What Kinds of Programs Are Welfare Benefit Plans or Pension Plans Under Title I of ERISA

In order to be either an employee welfare benefit plan or an employee pension benefit plan under Title I of ERISA, the arrangement, practice, or agreement must be a plan. Two aspects of this analysis are whether the sponsoring employer or employee organization has adopted the arrangement, practice, or agreement; and, if so, whether it constitutes a plan.

Plans sponsored by corporations are typically established by directors' resolutions. Once the resolution is adopted the plan is executed by the appropriate corporate officials, typically the president and the secretary. Typically plans that are established by noncorporate entities such as partnerships and proprietorships are merely executed; no board resolutions are used. Sometimes in larger corporations welfare plans are adopted without board approval by officers who have been delegated the authority to take such action, or have it by virtue of their office.

Neither Title I nor its regulations define what constitutes a plan for purposes of Title I of ERISA. Instead the definition of a plan under Title I is evolving through case law. Several courts have held that individual employment contracts are not ERISA plans. Another has held, however, that a contract between an employer and employee providing severance benefits was an ERISA plan. In the latter case, identical contracts had been entered into with approximately 20 other employees and each contract stated that the employer intended to provide severance benefits to certain key management employees. A program under which an employer provided its employees with a toll-free number staffed by operators who advised the employees who called where they could receive help for problems such as drug abuse was not a welfare benefit plan since it did not provide "benefits" of the type envisioned by ERISA 3(1). An employer who had a practice of paying insurance premiums for his employees and having them reimburse him, but who paid premiums without reimbursement for at least one employee, was held to have established a plan for purposes of ERISA. However, where an employment agreement which provided for severance benefits was entered into only with the president of the company, the Ninth Circuit concluded that it was not an ERISA plan, largely because it did not have ongoing administration requirements.