Expanding Access to Retirement Act of 2019

II 116TH CONGRESS 1ST SESSION S. 1927 To amend the Employee Retirement Income Security Act of 1974 with respect to association retirement plans and other multiple employer pension benefit plans. IN THE SENATE OF THE UNITED STATES JUNE 20, 2019 Mr. KENNEDY introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To amend the Employee Retirement Income Security Act of 1974 with respect to association retirement plans and other multiple employer pension benefit plans. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Expanding Access to 4 Retirement Act of 2019’’. 5 VerDate Sep 11 2014 00:37 Jun 22, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 2 •S 1927 IS SEC. 2. DEFINITION OF ‘‘EMPLOYER’’ FOR PURPOSES OF AS- 1 SOCIATION RETIREMENT PLANS AND OTHER 2 MULTIPLE EMPLOYER PENSION BENEFIT 3 PLANS. 4 (a) DEFINITION OF EMPLOYER.—Section 3(5) of the 5 Employee Retirement Income Security Act of 1974 (29 6 U.S.C. 1002(5)) is amended by striking the period and 7 inserting ‘‘(which, with respect to a defined contribution 8 pension plan, includes only a bona fide group or associa- 9 tion of employers or a bona fide professional employer or- 10 ganization, as defined in paragraphs (43) and (44), re- 11 spectively).’’. 12 (b) BONA FIDE GROUP OR ASSOCIATION OF EM- 13 PLOYERS.—Section 3 of the Employee Retirement Income 14 Security Act of 1974 (29 U.S.C. 1002) is amended by 15 adding at the end the following: 16 ‘‘(43)(A) The term ‘bona fide group or associa- 17 tion of employers’ means a group or association of 18 employers that meets all of the following require- 19 ments: 20 ‘‘(i) The primary purpose of the group or 21 association may be to offer and provide multiple 22 employer pension plan coverage to employer 23 members and their employees, provided that the 24 group or association has at least one substantial 25 business purpose unrelated to offering and pro- 26 VerDate Sep 11 2014 00:37 Jun 22, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 3 •S 1927 IS viding multiple employer pension plan coverage 1 or other employee benefits. 2 ‘‘(ii) Each employer member of the group 3 or association participating in the plan is a per- 4 son acting directly as an employer of at least 5 one employee who is a participant covered 6 under the plan. 7 ‘‘(iii) The group or association has a for- 8 mal organizational structure with a governing 9 body and has by-laws or other similar indica- 10 tions of formality. 11 ‘‘(iv) The functions and activities of the 12 group or association are controlled, in form and 13 in substance, by its employer members and the 14 group’s or association’s employer members that 15 participate in the pension plan. 16 ‘‘(v) The employer members have a com- 17 monality of interest as described in subpara- 18 graph (C). 19 ‘‘(vi) The group or association does not 20 make plan participation through the association 21 available other than to employees and former 22 employees of employer members, and their 23 beneficiaries. 24 VerDate Sep 11 2014 22:51 Jun 26, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 4 •S 1927 IS ‘‘(vii) The group or association is not a 1 bank or trust company, insurance issuer, 2 broker-dealer, or other similar financial services 3 firm (including pension record keepers and 4 third-party administrators), or owned or con- 5 trolled by such an entity or any subsidiary or 6 affiliate of such an entity, other than to the ex- 7 tent such an entity, subsidiary, or affiliate par- 8 ticipates in the group or association in its ca- 9 pacity as an employer member of the group or 10 association. 11 ‘‘(B) For purposes of subparagraph 12 (A)(i)— 13 ‘‘(i) a ‘substantial business purpose’ is 14 considered to exist if the group or associa- 15 tion would be a viable entity in the absence 16 of sponsoring an employee benefit plan; 17 and 18 ‘‘(ii) a ‘business purpose’ includes pro- 19 moting common business interests of the 20 group’s or association’s members or the 21 common economic interests in a given 22 trade or employer community and is not 23 required to be a for-profit activity. 24 VerDate Sep 11 2014 00:37 Jun 22, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 5 •S 1927 IS ‘‘(C)(i) For purposes of subparagraph 1 (A)(5)— 2 ‘‘(I) Employer members of a group or 3 association shall be considered to have a 4 commonality of interest if— 5 ‘‘(aa) the employers are in the 6 same trade, industry, line of business, 7 or profession; or 8 ‘‘(bb) each employer has a prin- 9 cipal place of business in the same re- 10 gion that does not exceed the bound- 11 aries of a single State or a metropoli- 12 tan area (even if the metropolitan 13 area includes more than one State). 14 ‘‘(ii) In the case of a group or associa- 15 tion that is sponsoring a multiple employer 16 plan and that is an employer member of 17 the group or association, the group or as- 18 sociation will be deemed for purposes of 19 paragraph (b)(2)(i)(A) to be in the same 20 trade, industry, line of business, or profes- 21 sion, as applicable, as the other employer 22 members of the group or association. 23 ‘‘(D)(i) For purposes of subparagraph (A), 24 a working owner of a trade or business without 25 VerDate Sep 11 2014 00:37 Jun 22, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 6 •S 1927 IS common law employees may qualify as both an 1 employer and as an employee of the trade or 2 business. 3 ‘‘(ii) For purposes of clause (i), the term 4 ‘working owner’ means any person who a re- 5 sponsible plan fiduciary reasonably determines 6 is an individual— 7 ‘‘(I) who has an ownership right of 8 any nature in a trade or business, whether 9 incorporated or unincorporated, including 10 a partner or other self-employed individual; 11 ‘‘(II) who is earning wages or self-em- 12 ployment income from the trade or busi- 13 ness for providing personal services to the 14 trade or business; and 15 ‘‘(III) who— 16 ‘‘(aa) works on average at least 17 20 hours per week or at least 80 18 hours per month providing personal 19 services to the working owner’s trade 20 or business; or 21 ‘‘(bb) has wages or self-employ- 22 ment income from such trade or busi- 23 ness that at least equals the working 24 owner’s cost of coverage for participa- 25 VerDate Sep 11 2014 00:37 Jun 22, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 7 •S 1927 IS tion by the working owner and any 1 covered beneficiaries in any group 2 health plan sponsored by the group or 3 association in which the individual is 4 participating or is eligible to partici- 5 pate. 6 ‘‘(iii) The determination of whether 7 an individual qualifies as a working owner 8 shall be made when the individual first be- 9 comes eligible for participation in the de- 10 fined contribution multiple employer pen- 11 sion plan and continued eligibility pursuant 12 to this subparagraph shall be periodically 13 confirmed pursuant to reasonable moni- 14 toring procedures.’’. 15 (c) BONA FIDE PROFESSIONAL EMPLOYER ORGANI- 16 ZATION.—Section 3 of the Employee Retirement Income 17 Security Act of 1974 (29 U.S.C. 1002), as amended by 18 subsection (b), is further amended by adding at the end 19 the following: 20 ‘‘(44)(A) The term ‘bona fide professional em- 21 ployer organization’ means a human resource com- 22 pany that contractually assumes certain employer re- 23 sponsibilities of employers who are clients of the or- 24 ganization (referred to in this paragraph as ‘client 25 VerDate Sep 11 2014 00:37 Jun 22, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 8 •S 1927 IS employers’) and that meets all of the following re- 1 quirements: 2 ‘‘(i) The organization performs substantial 3 employment functions, as described in subpara- 4 graph (B), on behalf of client employers, and 5 maintains adequate records relating to such 6 functions. 7 ‘‘(ii) The organization has substantial con- 8 trol over the functions and activities of the mul- 9 tiple employer plan, as the plan sponsor (within 10 the meaning of section 3(16)(B)), the plan ad- 11 ministrator (within the meaning of section 12 3(16)(A)), and a named fiduciary (within the 13 meaning of section 402). 14 ‘‘(iii) The organization ensures that each 15 client employer that adopts the multiple em- 16 ployer pension plan acts directly as an employer 17 of at least one employee who is a participant 18 covered under the defined contribution multiple 19 employer plan. 20 ‘‘(iv) The organization ensures that partici- 21 pation in the multiple employer pension plan is 22 available only to employees and former employ- 23 ees of the organization and client employers, 24 and their beneficiaries. 