H.R. 3669 (111th): Employer-Owned Life Insurance Limitation Act

111th Congress, 2009–2010. Text as of Sep 29, 2009 (Introduced).

Status & Summary | PDF | Source: GPO

I

111th CONGRESS

1st Session

H. R. 3669

IN THE HOUSE OF REPRESENTATIVES

September 29, 2009

introduced the following bill; which was referred to the Committee on Education and Labor

A BILL

To prohibit employers from carrying life insurance policies on their rank and file employees.

1.

Short title

This Act may be cited as the Employer-Owned Life Insurance Limitation Act.

2.

Prohibition on employer-owned life insurance of most employees

(a)

General prohibition

It shall be unlawful for any employer to carry an employer-owned life insurance policy on any employee of such employer whose salary is less than $1,000,000 per year.

(b)

Mandatory cancellation

It shall be unlawful for any employer to carry an employer-owned life insurance policy not prohibited by subsection (a) for any employee after 30 days after such employee terminates employment with such employer.

3.

Disclosure required

Not later than 30 days after the date on which an employer purchases any employer-owned life insurance policy not prohibited by section 2(a), the employer shall provide to the employee who is the subject of the employer-owned life insurance policy a written notice that contains—

(1)

a statement that the employer carries an employer-owned life insurance policy on the life of the employee;

(2)

the identity of the insurance carrier of the policy;

(3)

the benefit amount of the policy; and

(4)

the name of the beneficiary of the policy.

4.

Civil Action

Any employee who is the subject of an employer-owned life insurance policy carried by his or her employer in violation of section 2 (or the spouse or next of kin of such an employee in the case of a deceased employee) may commence a civil action in an appropriate district court of the United States—

(1)

to enjoin the employer from carrying such a policy; and

(2)

to obtain damages in an amount that is the greater of $500,000 or—

(A)

in the case of a deceased employee, 3 times the amount of any benefit paid or payable to the employer from the employer-owned life insurance policy; or

(B)

in the case of an employee who has not died, 3 times the amount of any benefit that would be payable to the employer from the employer-owned life insurance policy if the employee had died on the day on which such action was commenced.

5.

Definitions

As used in this Act—

(1)

the terms employer and employee have the meaning given such terms in section 3 of the Fair Labor Standards Act of 1938 (29 U.S.C. 203); and

(2)

the term employer-owned life insurance policy means a life insurance policy purchased by an employer where the insured is an employee of the employer and the beneficiary is the employer.

6.

GAO Study

The Comptroller General shall study the incidence of employers carrying employer-owned life insurance policies on their employees, the effect of this Act on such practices, and the number of actions brought under section 4 during the first 2-year period following the date of enactment of this Act. In conducting such a study, the Comptroller General shall consult with the Internal Revenue Service regarding information on such policies that has been reported to the Service. Upon conclusion of the study, the Comptroller General shall transmit to Congress a report assessing the efficacy of this Act in eliminating or limiting employer-owned life insurance policies.

7.

Effective date

This Act shall take effect 90 days after the date of its enactment.

8.

Criminal penalties

Any employer who commits a violation of section 2(a) upon conviction thereof, shall be deemed guilty of a misdemeanor and shall be fined $500,000 and imprisoned for up to 1 year.