An important part of the Employee Retirement Income Security Act of 1974 was reforming the practice of "backloading" pensions - in other words, having the lion's share of contributions come at the end of the employee's career, resulting in smaller retirement payouts. This D.C. Circuit decision, affirming a ruling that the Hilton Hotel pension plan violated the anti-backloading rule, furnishes an important lesson to all persons enrolled in such "defined benefit" plan: keep an eye on your benefit statements.
The Sixth Circuit provides the first definitive, court of appeals decision on a recurring issue: is it a fiduciary act, subject to ERISA § 404(a)(1), for a plan fiduciary to incorporate (in this case, allegedly untruthful) SEC filings by reference in a Summary Plan Description, thus potentially misleading participants about the risk of investing retirement money in the employer's stock fund? The Sixth Circuit holds that it is.
One of the difficulties of enforcing participants' statutory rights under ERISA, heretofore, has been the lack of effective make-whole remedies. But in the wake of last term's CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), participants have remedial options not previously available to them for breach of fiduciary duty claims. The Fourth Circuit reverses summary judgment in a case where a participant had been allowed to pay for years for dependent life insurance that (evidently) she was not entitled to receive.
In the ERISA field, here's a lifeline to all of those challenging "pre-authorization" denials of benefit claims. The Fifth Circuit re-animates a case challenging an HMO denial of Therapy for sleep apnea, based on a supposed "pre-authorization" requirement that the panel finds at-best ambiguous.
ERISA cases often turn on whether a plan administrator's interpretation of ambiguous plan language is reasonable (i.e., not an "abuse of discretion"). But in this non-precedential decision, a Fourth Circuit panel (2-1) tosses out a judgment in favor of the plan in the anti-cutback case - on the ground that only one interpretation of the plan is reasonable and favors the participants. It all started when the plan administrator demanded repayment of nearly 18 months' worth of benefits by a participant who (supposedly) was not eligible.
Under what is known as the Moench presumption, an ERISA plan fiduciary's decision to remain invested in employer stock in an Employee Stock Ownership Plan (ESOP) is insulated from legal challenge unless the participant proves that a prudent fiduciary would have made a different investment decision. The Sixth Circuit today reverses dismissal of such a case, where the ESOP - of General Motors stock - cratered as GM went into bankruptcy. Importantly for the future of such cases, the Sixth Circuit rejected the rulings of several other circuits and holds that the participant need not allege the Moench presumption in a complaint.
Most employees in the financial services industry work all year long to earn an annual bonus, which often represents a major portion of their total compensation for the year. Unfortunately, employees not protected by a contract or an offer letter that specifically calls for a bonus payment if and when terminated (even if before year end), will likely be out of luck this season, even if they worked an entire fiscal year.
In the past few years China has taken steps in its legislation that have made it more expensive for foreign employers and employees to do business there. The passing of the new PRC Social Insurance Law, which took effect on July 1, 2011 is just one of those steps. The new PRC Social Insurance Law requires expatriates working in China to pay a heavy tax burden to ensure that all employees in the PRC are insured with health and welfare benefits. However, since most international assignments do not last longer than an average of three years, these foreign employees may never reap the benefits of this insurance.
The Second Circuit becomes the latest U.S. Court of Appeals to join the fray about whether to adopt what is known as a "presumption of prudence" under ERISA. The rule favors plan fiduciaries who allow investment in company stock in an employee stock ownership plan (ESOP), despite knowing that the company stock is very risky. In two divided opinions, the panel adopts the presumption of prudence over a sharply-worded dissent.