Employer Not Liable For Alleged Breach Of Fiduciary Duty Where Reasonable Mix Of Investment Options Offered In 401(k) Plan
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- Published on Monday, 29 August 2011 16:44
Mark Renfro and Gerald Lustig (plaintiffs) alleged that their employer, Unisys Corporation, violated the fiduciary duties imposed upon them by the federal Employee Retirement Income Security Act ("ERISA") because their 401(k) plan caused plaintiffs to pay excessive fees for investments in the retirement savings plan. Under a 401(k) plan, employees contributing to the plan receive certain tax advantages and partial matching contributions from their employer. Plaintiffs alleged that their employer and the plan administrators were responsible for monitoring the selection, retention and removal of investment options to ensure compliance with their fiduciary obligations under ERISA. Plan participants had more than 70 investment options, including mutual funds, although the funds come with varying degrees of risk, reward opportunity, and fees. However, plaintiffs alleged that Unisys breached its fiduciary duties by causing plan participants to pay excessive administrative and investment management fees. In particular, plaintiffs complained that Unisys did not take advantage of the plan’s large size to negotiate lower fees or increased services for plan participates. The Third District Court found for Unisys, holding that the 401(k) “‘offered a sufficient mix of investments for their participants’ and that no rational trier of fact could find, on the basis of the facts alleged in the operative complaint, that the Unisys Defendants breached an ERISA fiduciary duty by offering this particular array of investment vehicles.” The court also noted that “Plaintiffs' Second Amended Complaint lists the more than 70 funds offered by the Plan. The fees associated with these investment options were disclosed to plan participants via prospectuses and ranged from 0.1% for the Spartan Index Fund to 1.21% for the Southeast Asia Fund…a plan fiduciary need not select the cheapest fund available…Rather, a plan fiduciary need only act solely in the interest of plan participants and beneficiaries, and select funds ‘with the care, skill, prudence, and diligence’ of a prudent person acting in a similar role.” Read More.
HR Practice Pointer: What Is “ERISA”?
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- Published on Thursday, 25 August 2011 19:36
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry in order to provide protection for employees in these plans. A pension plan is an employee benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides retirement income or defers income until termination of covered employment or beyond. There are a number of types of retirement plans, including the 401(k) plan and the traditional pension plan, known as a defined benefit plan. ERISA requires plans to (1) provide participants with plan information including important information about plan features and funding; (2) provide details about fiduciary responsibilities for those who manage and control plan assets; and (3) establish a grievance and appeals process for participants to get benefits from their plans. ERISA also gives participants the right to sue for benefits and breaches of fiduciary duty. Read More.
EEOC Issues Guidance on GINA
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- Published on Wednesday, 17 November 2010 04:54
The Equal Employment Opportunity Commission (EEOC) recently issued guidance on the Genetic Information Nondiscrimination Act (GINA), which became law on May 21, 2008. The EEOC previously issued regulations implementing Title II of the Act on November 9, 2010. Title I of GINA amends portions of the Employee Retirement Income Security Act (ERISA), the Public Health Service Act, and the Internal Revenue Code to address the use of genetic information in health insurance. Title II prohibits the use of genetic information in employment, restricts employers and other entities covered by Title II from requesting, requiring, or purchasing genetic information, and strictly limits the disclosure of genetic information. The EEOC guidance on GINA addresses questions such as (1) Who must comply with the ACT? (In general, private employers and state and local government employers with 15 or more employees), and (2) Why is GINA needed? (In large part, because of developments in the field of genetics, the decoding of the human genome, and advances in the field of genomic medicine. Genetic tests now exist that can determine whether individuals are at risk for specific diseases or disorders. As the number of genetic tests increases, so do the concerns of individuals fearing the loss of health coverage or employment because of their genetic information)....
Coca-Cola To Restore Health Benefits To Striking Workers
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- Published on Thursday, 02 September 2010 18:19
Coca-Cola has announced that it will restore health benefits to approximately 500 striking Coca-Cola Enterprises Inc. workers in Washington state. Lawyers for the workers recently filed a lawsuit against Coca-Cola alleging that the company violated the Employee Retirement Income Security Act (ERISA) when it suspended the workers' health benefits during a strike which began on August 24, 2010. The company maintains that it was within its legal rights to suspend the benefits. When the benefits are restored, employee contributions will be prorated to reflect the brief lapse in coverage....
