ML BeneBits

In many situations, practitioners recommend establishing a fiduciary committee to oversee ERISA-covered employee benefit plans. There are several reasons for this, including providing a well-defined process for decision-making; bringing together a diverse team with a wide set of experience to address issues relevant to the benefit plan’s administration; managing the investment, legal compliance, and operational risks that can arise in a complex regulatory landscape; and establishing clear separation between plan sponsor and fiduciary roles.

In 2017, several private universities were hit with ERISA class actions alleging various breaches of fiduciary duty and prohibited transactions—including claims that these universities’ defined contribution plans charged unreasonable recordkeeping costs. One such university was Cornell in the case of Cunningham v. Cornell University.

The US Department of Labor (DOL) issued a press release on September 6, 2024 reminding ERISA plan fiduciaries that it considers cybersecurity to be an area of “great concern” and emphasizing that it continues to investigate potential cybersecurity-related ERISA violations. The press release accompanied guidance updating the DOL’s 2021 cybersecurity subregulatory guidance and, most significantly, clarifying that the 2024 updates apply to all types of ERISA plans, including health and welfare plans. In our view, this clarification now aligns the DOL’s cybersecurity guidance with the position it has taken in investigations and public statements.

The amendments to the QPAM Exemption include a September 15, 2024 notification deadline that will apply to many asset managers. This blog post includes a brief summary of the US Department of Labor’s (DOL’s) recent technical amendments to the exemption.

In Loper Bright Enterprises v. Raimondo and Relentless Inc. v Department of Commerce, the Supreme Court held that both the United States’ constitutional structure and the Administrative Procedure Act preclude a court from deferring to administrative agencies when they interpret ambiguous statutory text. Instead, the court must assess the “best meaning” of the statute using traditional tools of statutory construction.

A recent ruling by the US Court of Appeals for the Third Circuit provides a valuable reminder for multiemployer pension funds and contributing employers regarding ERISA’s withdrawal liability notice and demand requirements. Specifically, the case presents a recap of what it means for a notice and demand to be provided “as soon as practicable” under ERISA Section 4219(b)(1) and the interplay of that timing requirement with common defenses raised for withdrawal liability demands that are allegedly less than timely.

Employers utilizing class-based criteria to exclude employees from retirement plan participation face new issues and considerations following the adoption of the long-term part-time employee (LTPTE) rules in SECURE 1.0 and SECURE 2.0. Employers who have not done so already may want to evaluate their plan's eligibility rules to determine whether any updates or clarifications may be desirable.

The backbone of a fiduciary’s duties is the written plan document: understanding the key terms and adhering to them provides a bulwark against fiduciary breach. ERISA Sections 402(a)(1) and 404(a)(1)(d) require that every employee benefit plan be established and maintained pursuant to a written instrument and that the plan be administered according to its written terms (note fiduciaries must follow a written plan document only to the extent it is consistent with ERISA.) Veering from the plan’s terms is generally a per se violation of ERISA. The key to avoiding a costly breach of fiduciary duty is to stick to the plan.

Join Morgan Lewis lawyers this summer for programs on employee benefits and executive compensation.

The US Department of Labor (DOL) maintains a robust investigatory program for auditing employee benefit plans for potential ERISA violations. Under the Biden administration, the DOL’s ERISA enforcement activities and investigations have remained a high priority. As such, ERISA plan fiduciaries and service providers can expect the DOL to continue its ever-evolving enforcement program targeting both fiduciaries and nonfiduciary service providers.