Who a Hold-Harmless Clause Binds
A clause only binds the parties who signed the agreement. Confirm that the entity promising to cover losses is the entity that performs the work.
What to know.
Providers sometimes use a parent company, an affiliate or a subcontractor for parts of a service. Check the legal name that signs, the entity that performs and whether any work is subcontracted.
Plan sponsors also carry duties of their own under ERISA, including prudently selecting and monitoring their service providers. A clause supports that work but does not replace it.
Where to look next.
ERISA for Employer Health Plans
Plan documents, fiduciary duties and claims.
Is It in Writing?
See what to look for.
Plan Compliance Services
See the services involved.
Checking who stands behind the promise.
Start with the name on the signature page and compare it with the name on the invoices and the notices the provider sends. If they differ, ask why. Providers often operate through related companies, and a promise from one entity may not bind another that performs the work.
Then ask about subcontractors. If a task such as printing and mailing notices or preparing filings is subcontracted, ask whether the provider answers for the subcontractor’s errors and says so in writing. Keep in mind that the plan sponsor also has its own duty to select and monitor providers prudently, so this review is part of that duty.
Common questions on this topic.
Four questions to settle before you rely on it.
Why does the signing entity matter?
Because only the signer is bound by the promise.
What if work is subcontracted?
Ask whether the clause covers the subcontractor’s errors.
Does it protect individual fiduciaries?
Ask your counsel. The terms control.
Who can answer these questions?
Your counsel and the provider. CFH can bring counsel in.
Does the provider’s size matter?
It can. A promise is worth more when the entity making it can pay. Ask about the entity’s financial standing, or whether it carries insurance supporting the promise.
Should we keep a record of how we selected the provider?
Yes. A short file showing what you reviewed, what you asked and why you chose the provider supports your prudence if a question arises later.
Ready? Upload your renewal, or talk it through with someone first. No cost, no obligation.
General information about compliance service protections, not legal or tax advice. Plan-specific questions belong with your counsel, and we will bring them in.
Related guides.
Is Your Compliance Vendor’s Protection in Writing?
The overview this page belongs to.
Compliance Services With Hold-Harmless Protection
What the protection is, what it covers and what to ask.
Ask to See the Hold-Harmless Clause
The next question on the same topic.
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
COBRA Excise Tax (26 U.S.C. 4980B)
The tax on failures to meet COBRA continuation coverage requirements.
ERISA Civil Enforcement (29 U.S.C. 1132)
Includes the daily amounts a court may assess for failing to provide required notices.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents, two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →