New York Banking Law
Article 2-A
Employee welfare funds.
Section
60. Declaration of policy.
61. Definitions.
62. Registration.
63. Examinations; authorization and requirement.
64. Examinations; publication.
65. Examinations; expenses.
66. Annual statement to superintendent.
67. Special statements to superintendent.
68. Annual reports to employers and employees.
69. Annual statements by corporate trustees and agents,
insurance companies and service plans.
70. Regulation under other laws.
71. Compliance and enforcement.
72. Injunctions.
73. Supplementary regulations; extensions of time.
74. Construction.
75. Separability.
S 60. Declaration of policy. It is hereby declared to be the policy of
the state that employee welfare funds are of great benefit to employees
and their families and that their growth should be encouraged; that the
establishment and management of such funds vitally affect the well-being
of millions of people and are in the public interest; and that such
funds should be supervised by the state to the extent necessary to
protect the rights of employees and their families, without imposing
burdens upon such funds which might discourage their orderly growth and
without duplicating the supervisory responsibilities presently vested in
any state agencies.
S 61. Definitions. 1. Employee welfare funds. The term "employee
welfare fund", as used in this article, shall mean any trust fund or
other fund established or maintained by or on behalf of one or more
employers together with one or more labor organizations to provide
employee benefits, by the purchase of insurance or annuity contracts or
otherwise, with the over-all management of such fund vested, alone or
jointly with other trustees, in a corporate trustee which is subject to
supervision by the superintendent of banks of this state or any other
state or is a member of the federal reserve system, and to which fund is
paid or contracted to be paid anything, other than income from
investments of such fund, for the benefit of employees employed in this
state, and, if the principal office of the employer is located outside
of the state, for at least twenty such employees.
2. Employee benefits. The term "employee benefits", as used in this
article, shall mean one or more benefits or services for employees or
their families or dependents, or for both, including, but not limited
to, medical, surgical or hospital care or benefits, benefits in the
event of sickness, accident, disability or death, benefits in the event
of unemployment, or retirement benefits.
3. Trustees. The term "trustee", as used in this article, shall mean
the person or group of persons who or which is charged with or has the
general power of administration over an employee welfare fund and may
include a pension board or committee, a board of individual trustees, a
board of administration or the like; provided, however, such term shall
not include a corporate trustee which is subject to supervision by the
superintendent of banks of this state or any other state or is a member
of the federal reserve system; nor shall such term include any insurer
licensed under the laws of this state or authorized to do business
herein.
4. Superintendent. The term "superintendent", as used in this article,
shall mean the superintendent of banks.
5. Employed in this state. The term "employed in this state", as used
in this article, shall mean employed at a place of business maintained
by the employer in the state of New York.
6. Employer. The term "employer", as used in this article, shall mean
all persons part or all of whose employees or members are covered by an
employee welfare fund.
7. Person. The term "person", as used in this article, shall mean all
individuals (acting alone or in representative capacities),
partnerships, associations, corporations, labor unions and other
entities.
8. Labor organization. The term "labor organization", as used in this
article, shall mean any 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 grievances,
labor disputes, wages, rates of pay, hours of employment or conditions
of work.
S 62. Registration. 1. The trustees of every employee welfare fund
shall register such fund with the superintendent within three months
after the effective date of this article, and the trustees of every
employee welfare fund commencing to do business in this state after the
effective date of this article shall register such fund with the
superintendent within three months after so commencing. Such
registration shall be in such form and shall contain such information
relating to the organization, operations and affairs of such fund as may
be prescribed by the superintendent.
2. If it is found that the conditions which originally required
registration with the superintendent of banks have ceased to exist and
that new conditions exist which would not require the registration of an
employee welfare fund with either the superintendent of banks or the
superintendent of insurance, then the superintendent of banks may, on
application of the trustees or on his own motion, cancel the
registration of such fund.
S 63. Examinations; authorization and requirement. 1. The
superintendent may examine into the affairs of any employee welfare fund
as often as he deems it necessary, and he shall do so at least once in
every five years.
2. The trustees of every employee welfare fund shall be responsible
for the maintenance of accurate records of its books and accounts in
conformance with generally accepted accounting principles and with any
regulations prescribed with regard thereto.
S 64. Examinations; publication. 1. All reports of examinations and
investigations, special reports rendered to the superintendent pursuant
to section sixty-seven of this article, or correspondence and memoranda
concerning or arising out of such examinations or investigations,
including any duly authenticated copy or copies thereof in the
possession of any employee welfare fund or the banking department, shall
be confidential communications, shall not be subject to subpoena and
shall not be made public unless, in the judgment of the superintendent,
the ends of justice and the public advantage will be subserved by the
publication thereof, in which event he may publish or authorize the
publication of a copy of any such report or other material referred to
in this subdivision one, or any part thereof, in such manner as he may
deem proper.
