In Advisory Opinion 2025-02, the Department of Labor (“DOL”) has determined that the California Association of Professional Firefighters (“CAPF”) Long Term Disability (“LTD”) Plan is not an ERISA-covered employee welfare benefit plan because it is not established and maintained by either an employer or an employee organization.
Law. ERISA defines the term “employee welfare benefit plan” as:
“[A]ny plan, fund, or program established or maintained by an employer or by an employee organization, or by both, to the extent such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries” certain specified benefits, including long term disability.
Under ERISA, the term “employee organization” means:
“[A]ny labor union or any organization of any kind, or any agency or employee representation committee, association, group, or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning an employee benefit plan; or any employees’ beneficiary association organized for the purpose in whole or in part, of establishing such a plan.”
The law further provides that an association is an “employees’ beneficiary association” only if: (1) membership is conditioned on commonality of employment status—for example, membership is limited to employees of a certain employer or members of one union; (2) the association has a formal organization, with officers, by-laws or other indications of formality; (3) the association generally does not deal with employers; and (4) the association is organized for the purpose, in whole or in part, of establishing a welfare or pension plan.
Facts. CAPF is a non-profit mutual benefit corporation, established by various unions and mutual benefit associations, that provides self-funded long-term disability benefits to participating firefighting personnel and members of fire departments throughout California. Employees of fire departments that do not participate in CAPF may also participate, as individuals, in the plan.
Advisory Opinion. DOL determined that CAPF does not exist for the purpose of dealing with employers concerning an employee benefit plan. Therefore, CAPF is not an employee organization.
It then ruled that while CAPF has some of the characteristics of an employees’ beneficiary association in that it has a formal organization, it generally does not deal with employers, and it was organized, in part, to provide welfare benefits. However, in DOL’s view, CAPF membership is not conditioned on employment status nor do employees “participate” in CAPF.
Individuals who participate in the CAPF LTD Plan are not employees of a single employer or group of affiliated employers or members of a single employee organization. Rather, membership in the CAPF LTD Plan is open to employees of any number of unrelated employers, as well as other eligible individuals, who are not members of any participating union or employer. “In the Department’s view, having the same occupation or being employed by similar employers does not provide the type of employment-based commonality that characterizes an employees’ beneficiary association.”
Another potential basis for commonality in an employees’ beneficiary association—that the members are all members of the same union or employee organization—is also not satisfied by the CAPF arrangement. DOL does not view this commonality requirement as satisfied where an association’s membership extends to individuals belonging to a variety of associations, unions or clubs.
DOL also could not conclude that the CAPF members “participate” in an association. The Department has interpreted this requirement to mean that the members must participate in the association in such a way that its functions and activities are controlled by the members, either directly or through the regular election of directors, officers, or other similar representatives.
Accordingly, DOL determined that the CAPF LTD Plan does not constitute an employee welfare benefit plan under ERISA because the requirement that such plans be “established or maintained by an employer or by an employee organization, or by both” was not met.