The Department of Labor ("DOL") has recently issued two new Regulations regarding fee disclosure and transparency that will dramatically affect almost all employers that sponsor retirement plans for their employees, including PEOs that sponsor multiple employer plans (MEPs). The significance of these Regulations has not escaped the national media as evidenced by the segment broadcast May 30 on ABC's World News with Diane Sawyer. For those interested in viewing the segment, click here.

ABC News points out that, according to a survey conducted by AARP, 70% of all participants in employer-sponsored retirement plans are under the mistaken impression that they pay no 401(k) plan fees. The segment went on to demonstrate the potentially significant adverse impact that plan administrative fees can have on the benefits ultimately paid from the plan.

The first Regulation, effective July 1, 2012, is intended to ensure that plan sponsors know and understand all of the fees being charged by those companies that provide recordkeeping and investment management services ("Service Providers") to the plan. The second Regulation provides for fee disclosures to participants in plans which permit participant-direction of plan investments including all of the costs and expenses charged against their plan accounts.

In general, a Service Provider's failure to comply with the requirements of this new DOL Regulation will automatically result in a "prohibited transaction" between the plan and the Service Provider which must be disclosed on the plan's annual report. Furthermore, the plan sponsor must analyze and benchmark the disclosed fee information to determine if the fees being charged are "fair and reasonable." The failure to do so could result in a "breach of fiduciary duty." Many times employers believe that by hiring outside service providers they are reducing their fiduciary liability. However, the reality is that you will still be responsible for the plan operations and compliance-including work done by these service providers.

The importance of this fiduciary duty to properly analyze the information supplied by the Service Providers cannot be understated, especially in light of a recent class action case (Tussey v. ABB, Inc.) in which the court ruled that the plan sponsor pay $35.2 million to the plan's participants for failing to prudently monitor the recordkeeping and revenue-sharing payments made to the plan's recordkeeper and provider of investment alternatives under the plan.

For questions concerning these Regulations and their potential impact on employers which sponsor retirement plans for their employees please contact a member of the national PEO team or visit us on the Web at uhy-us.com.

With insurance costs on the rise, many companies are looking to PEOs and Staffing companies to fulfill their workforce needs. Co-employer relationships often have a fine line between the responsibilities of the PEO and the client employer when it comes to workers' comp and other insurance claims. Companies that use PEOs are doing whatever they can to push all of the insurance liability to the PEO. Below are a few examples of how these companies are attempting to mitigate their liability for claims that could potentially be made against them by the PEOs workers' comp carrier.

For instance, if a worksite employee or temporary worker is injured on your client's premises because of their negligence (i.e. failure to maintain their parking lot or to provide safe equipment) the injured worker will be paid loss of wages and medical bills from the PEOs workers' comp carrier. The carrier could then sue the client employer (also known as subrogation) to recover payments made to the worker. That sounds reasonable, right? Well, many companies are now attempting to obtain agreements whereas the PEO will waive their rights to file a suit to recover losses and also the losses of its workers' comp insurance carrier in the event of injury to their worksite employee, even if the claim is due to the client employer negligence. This also requires an agreement from the PEOs workers' comp carrier as shown by a waiver of subrogation endorsement on their workers' comp policy.

Putting formal agreements like this in place is something that might make or break a client relationship; completing a good risk assessment analysis before waiving a client's rights is essential in making the right decision.

For more information or questions on this topic please contact a member of the national PEO team or visit us on the Web at uhy-us.com.