2. In any action or proceeding against the trustees of any employee
welfare fund, or against their officers, agents, or employees, report of
examination or investigation, or any part thereof, if published or
authorized to be published by the superintendent, shall be admissible in
evidence and shall be presumptive evidence of the facts stated therein.
3. The superintendent may assemble and file for public inspection such
information covering forms of trust indentures in use and compensation
paid to trustees of employee welfare funds and such other matters
affecting the establishment and administration of such funds as, in his
opinion, are in the public interest.
S 65. Examinations; expenses. The expenses of every examination of the
affairs of any employee welfare fund, including any appraisal of real
property, made pursuant to the authority conferred by any provision of
this chapter, shall be borne and paid by the employee welfare fund so
examined, but the superintendent, with the approval of the comptroller,
may in his discretion for good cause shown remit such charges. For any
such examination by the superintendent or a deputy superintendent
personally, the charge made shall be only for necessary travelling
expenses and other actual expenses. In all other cases the expenses of
examination shall also include reimbursement for the compensation paid
for the services of persons employed by the superintendent or by his
authority to make such examination or appraisal. All charges, including
necessary travelling and other actual expenses, as audited by the
comptroller and paid on his warrant in the usual manner by the
comptroller to the person or persons making the examination or
appraisal, shall be presented to the trustees of the employee welfare
fund in the form of a copy of the itemized bill therefor as certified
and approved by the superintendent or a deputy superintendent. Upon
receiving such certified copy such trustees shall pay the amount thereof
to the superintendent, to be paid by him into the state treasury.
S 66. Annual statement to superintendent. The trustees of every
employee welfare fund shall file in the office of the superintendent,
annually within five months after the close of the fiscal year used in
maintaining the records of such fund, a statement, to be known as the
annual statement of such fund, executed in duplicate, verified by the
oath of its trustee or, if there is more than one trustee, then by the
oaths of at least two of such trustees, showing its condition and
affairs during such fiscal year. Such fiscal year shall not be changed
without the consent of the superintendent. Such statement shall be in
such form and contain such substantiation by vouchers and otherwise and
such other information as the superintendent shall from time to time
prescribe. The superintendent shall cause to be prepared and furnished
to the trustees of every employee welfare fund required by law to report
to him printed forms of the statements and schedules required by him.
Every employee welfare fund shall, at the time of filing the annual
statement, pay to the superintendent the sum of one hundred twenty-five
dollars as a fee for reviewing such annual statement, provided, however,
for funds with annual contributions of less than fifty thousand dollars,
as reported in such annual statement, the fee shall be twenty-five
dollars.
S 67. Special statements to superintendent. In addition to any other
statements or reports required by this article, the superintendent may
also address to the trustees of any employee welfare fund or to any of
its other officers, agents or employees or to any employer or labor
organization representing any employees eligible for employee benefits
thereunder any inquiry in relation to the transactions or condition of
the fund or any matter connected therewith. Every person so addressed
shall reply in writing to such inquiry promptly and truthfully, and such
reply shall be verified, if required by the superintendent, by such
individual or individuals as he shall designate.
S 68. Annual reports to employers and employees. The trustees of every
employee welfare fund shall, annually, within five months after the
close of the fiscal year used in maintaining the records of such fund,
file a report with the superintendent to be known as the annual report
of such fund, verified by the oath of its trustee, or if there is more
than one trustee, then by the oaths of at least two of such trustees,
showing its condition and affairs during such fiscal year. Such report
shall be in such form and contain such matters as the superintendent
shall from time to time prescribe. Such annual report shall be kept on
file with the superintendent and at the principal office of the trustees
and such report, or such portion thereof as the superintendent shall
deem appropriate and relevant, shall be made available by the
superintendent or by the trustees, or both, for inspection by any
employer contributing to such fund, by any labor organization which is a
party to an agreement establishing such fund, or by any employee covered
by such fund. In addition and to such extent that he deems it to be in
the public interest, the superintendent may require the trustees to mail
such report, or such portions thereof as the superintendent shall deem
appropriate and relevant, to employees covered by the fund, to
contributing employers or to any labor organization which is a party to
an agreement establishing such fund, or to any or all of such parties.
Article 2-A, Continued . . .
