In the past 17 years, since the Department of Labor promulgated its safe harbor rules for electronic delivery of required notices under ERISA, electronic delivery has slowly become the norm.
As plan sponsors and recordkeepers alike strive for administrative efficiency and lower costs, it only makes sense that many prefer electronic delivery of notices. It is estimated that eliminating paper notices altogether across the industry would reduce administrative costs by $750 million annually.
- According to the US Census Bureau, almost 80 percent of households now have a desktop, laptop and/or a hand held device, plus an internet subscription. This compares to 1984 when fewer than 10 percent of households had a computer of any type.
- Current law mandates delivery of required notices by a means “reasonably calculated to ensure receipt.” In 2002, the DOL issued two safe harbors known as “wired at work” and “affirmative consent” describing the circumstances under which electronic delivery meets this standard. Following these safe harbors is not a legal requirement but has been industry practice.
- Under the “wired at work” safe harbor, notices may be delivered electronically to participants on company email. For employees not on company email and former employees, consent is required. In practice, this has meant electronic delivery for active employees on company email and the U.S. mail for everyone else.
- The new rule will permit notifying participants how they can access required notices on line. The proposed rule includes standards for maintaining websites.
- Participants will still have a right to paper notices upon request. Once a participant is notified by paper of the right to receive paper all future notices may be electronic.
- The rule is in proposed form. But it appears that going forward the industry standard will be to direct participants to a website where they can view required notices. There will be delivery of a paper notice only at the onset of participation to inform participants of their right to paper notification, or if this is then affirmatively requested by the participant.