Man with briefcase and law books ERISA has a preemption provision that protects qualifying sponsors from having to comply with different state regulations. Oregon's requirement that ERISA plans report their status is a breach of that provision, alleged ERIC.

The ERISA Industry Committee, a trade group that represents the interests of large employer sponsors of retirement plans, has settled a lawsuit brought against the Oregon Retirement Savings Board, which administers the Oregon Saves Auto IRA retirement program.

Last November, ERIC filed a complaint in a Portland federal court, seeking an injunction against a reporting requirement under the new Oregon law.

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Oregon Saves, which requires employers that don't sponsor a retirement plan to enroll workers in a state-administered Roth IRA, is in the midst of a phased rollout. Employers with 100 or more employees that don't offer a plan are required to participate.

Employers that do sponsor plans under the Employee Retirement Income Security Act are required to file papers proving as much. If an employer doesn't file a "certificate of exemption," they are required to enroll employees in the Oregon Saves plan.

It is that filing requirement that attorneys for ERIC claimed breached ERISA's federal preemptive powers.

"Reporting on plan activities is a core ERISA function governed exclusively by federal law," attorneys claimed in the lawsuit.

ERISA has a preemption provision that protects qualifying sponsors from having to comply with different state regulations. Oregon's requirement that ERISA plans report their status is a breach of that provision, alleged ERIC.

In settling the claim, ERIC drops its lawsuit. Going forward, if ERIC's members operating in Oregon are approached by the state, employers can inform regulators of their membership in the trade group. Regulators will then go back to ERIC to confirm membership.

In effect, ERIC members will only have to reveal they already sponsor a plan if the state asks.

ERIC represents employers with 10,000 or more employees. The organization does not publish its membership list. Nor is it clear how many ERIC members have operations in Oregon.

ERIC's lawsuit only addressed the reporting requirement in Oregon's law, and not ERISA's preemption implications with the overall law.

"Our argument was based on the fact that a reporting requirement was imposed on sponsors of ERISA-qualified plans," explained Will Hansen, executive vice president at ERIC, in an email. "Our lawsuit did not argue that the entire law is preempted by ERISA because no other provision within the law was harmful to our members."

It is unclear how Oregon's settlement will impact employers that sponsor ERISA plans that are not members of ERIC.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.