No one doubts that employers’ health care costs are a major issue, nor that access to health care is also critical to attracting and retaining qualified and experienced employees. But employers are not limited to an “all-or-nothing” choice.
As explained recently by one federal court, the Employment Retirement Income Security Act’s (ERSIA) minimum participation requirements permit an employer to preclude hourly employees from participating in a benefits plan. In the case of first impression, the court agreed with the employer in that case that the ERISA requirements allowed it to deny participation to employees for any reason not based on age or length of service. The court went so far as to state: “Examples of legitimate exclusions may include employees who are hourly; those who are leased; those who are part-timed; or those who are independent contractors. In fact, an employer could even exclude all persons whose names begin with the letter “H,” as long as this was not deemed to be discriminatory in application.”
So what discrimination is prohibited by ERISA’s minimum participation requirements? Section 1052(a) of the Act does nothing more than forbid employers from denying participation in an ERISA plan to an employee on the basis of age or length of service if he is at least twenty-one years of age and has completed at least one year of service. Section 1052(a) does not prevent employers from denying participation in an ERISA plan if the employer does so on a basis other than age or length of service.