Whether because of the tight U.S. labor market or flawed onboarding processes, many undocumented workers are becoming participants and accruing benefits in ERISA-governed employee benefit plans. Dealing with such plan participation adds yet another layer of administrative difficulty and legal exposure for employers who hire employees not authorized to work in the U.S.
ERISA does not exclude individuals otherwise qualifying as common law employees from plan rights and protections simply because of their immigration status.
However, although the Department of Labor (“DOL”) has affirmed that other federal statutes, such as the FLSA, protect undocumented workers, it has conspicuously failed to formally state that ERISA does too.
And the court decisions have not been consistent. For example, one federal district court opinion held in 2016 that trustees of ERISA benefit funds could enforce collection from employers of unpaid plan contributions for illegal aliens to collectively bargained welfare and pension plans. But another federal district court decision in 2009 held that the wife of a deceased undocumented worker could not recover death benefits under an ERISA group life insurance plan.
These individuals understandably desire to stay under all governmental radar, usually because they have either no social security number or a false one. As a result, tax and related difficulties arise when administering their participation in a plan. For example, under the annual reporting...
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