ERISA
Law FAQ
Lieff Cabraser Heimann & Bernstein, LLP, is a class
action law firm that represents employees across America
in lawsuits involving ERISA violations, breach of fiduciary
duties to pension and 401k participants, employment discrimination
and overtime pay disputes.
To contact
a Lieff Cabraser ERISA
attorney, please click
here.
ERISA
Law Frequently Asked Questions (FAQ) - Updated 2009
Does
an employer have legal obligations with respect to employee
pension plans?
Yes.
The Employee Retirement Income Security Act of 1974
("ERISA") imposes obligations on employers
who control or administer their employees' pension
plans. This is because an employer is generally a fiduciary,
with the authority to control and manage the operation
and administration of the plan.
ERISA
sets minimum standards for the administration of plans
and the investment of plan assets. It does not require
employers to offer a certain level of benefits to its
employees, or to offer employees any benefits at all.
For this reason, the language of the plan document is
often determinative. It is therefore extremely important
to know what your plan says, and to insist on seeing
a copy of the plan document yourself, rather than simply
relying on assurances by your employer or your employer's
representatives.
What
pension plans are covered under ERISA?
A
pension plan is governed by ERISA if it is a plan, fund,
or program established or maintained by an employer
(or an employee organization, or both) that, either
explicitly or because of surrounding circumstances,
(1) provides retirement income to employees or (2) results
in a deferral of income by employees until after termination
of covered employment or beyond.
Most
private employer-sponsored pension plans fall within
the scope of this definition. Plans and benefits that
do not fall within this definition include government
employee pension plans, vacation pay, health club benefits,
family leave, and workers' compensation.
What
is a fiduciary?
A
fiduciary is a person or entity with special obligations
arising from the relationship of trust between the fiduciary
and the beneficiary. The fiduciary holds rights that
would normally belong to another person, and is therefore
held to a high standard of care in the exercise of those
rights.
An
employer is a fiduciary with respect to an employee
pension plan if the employer is named as a fiduciary in the plan, or if the employer
exercises "any
discretionary authority or discretionary control respecting
management of such plan or exercises any authority or
control respecting management or disposition of its
assets" or has "any discretionary authority
or discretionary responsibility in the administration of such plan."
Most
employers are fiduciaries with respect to pension plans
that they have established or that they maintain. We use the term "employer" in
the questions below to mean an employer who is a fiduciary with respect
to a pension plan.
What is a beneficiary?
A
participant is any employee or former employee of an
employer who is or may become eligible to receive a
benefit of any type from that employer's employee benefit
plan. A
beneficiary is a person designated by a participant
or by the terms of a plan who is or may become entitled
to a benefit under the plan.
A
person can be both a participant and a beneficiary.
Participants and beneficiaries can assert their rights
under ERISA against fiduciaries who do not comply with
the required standard of care.
What
are an employer's obligations with respect to employee pension
plans?
As
a fiduciary, an employer must discharge his or her duties
with respect to a pension plan solely in the interest
of the plan's participants and beneficiaries and for
the exclusive purpose of providing benefits to participants
and their beneficiaries. In other words, an employer
who is a fiduciary must administer pension plans and
invest plan assets solely for the benefit of the plan's
participants and beneficiaries, and not for any other
reason, including any other business purpose or the
company's bottom line.
An
employer who is a fiduciary has a duty of loyalty to
plan participants and beneficiaries. An employer-fiduciary
also must not conceal any breaches of responsibility
by any other fiduciaries of the plan.
An
employer who is a fiduciary also has a duty of prudence.
This means that the employer-fiduciary must act with
care, skill, prudence, and diligence with respect to
a pension plan; must diversify investments; and must
act in accordance with the provisions of the plan itself.
This includes ensuring that the plan is properly funded
and has sufficient assets to satisfy its accumulated
benefit obligations.
An
employer who is a fiduciary has a duty not to engage
in self-dealing. Transactions between a plan and a party
in interest are prohibited, and an employer that sponsors
a plan is a party in interest. In the absence of a specific
exemption, transactions between the employer and the
plan constitute breaches of the employer's fiduciary
duty.
An
employer who is a plan administrator also has a duty
to inform. This means that such an employer must provide
employees adequate, accurate, and understandable information
about the plan's provisions, benefits, and source of
funding, including any changes to this information.
Providing
misleading or incomplete information violates this obligation.
As part of the employer's duty to inform, every plan
participant has the following rights:
- The right to obtain a copy of the plan document from
the plan administrator.
- The
right to receive a summary plan description (SPD)
upon joining the plan and at specified intervals thereafter.
The SPD is a description of the plan's terms that
is (or should be) in language that is understandable.
- The
right to obtain a copy of the plan's most recent annual
statement (Form 5500).
You
must request these documents from the plan administrator
in writing, and the plan administrator has 30 days from
the receipt of your request to respond.
Does
anyone else have fiduciary or other obligations with respect
to employee pension plans?
ERISA
also imposes fiduciary obligations on anyone who renders
investment advice for a fee or other compensation, or
who has any authority or responsibility to render such
advice, with respect to any pension plan money or property.
In
addition, in certain circumstances, some service providers
to the pension plan (such as attorneys, accountants,
actuaries, etc.) may be liable to the plan and/or its
participants for professional negligence.
What
can I do if my employer has breached its fiduciary duties?
