Distributing SPDs: Intranet is Not Enough
Frequently I am asked if it is good enough to just publish the new SPDs through the company intranet, making them available on-line. I usually say no because it does not cover former employees on COBRA or dependents. Now apparently I have a Court case that makes me right.
In Gertjejansen v. Kemper Insurance Companies, the 9th circuit recently held that posting the SPD to the company intranet site alone is insufficient. As a rule, ERISA requires SPDs to be distributed to plan participants in a manner reasonably calculated to ensure actual receipt by participants. Mailing them or delivering them electronically can satisfy this requirement. if you rely on electronic distribution, you would have to make sure that all employees have regular access to a computer at work and that non-employee participants are provided a copy through other means.
In this case, the Court found that a mere posting is not sufficient delivery because it was not an actual distribution. Making an SPD available on the company intranet did not constitute a "distribution." Plus, because all employees did not have regular access to a computer at work, the company could not verify that it was distributed to all participants.
DOL Reg 2520.104b-1(c) gives a safe harbor for electronic distribution, but it definitively requires a transmission of the SPD, not merely a posting. So in the future, make sure you are actually DISTRIBUTING the documents, not merely making them available.
