employing railroads.
2


P/OPINION 75-144


Assuming the foregoing statements to be accurate, and
further assuming the absence of other facts which would
tend to show additional involvement by the railroads,
the unions, or both, it is the opinion of this Department
that the railroads' practice of providing for payroll
deduction check-offs for premium payments on individual
insurance policies does not constitute an employee
benefit plan under the Employee Retirement Income Security
Act of 1974.

We trust that this answers your question and hope you
will not hesitate to write us if we can be of any further
assistance.

Sincerely,