Apprenticeship plan trustee pay and ERISA duties

P/OPINION 76-03


                                                             3(1)
                                                             104(a)(3)
                                                             408(c)2
                                                             410(b) ✓
                                                             414(c)


                     March 17, 1976

Dear:

This is in reply to your letter of January 28, 1976, to
          concerning the application of various provisions
of the Employee Retirement Income Security Act of 1974
(the Act) to certain questions involving training and
apprenticeship plans.

Your letter first inquires whether a plan may compensate
a person who is a trustee or fiduciary with respect to
the plan for the time spent by such person in attending
an apprenticeship meeting in a distant city. Your letter
indicates that such person is not paid his normal hourly
wage by his employer when attending such meeting and, as
a result of attending the meeting, he will miss work and
suffer a diminution in pay.

Section 408(c)(2) of the Act provides, generally, that a
fiduciary may receive reasonable compensation for services
rendered, or reimbursement for expenses properly and actually
incurred, in the performance of his duties with a plan.
Section 408(c)(2) further provides, however, that a fiduciary
who already receives full-time pay from an employer or
association of employers, whose employees are covered by the
plan, or from an employee organization whose members are
participants in the plan, may not receive compensation for
services rendered to the plan (although he may receive
reimbursement for expenses properly and actually incurred in
connection with his plan duties).
P/OPINION 76-03


In the situation described in your first question, the
trustee or fiduciary is paid by his employer (who we
assume is an employer whose employees are participants
in the plan) on an hourly basis and loses wages for time
spent in connection with his plan duties. Thus, he would
not be deemed to be receiving full-time pay from his
employer during those periods of time that he is performing
his duties as plan trustee or fiduciary, and he may, therefore,
receive compensation from the plan for services rendered
in the performance of his duties with the plan.

The second question raised in your letter relates to a
situation similar to that described above, except that
the plan trustee or fiduciary is a management representative
who is required to be absent from his business for four
hours in order to attend the apprenticeship meeting. You
inquire whether this trustee may also be compensated by
the plan for services rendered in the performance of his
duties with the plan. As noted above, section 408(c)(2)
of the Act does not permit a plan trustee or fiduciary to
receive compensation from the plan if he is already receiving
full-time pay from, among others, an employer whose employees
are participants in the plan. From your letter, it appears
that the management representative/trustee is the owner of a
business which is an employer whose employees are participants
in the plan. In such cases, it is unlikely that the
trustee's regular full-time pay or compensation will be
diminished by his time spent on plan duties. Accordingly,
under section 408(c)(2) he may not ordinarily receive
compensation from the plan for services rendered to the
plan as trustee or fiduciary.

This provision does not however, preclude reimbursement
for expenses properly and actually incurred by such person
in the performance of his duties with the plan. In addition,
section 414(c)(4) of the Act may provide a transitional
exemption which would permit the payment of compensation
to a person serving as a trustee or fiduciary for a plan.
On December 31, 1974, the Department issued ERISA IB 75-1,
(enclosed herewith), which clarifies the scope of section
414(c)(4). As indicated in ERISA IB 75-1, a plan trustee
or fiduciary serving as such on June 30, 1974, whose services
meet the requirements of section 414(c)(4) of the Act,
P/OPINION 76-03


may continue to receive reasonable compensation from
the plan for his services as plan trustee or fiduciary
until June 30, 1977, notwithstanding the limitations
of section 408(c)(2).
The third question raised in your letter is whether
apprenticeship and training plans will be exempt from all
of the provisions of the Act. Section 3(1) of the Act
includes within the definition of "employee welfare
benefit plan" any apprenticeship or other training programs.
Pursuant to various provisions of the Act, employee welfare
benefit plans are subject to Parts 1 and 4 of Title I of
the Act relating to reporting and disclosure and fiduciary
responsibilities; however, such plans are not subject to
Parts 2 and 3 relating to participation, vesting and funding.
In addition, pursuant to regulations under section 104 (a)(3)
of the Act, issued by the Department on August 15, 1975
(29 CFR §2520.104-22, 40 FR 34535), a limited exemption from
the reporting and disclosure requirements of the Act has
been provided for employee welfare benefit plans which
provide solely apprenticeship and training benefits. I am
enclosing a copy of this regulation for your information.

Finally, your letter requests advice regarding the purchase
of fiduciary insurance, and, specifically, whether such
insurance should contain a "discrimination clause". As
you know, section 410(b) of the Act allows, but does not
require, plans to purchase insurance for its fiduciaries,
provided that such insurance permits recourse by the insurer
against the fiduciary in the case of a breach of a fiduciary
obligation by the fiduciary. However, the decision to purchase
such insurance can only be made by the appropriate plan
fiduciaries consistent with their responsibilities as
fiduciaries set forth in section 404(a)(l) of the Act.
Accordingly, the question of whether a plan should purchase
fiduciary insurance, or what form it should take, is not
a matter on which the Department is able to provide advice.
Sincerely,