ERISA requires Summary Plan Descriptions and other disclosures to be "written in a manner calculated to be understood by the average plan participant." ERISA section 102(a). On October 23, 2019, the Department of Labor (DOL) published proposed regulations on new Electronic Disclosure Rules that, among other things, require individuals to receive a "notice of internet availability."
The purpose of the notice is to inform individuals that required disclosures may be found on the internet. The proposed regulations also state that if the notice has a Flesch Reading Ease score of at least 60, then the notice is "written in a manner calculated to be understood by the average plan participant."
Similarly, the proposed regulations state that "covered documents must be presented" on a website in a manner "calculated to be understood by the average plan participant." The preamble to the proposed regulations notes that this requirement is identical to the readability standard set forth in the regulations.
Thus, if a document presented on a website has a Flesch Reading Ease score of at least 60, the DOL will deem it to be understandable by the average plan participant.
Is the DOL imposing the Flesch Reading Ease Score as a new standard for the readability of plan-related disclosures? Just in case, we ran the Flesch Reading Ease test on the DOL’s new proposed regulations (we used MS Word for all Flesch scores in this article). The DOL scored 14.2. (A score of 0 to 30 is rated “very difficult.”)
Perhaps the message here is that if the DOL wants employers to simplify disclosures, the DOL should first write shorter, simpler regulations. It is possible to achieve a Flesch Reading Ease Score of at least 60 on a Notice of Availability. However, given the current complexity of both IRS and DOL regulations, it is much harder to achieve that score on more technical documents, such as a defined benefit plan summary plan description. Employers could more easily simplify disclosures if the DOL and the IRS would first simplify their regulations.
By the way, the Flesch Reading Ease score for this article is 42.5 (the score for the Pledge of Allegiance is 41.6). And yes, we will next issue an advisory that discusses the proposed regulations.