Friday, November 5, 2021
Paul M. Secunda, The Emerging Law of Portable Retirement Benefits, 95 Chicago-Kent L. Rev. (2020):
Alt-labor and the sharing economy have recently come to dominate the writings of labor and employment law scholars. Misclassification, union organizing, and wage and hour issues, have all been scrutinized as emerging issues for those who engage in alt-labor activities. In all this scholarship, the authors have mostly concerned themselves with workers who have precarious, less-than-full-time jobs in the new global economy of the early 21st century, and all of whom are seeking ways to improve their work conditions through organizing and other collective action outside the formalized collective bargaining process.
One of the less discussed, but equally important, alt-labor topics concerns the provision of retirement work benefits for the self-employed, workers at small businesses, as well as those in the precarious and gig-oriented American workforce. Indeed, an increasing number of these workers will lack adequate retirement savings in the decades to come. This state of affairs exists in part because being labeled “independent contractors” or some other form of non-employee status is of utmost importance in the American workplace. Such classifications largely determine whether workers are covered by U.S. employment laws, as such laws center on the existence of an employer-employment relationship. Because American employers are increasingly seeking to define many workers as “independent contractors” or non-employees, these workers have little to no access to retirement plans. In turn, this is critical because, according to AARP, Americans workers are fifteen times more likely to save for retirement when they are covered by a workplace retirement plan.
The thesis of this article is two-fold. First, self-employed, small business, and precarious workers must be considered common law employees under employee benefits law so that they can receive the consumer protections and the appropriate template of an approved retirement plan structure provided by ERISA. Second, under ERISA, these workers will most-likely receive meaningful access to retirement plans through the use of Open MEPs operated by PEOs. As this paper goes to press, Open MEPs run by PEOs have become a reality with the passage of the Setting Every Community up for Retirement Enhancement Act of 2019 (SECURE Act of 2019). It will be important to educate, and give incentive to, employers who currently do not provide employment-based retirement benefits to consider joining one of these new employee benefit plan structures.