Benefits and Employer Liability
What obligations do employers have re: benefit plans?
1. Administrating benefit plans
Duty: to diligently administrate benefits
2. Advising re: benefit plans
Duty: to accurately describe benefit coverage
Administrating Benefit Plans
- Administration activities:
- issuing benefits summaries and/or policy books
- enrolling employees in a benefits plan
- providing medical questionnaires
- collecting premiums
- reporting incomes to the insurer
- assisting employees in making claims
- and more
Administrating Benefit Plans (cont.)
Pittman v Manufacturers Life Insurance Company [1990] N.J. No. 36.
- Employee applied for optional life insurance for his spouse under employer's group benefits plan.
- Company's responsibility to receive the applications on behalf of the insurance company.
- Employer lost the application, never provided it to insurer.
- Employee's wife passed away.
- Insurance denied: no record of wife's application.
Administrating Benefit Plans (cont.)
Newfoundland Court of Appeal:
- Insurance company would have accepted application if received.
- Employer was agent of the insurer for the purpose of receiving the application.
- Both employer and the insurer found liable for value of wife's coverage: $50,000.
Advising on Benefit Plans
What kind of details do employees want / need to know? Includes:
- The nature of the benefits offered;
- The extent of benefit coverage; and
- Requirements for eligibility.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
