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ERISA

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The financial fallout from the outbreak of COVID-19 has unfortunately forced employers to turn to layoffs and furloughs. Many employers facing these decisions are looking for cost effective ways to mitigate the financial impact on affected employees. A supplemental unemployment benefit plan (“SUB Plan”) may be one way to assist employees while generating some cost savings for the company. A SUB Plan is a unique type of severance benefit plan that permits employers to supplement…

Now is the time to consider opportunities to manage global pension cost and risk. Many employers have already frozen their defined benefit plans and implemented defined contribution plans.  Of course, such cost-reduction strategies may raise employment law issues in non-US jurisdictions because of the Acquired Rights Directive in EU jurisdictions and similar legislation elsewhere.  In considering any such change, an employer has to consider how such change will be communicated to employees and employee representatives,…

Almost all plan documents contain some level of administrative provisions outlining how the plan is intended to operate (e.g., number of committee members, quorum, etc.).  Plan sponsors often view these provisions as “boilerplate” with little or no meaning.  In actuality, these are substantive provisions of the plan and failure to follow those provisions can have substantial consequences. The Consequences Failure to follow the terms of the plan document is a potential qualification issue under IRS…

The Fifth Circuit recently vacated the US Department of Labor’s (“DOL”) 2016 fiduciary rule that had expanded ERISA’s fiduciary definition to those providing investment advice for a fee to an ERISA plan or its participants. In light of the Fifth Circuit’s decision, the DOL has issued a temporary enforcement policy halting the enforcement of certain prohibited transaction claims against investment advice fiduciaries. Under Field Assistance Bulletin 2018-02, the DOL indicated that it will not pursue…

In a recent blog post we discussed the new disability claims procedure rules scheduled to go into effect on January 1, 2018. Earlier this year, as part of the administration’s direction to evaluate existing regulations to make them less burdensome, the Department of Labor (DOL) opened a comment period (through December 11, 2017) on whether the new disability claims procedure rule should be modified, rescinded or retained and raised the possibility of a delay. Based on the…

On June 1, 2017, the United States Court of Appeals for the Fifth Circuit, in Langley v. Howard Hughes Mgmt. Co., L.L.C., 694 F. App’x 227 (5th Cir. 2017), held that William Langley, a former golf club executive, was entitled to receive approximately $255,000 in severance pay, plus attorney’s fees.  The Court found that the administrator’s interpretation of a severance plan, which resulted in denying the former executive’s claim for severance pay, was an abuse…

Last year the Department of Labor (DOL) finalized new disability claims procedure rules, effective January 1, 2018, to add more procedural safeguards and provide claimants access to more information. Covered Plans The new rules are not limited to disability plans.  They apply to all ERISA welfare and pension plans that provide benefits based on a finding of disability (e.g., vesting or payment under pension, 401(k), and top hat plans or life insurance plans that require…

The establishment of prudent processes is a fundamental element of appropriately discharging fiduciary duties under ERISA.  Where a committee acts as the primary plan fiduciary, a written committee charter will typically form the basis for all committee operations.  The committee charter effectively provides the “by-laws” and operating guidelines that will govern how the committee discharges its obligations. The Charter’s Role Charters will typically address how committee members will be appointed and replaced, term limits, quorum,…