DoL Releases Final MEWA Determinations

April 8, 2003 ( - Plan sponsors have some guidance in determining whether an employee welfare benefit plan is collectively bargained, and thus exempt from state regulation of multiple employer welfare arrangements (MEWA).

>The US Department of Labor (DoL) released a final rule to offer assistance in determining whether a plan is a MEWA under ERISA Section 3(40).   Additionally, a final rule was released describing the procedures for administrative hearings in making such determinations, according to Washington-based legal publisher BNA.

>The administrative hearing final rule provides that a hearing is available only if the law of a state has been asserted against a plan or other arrangement that contends it is collectively bargained.   Further, such a hearing is available only to an entity that contends it meets the collective bargaining exception.

>Administrative hearings thus offer both the plan and the state an opportunity to reach a decision without going through the courts, the DoL said in the preamble to the rule.

Determining Factors

>The factor final rule retains the criteria as originally proposed that, if satisfied, would constitute a plan is established or maintained under one or more collective bargaining agreements for purposes of ERISA Section 3(40).   Those four factors are:

  • The entity in question must be an employee welfare benefit plan within the meaning of Section 3(1).
  • 85% of those participants covered by the plan have to have a nexus to the bargaining relationships under which the plan was established or maintained.
  • The agreements that established the plan are required to have characteristics that indicate that they were, for purposes of Section 3(40) only, collective bargaining agreements.  
  • Of the eight specific “factors” deemed to indicate the existence, for purposes of Section 3(40) only, of a bona fide collective bargaining relationship, at least four are present.

Additional, this rule contains a “catch-all” factor.   This factor recognizes, that in any particular case, other facts might need to be taken into account to determine whether a bona fide collective bargaining relationship exists.


>The proposed rule, original published in the Federal Register October 27, 2000 was clarified and amended in response to seven comments received by the DoL.   The DoL made the following amendments:

  • amended the definition of collective bargaining agreement
  • amended the nexus group categories, which now include, as a separate category, the employees of an authorized employer representative that actually engaged in the collective bargaining that led to the agreement that references the plan
  • require at least 85% of the participants in the plan be within the nexus group
  • noted the final rule is not intended to provide a basis for delay of a state administrative proceeding or enforcement of a subpoena
  • clarified that in the case of a merger of MEWAs, participation in a predecessor plan or employment with a predecessor union may be considered for purposes of determining the nexus group individuals
  • in determining the amount of premiums or contributions to which the 75% test applies does not include any amount that a participant or beneficiary might be required to pay as a co-pay or deductible under the provided coverage

Both final rules are scheduled to be published in the April 9 Federal Register with an effective date of June 9.   Plan sponsors can find additional information on MEWAs at .