I 

111TH CONGRESS 

1ST SESSION H. R. 3669 

To prohibit employers from carrying life insurance policies on their rank 

and file employees. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 29, 2009 

Mr. GUTIERREZ 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 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Employer-Owned Life 

5 Insurance Limitation Act’’. 

6 SEC. 2. PROHIBITION ON EMPLOYER-OWNED LIFE INSUR7 ANCE OF MOST EMPLOYEES. 

8 (a) GENERAL PROHIBITION.—It shall be unlawful for 

9 any employer to carry an employer-owned life insurance 


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1 policy on any employee of such employer whose salary is 

2 less than $1,000,000 per year. 

3 (b) MANDATORY CANCELLATION.—It shall be unlaw4 ful for any employer to carry an employer-owned life in5 surance policy not prohibited by subsection (a) for any em6 ployee after 30 days after such employee terminates em7 ployment with such employer. 

8 SEC. 3. DISCLOSURE REQUIRED. 

9 Not later than 30 days after the date on which an 

10 employer purchases any employer-owned life insurance 

11 policy not prohibited by section 2(a), the employer shall 

12 provide to the employee who is the subject of the employer13 owned life insurance policy a written notice that con14 tains— 

15 (1) a statement that the employer carries an 

16 employer-owned life insurance policy on the life of 

17 the employee; 

18 (2) the identity of the insurance carrier of the 

19 policy; 

20 (3) the benefit amount of the policy; and 

21 (4) the name of the beneficiary of the policy. 

22 SEC. 4. CIVIL ACTION. 

23 Any employee who is the subject of an employer24 owned life insurance policy carried by his or her employer 

25 in violation of section 2 (or the spouse or next of kin of 


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1 such an employee in the case of a deceased employee) may 

2 commence a civil action in an appropriate district court 

3 of the United States— 

4 (1) to enjoin the employer from carrying such 

5 a policy; and 

6 (2) to obtain damages in an amount that is the 

7 greater of $500,000 or— 

8 (A) in the case of a deceased employee, 3 

9 times the amount of any benefit paid or payable 

10 to the employer from the employer-owned life 

11 insurance policy; or 

12 (B) in the case of an employee who has not 

13 died, 3 times the amount of any benefit that 

14 would be payable to the employer from the em15 ployer-owned life insurance policy if the em16 ployee had died on the day on which such ac17 tion was commenced. 

18 SEC. 5. DEFINITIONS. 

19 As used in this Act— 

20 (1) the terms ‘‘employer’’ and ‘‘employee’’ have 

21 the meaning given such terms in section 3 of the 

22 Fair Labor Standards Act of 1938 (29 U.S.C. 203); 

23 and 

24 (2) the term ‘‘employer-owned life insurance 

25 policy’’ means a life insurance policy purchased by 


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1 an employer where the insured is an employee of the 

2 employer and the beneficiary is the employer. 

3 SEC. 6. GAO STUDY. 

4 The Comptroller General shall study the incidence of 

5 employers carrying employer-owned life insurance policies 

6 on their employees, the effect of this Act on such practices, 

7 and the number of actions brought under section 4 during 

8 the first 2-year period following the date of enactment of 

9 this Act. In conducting such a study, the Comptroller Gen10 eral shall consult with the Internal Revenue Service re11 garding information on such policies that has been re12 ported to the Service. Upon conclusion of the study, the 

13 Comptroller General shall transmit to Congress a report 

14 assessing the efficacy of this Act in eliminating or limiting 

15 employer-owned life insurance policies. 

16 SEC. 7. EFFECTIVE DATE. 

17 This Act shall take effect 90 days after the date of 

18 its enactment. 

19 SEC. 8. CRIMINAL PENALTIES. 

20 Any employer who commits a violation of section 2(a) 

21 upon conviction thereof, shall be deemed guilty of a mis22 demeanor and shall be fined $500,000 and imprisoned for 

23 up to 1 year. 

Æ 


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