S 69. Annual statements by corporate trustees and agents, insurance
companies and service plans. Any corporate trustee or agent holding or
administering all or any part of an employee welfare fund, and any
insurance company or hospital, surgical or medical service plan
providing benefits under an employee welfare fund shall, within four
months after the end of each policy or fiscal year, furnish to the
trustees of the fund a statement of account setting forth such
information relating to the fund as the trustees of the fund may need
from it in order to comply with the requirements of this article.
S 70. Regulation under other laws. Where the trustees of any employee
welfare fund are subject to and comply with the requirements of any law
of this state other than this article or the law of any other state or
of the United States with respect to registration, filing, examination,
statements or reports, such requirements of this article or any of them
may be waived by the superintendent with respect to any such fund or
trustees to the extent that they are included in such other laws.
Application for such a waiver shall be made in writing to the
superintendent on such forms as he may require and any waiver issued by
him hereunder shall be in writing and shall be filed in his office. The
superintendent may, at any time, revoke any such waiver if, in his
opinion, such other laws fail to accomplish adequately the purposes of
this article. The action of the superintendent pursuant to this section
shall be subject to judicial review.
S 71. Compliance and enforcement. 1. The trustees of every employee
welfare fund shall be responsible in a fiduciary capacity for all money,
property, or other assets received, managed or disbursed by them, or
under their authority, on behalf of such fund.
2. (a) No employee welfare fund and no employer or labor organization
representing any employees eligible for employee benefits thereunder,
and no trustee or other officer or employee of any such fund, employer
or labor organization shall receive, directly or indirectly, any
payment, commission, loan or other thing of value from any insurance
company, insurance agent, insurance broker or any hospital, surgical or
medical service plan, in connection with the solicitation, sale, service
or administration of a contract providing employee benefits for such
fund; and no such employer, labor organization, trustee, officer or
employee shall receive any payment, commission, loan, service or any
other thing of value from such fund, or which is charged against such
fund or would otherwise be payable to such fund, either directly or
indirectly, except that any such person may receive any employee
benefits to which he is otherwise entitled, and any such trustee or
other officer or employee of a fund, may receive from such fund
reasonable compensation for necessary services and expenses rendered or
incurred by him in connection with his official duties as such;
provided, however, that nothing in this subdivision shall affect the
payment of any dividend or rate credit or other adjustment due under the
terms of any insurance or annuity contract.
(b) No insurance company, insurance agent or insurance broker and no
hospital, surgical or medical service plan, shall either directly or
indirectly, pay any commission, make any loan or give any other payment
or thing of value to any employee welfare fund or to any employer or
labor organization representing any employees eligible for employee
benefits thereunder or to any trustee or other officer or employee of
any such fund, employer or labor organization, in connection with the
solicitation, sale, service or administration of a contract providing
employee benefits for such fund.
(c) The superintendent may, after notice and a hearing, prohibit the
trustees of an employee welfare fund from employing or retaining or
continuing to employ or retain any person upon finding that such
employment or retention involves a conflict of interest which is not in
the best interests of the fund or adversely affects the interests of
covered employees. Any such finding by the superintendent shall be
subject to judicial review.
(d) The superintendent may, by regulation or order, and upon such
terms and conditions as he may require, authorize or approve any
transaction or transactions otherwise prohibited by this subdivision
upon his finding that the transaction or transactions promote or will
promote the best interests of the relevant employee welfare funds, and
do not or will not adversely affect the interests of the covered
employees.
3. (a) No insurance company shall pay any dividend or retrospective
rate credit on any covering policy except by check payable to the
affected employee welfare fund or by credit memo forwarded to such fund.
(b) No employee welfare fund shall pay any premium on a covering
policy except by check payable to the insurance company directly.
4. No political contributions shall be made directly or indirectly by
or from any employee welfare fund.
5. The superintendent may impose a penalty of not to exceed
twenty-five hundred dollars upon any trustee or other officer, agent or
employee of any employee welfare fund subject to this article or may
remove such trustee, officer, agent or employee from office or
employment, or both such penalty and removal, if after notice and a
hearing he shall find that he has wilfully failed to comply with the
requirements of this article. Any such action of the superintendent
under this subdivision shall be subject to judicial review.
6. In any case where, after notice and a hearing, the superintendent
finds that any employee welfare fund has been depleted by reason of any
wrongful or negligent act or omission of a trustee or of any other
person, he may transmit a copy of his findings to the attorney general,
who may bring an action in the name of the people of the state, or
intervene in an action brought by or on behalf of an employee, for the
recovery of such fund for the benefit of the employees and such other
persons as may have an interest in the fund.