25 VerDate Sep 11 2014 22:51 Jun 26, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 9 •S 1927 IS ‘‘(v) The organization establishes a mul- 1 tiple employer pension plan. 2 ‘‘(B)(i) The Secretary shall determine 3 whether an organization is considered to per- 4 form substantial employment functions on be- 5 half of client employers, within the meaning of 6 subparagraph (A)(i), based on the criteria 7 under clause (ii). 8 ‘‘(ii) An organization performs substantial 9 employment functions if either of the following 10 applies: 11 ‘‘(I) The organization is a certified 12 professional employer organization (as de- 13 fined in section 7705(a) of the Internal 14 Revenue Code of 1986), has entered into a 15 service contract (within the meaning of 16 section 7705(e)(2) of such Code) with re- 17 spect to its clients that adopt the defined 18 contribution multiple employer pension 19 plan. 20 ‘‘(II) The organization meets 5 or 21 more of the following criteria with respect 22 to employees of client employers partici- 23 pating in the multiple employer pension 24 plan: 25 VerDate Sep 11 2014 00:37 Jun 22, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 10 •S 1927 IS ‘‘(aa) The organization is respon- 1 sible for payment of wages to employ- 2 ees of its client employers that adopt 3 the plan without regard to the receipt 4 or adequacy of payment from such cli- 5 ent employers. 6 ‘‘(bb) The organization is respon- 7 sible for reporting, withholding, and 8 paying any applicable Federal employ- 9 ment taxes for its client employers 10 that adopt the plan, without regard to 11 the receipt or adequacy of payment 12 from those client employers. 13 ‘‘(cc) The organization is respon- 14 sible for recruiting, hiring, and firing 15 workers of its client employers that 16 adopt the plan in addition to the cli- 17 ent employer’s responsibility for re- 18 cruiting, hiring, and firing workers. 19 ‘‘(dd) The organization is respon- 20 sible for establishing employment poli- 21 cies, establishing conditions of em- 22 ployment, and supervising employees 23 of its client employers that adopt the 24 plan in addition to the client employ- 25 VerDate Sep 11 2014 22:51 Jun 26, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 11 •S 1927 IS er’s responsibility to perform such 1 functions. 2 ‘‘(ee) The organization is respon- 3 sible for determining employee com- 4 pensation, including method and 5 amount, of employees of its client em- 6 ployers that adopt the plan in addi- 7 tion to the client employers’ responsi- 8 bility to determine employee com- 9 pensation. 10 ‘‘(ff) The organization is respon- 11 sible for providing workers’ compensa- 12 tion coverage in satisfaction of appli- 13 cable State law to employees of its cli- 14 ent employers that adopt the plan, 15 without regard to the receipt or ade- 16 quacy of payment from those client 17 employers. 18 ‘‘(gg) The organization is respon- 19 sible for integral human-resource 20 functions of its client employers that 21 adopt the plan, such as job-description 22 development, background screening, 23 drug testing, employee-handbook 24 preparation, performance review, paid 25 VerDate Sep 11 2014 22:51 Jun 26, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 12 •S 1927 IS time-off tracking, employee griev- 1 ances, or exit interviews, in addition 2 to the client employer’s responsibility 3 to perform such functions. 4 ‘‘(hh) The organization is respon- 5 sible for regulatory compliance of its 6 client employers participating in the 7 plan in the areas of workplace dis- 8 crimination, family and medical leave, 9 citizenship or immigration status, 10 workplace safety and health, or Pro- 11 gram Electronic Review Management 12 labor certification, in addition to the 13 client employer’s responsibility for 14 regulatory compliance. 15 ‘‘(ii) The organization continues 16 to have employee-benefit-plan obliga- 17 tions to multiple employer pension 18 plan participants after the client em- 19 ployer no longer contracts with the or- 20 ganization. 21 ‘‘(iii) The Secretary may determine 22 that an organization performs substantial 23 employment functions based upon finding 24 that such organization meets as few as a 25 VerDate Sep 11 2014 00:37 Jun 22, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1927.IS S1927 kjohnson on DSK79L0C42 with BILLS 13 •S 1927 IS single criterion under subclause (I) or (II) 1 of clause (ii).’’. 2 Æ VerDate 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