You
should first seek recourse from the internal claim and
review procedure provided under your plan. Plans are
required to have an internal procedure by which participants
may bring and appeal disputed claims. Many courts have
held that participants must exhaust this internal procedure
before filing a lawsuit. It is a good idea to consult
an attorney even in this internal procedure to ensure
that you act in a timely fashion to preserve all your
rights and remedies under your plan and the applicable
state and federal laws, including ERISA.
An
attorney can help ensure that you submit all possible
evidence in support of your position while evidence
is fresh and more easily accessible, and so that the
evidence becomes part of the record of your claim. An
attorney can also help advise you of the relevant deadlines,
which may come quickly - for example, many plans require
you to appeal the denial of a claim within 60 days of
the denial. An attorney can also tell you whether your
claim is exempt from the internal claim and review procedure,
in which case you may decide to file a lawsuit.
When
internal procedures are insufficient to resolve a claim,
or when a claim is not subject to internal procedures,
ERISA gives plan participants and beneficiaries the
right to sue fiduciaries for breaches of their obligations.
Again, important deadlines apply, so time is of the
essence.
The
right to sue must be exercised within six years of the
employer's breach, or within three years of the employee's
actual knowledge of the breach. A breach can involve
an overt act by an Employer, or an omission - that is,
a failure to act when action was required.
An
employer may be liable under ERISA for any losses to
the plan resulting from each breach of its fiduciary
obligations. The employer must restore to the plan any
profits the employer made through use of the plan's
assets and must provide any other relief that a court
deems appropriate in light of the violation.
What
steps can I take to seek recovery?
First,
be wary of relying on promises or assurances given to
you about your benefits or pension plan by your employer,
plan administrator, insurance representative, or anyone
else who is not properly qualified to offer legal advice.
Many times employees will rely on such representations
only to find out later that these representations conflict
with the language of the plan.
The
language of the plan is legally binding, while representations,
even by persons in positions of authority, generally
are not binding and not enforceable. Always check the
language of the plan and, if you have any questions
or doubt about its provisions, consult with an attorney.
You
can also seek answers to certain questions from your
local office or the website of relevant government agencies
including the Department of Labor (www.dol.gov),
the Pension Benefit Corporation (www.pbgc.gov),
and the IRS (www.irs.gov).
If
you believe that you have suffered a loss because your
employer breached its obligations with respect to a
pension plan of which you are a participant or a beneficiary,
you should contact an attorney as soon as possible.
An attorney can help ensure that you are aware of the
available legal remedies and applicable deadlines, and
that you act in a timely fashion to preserve your rights.
ERISA
and Pension Benefits Lawsuits
Lieff
Cabraser is litigating claims in a wide range of cases on
behalf of employees, retirees, and/or beneficiaries alleging interference
with their interests under the federal Employee Retirement
Income Security Act (ERISA). Among its provisions, ERISA
recognizes that pension and 401k plan trustees owe fiduciary
duties to the participants and beneficiaries in these plans. Liefff Cabraser can also represent your employer or plan sponsor in lawsuits against third parties for mismanagement or poor advice.
For
example, with co-counsel, Lieff Cabraser successfully litigated the following cases:
We represented former Pacific
Telesis Group and SBC Communications, Inc. employees
who became participants in 401k plans administered
by SBC Communications, Inc. The plaintiffs alleged
that SBC liquidated plaintiffs' AirTouch stock from
the 401k plans without providing them with adequate
notice of their rights to retain the AirTouch stock.
In 2002, the court granted final approval to a $10
million settlement of the case.
We represented a class of chicken processing employees of Perdue Farms, Inc., one of the nation's largest poultry processors, for wage and hour violations. The suit challenged Perdue's failure to compensate its assembly line employees for putting on, taking off, and cleaning protective and sanitary equipment in violation of the Fair Labor Standards Act, various state wage and hour laws, and ERISA. Under a settlement approved by the Court in 2002, Perdue paid $10 million for wages lost by its chicken processing employees and attorneys' fees and costs. The settlement was in addition to a $10 million settlement of a suit brought by the Department of Labor in the wake of Lieff Cabraser's lawsuit.
Lieff Cabraser continues to achieve outstanding results in pending ERISA cases:
- R.J. Reynolds Tobacco Co. Employees 401(k)
We represent R.J. Reynolds Tobacco Co. employees in a lawsuit claiming that RJR and other defendants breached their duty as fiduciaries of the employee benefit 401(k) plan by selling at a loss stock held in Nabisco foods in January 2000 after the split between the tobacco and food businesses of the former R.J. Reynolds Nabisco company, although market analysts recommended buying or holding the stock. On September 29, 2008, the Court certified a class of over 3,500 employees.
We represents retirees of Caterpillar, Inc. in a class action lawsuit against the company to preserve the healthcare benefits promised them under collective bargaining agreements. On July 12, 2007 the Court granted the plaintiffs' class certification request. On September 16, 2008, after a three-day hearing, the Court granted an injunction that requires the defendant to provide retiree health care to a subclass of the Caterpillar retirees.
Contact National Employment Attorneys
The
law firms of Lieff Cabraser and Lewis and Feinberg represent employees in ERISA cases in addition to cases involving employment
discrimination, overtime pay, and wage and hour violations. To
contact a Lieff Cabraser ERISA lawyer, click
here.
Notice: Lieff Cabraser attorneys provide legal advice and practice law for clients in
federal courts throughout the United States and in state courts where we are
licensed to practice. Please read our disclaimer.
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