7. (a) Any person who wilfully violates or causes or induces the
violation of any provision of this article or any regulation hereunder
shall be guilty of a misdemeanor.
(b) Any person who makes a false statement or representation of a
material fact, knowing it to be false, or who knowingly fails to
disclose a material fact in any registration, examination, statement or
report required under this article or the regulations thereunder shall
be guilty of a misdemeanor.
(c) Any person who makes a false entry in any book, record, report or
statement required by this article or any regulation thereunder to be
kept by him for any employee welfare fund, with intent to injure or
defraud such fund or any beneficiary thereunder, or to deceive any one
authorized or entitled to examine the affairs of such fund shall be
guilty of a misdemeanor.
(d) Nothing in paragraphs (b) or (c) of this subdivision shall be
construed in any manner to limit the effect of paragraph (a).
S 72. Injunctions. The superintendent may maintain and prosecute in
the name of the people of the state an action against any trustee or any
other person or persons subject to the provisions of this article, for
the purpose of obtaining an injunction restraining such person or
persons from doing any acts in violation of the provisions of this
article. In such action if the court finds that a defendant is
threatening or is likely to do any act or acts in violation of this
article, and that such violation will cause irreparable injury to the
interests of the people of this state or the beneficiaries of the
employee welfare fund involved, the court may grant an injunction
restraining such violation. The court may, on motion and affidavits,
grant a preliminary injunction ex parte and an interlocutory injunction,
upon such terms as may be just; but the people of the state shall not be
required to give security before the issuance of any such injunction.
S 73. Supplementary regulations; extensions of time. 1. The
superintendent may from time to time promulgate appropriate
supplementary rules and regulations designed to carry out the express
provisions and purposes of this article.
2. For good cause shown, the superintendent may grant reasonable
extensions of time for doing any act required by this article.
3. (a) The trustees of any employee welfare fund which has its
principal place of business without the state, shall, within ten days
after registering a fund with the superintendent, file with the
secretary of state a designation, duly acknowledged, irrevocably
appointing the secretary of state as their agent upon whom may be served
any summons, subpoena, subpoena duces tecum or other process directed to
such trustees, in any action or proceeding brought under the provisions
of this article arising out of or in connection with any transaction,
matter or thing relating to such fund. If the trustees shall fail to
make such designation in the manner and within the period above set
forth, or, in the case of a fund which was registered with the
superintendent on the effective date of this act, within six months
after such effective date, such trustees shall be deemed to have
irrevocably appointed the secretary of state as such agent upon whom
service of such process may be made.
(b) Service of such process shall be made by serving the secretary of
state with a copy thereof and such service shall be sufficient provided
that notice thereof and a copy of the process are sent within ten days
thereafter by the moving party to the trustees at the office address of
the fund by registered mail with return receipt requested. In any
examination or hearing instituted by the superintendent, service of such
process shall be complete ten days after the receipt by the
superintendent of a return receipt purporting to be signed by the
trustees or their agent or agents in accordance with the rules and
customs of the post office department, or, if acceptance was refused by
the trustees or their agents, the original envelope bearing a notation
by the postal authorities that receipt was refused. In any action or
proceeding instituted in any court in this state having jurisdiction of
the subject matter, the moving party shall file with the clerk of the
court in which such action or proceeding is pending, or with the judge
or justice of such court, in case there be no clerk, an affidavit of
compliance herewith, a copy of the process, and either the return
receipt or the original envelope bearing a notation of refusal, as the
case may be. Such affidavit and other papers shall be filed within
thirty days after the return receipt or original envelope is received by
the moving party, and service of process shall be complete ten days
thereafter. Service of any process made in accordance with this
subdivision shall be deemed to have been made personally within the
state and, in the case of a court action or proceeding, within the
territorial jurisdiction of the court from which such process issued.
4. The trustees of every employee welfare fund shall preserve all of
its records of final entry and all reports and statements required by
this article and the regulations thereunder for a period of at least six
years from the date of making the same; provided, however, that
preservation of photographic reproduction thereof or records in
photographic form shall constitute compliance with the requirements of
this section.
S 74. Construction. Nothing in this article shall be construed to
relieve the trustees of any employee welfare fund from compliance with
any other provision of this chapter or any other applicable laws of this
state.
S 75. Separability. If any provision of this article or the
application of such provision to any person or circumstance shall be
held invalid, the remainder of this article and the application of such
provision to persons or circumstances other than those as to which it is
held invalid shall not be affected thereby.