Executives are no longer reluctant to lawyer up. News reports on executive/employer contretemps at Papa John’s, Barnes & Noble, Uber and other companies have drawn press attention in the past year; countless other executive/employer disputes have flown below radar.

Underlying these controversies is the executive’s employment agreement, typically the most high-stakes and closely negotiated employment agreements to which companies will contract. Yet, these agreements often contain less clarity and less certainty than either executives or their employers need. Indeed, there appear to be three areas where these contracts could and should be upgraded. Let’s look at each.

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Originally published by Law360, February 2019.

There are three focal points in every successorship case: (1) notice to the purchaser; (2) continuity of the business; and (3) the ability of the seller to provide relief.

Reading the tripartite test for successor liability, it is enticing to conclude that a deal is safe. This is what the Greeks called hubris. Remember Oedipus, who also thought he could escape the prophecy of his fate? Even when it appears one of those factors ought to result in a buyer escaping successorship liability, any reading of those factors needs to be grounded in the case law because it sweeps more than a literal reading of those tripartite factors might suggest.

Even a quick look at the case law reveals the magnitude of the doctrine’s scope.

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Originally published by Law360, July 2019.

In 2018, the Treasury Department and the IRS issued new hardship distribution rules applicable to defined contribution plans, and many plans have begun administering these new rules. While plan sponsors may want to wait for further IRS guidance before amending their plans, they should take steps now to inform employees of changes in hardship distribution administration.

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The US Supreme Court declined to review a recent Ninth Circuit decision, blocking the interim rules that exempted employers with religious or moral objections from providing birth control coverage required by the Affordable Care Act (ACA). Until such time as this issue is clarified, it is prudent for employers with employees in certain states to comply with the ACA mandate and to cover contraceptives under their health plans.

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Teal Trujillo, a summer associate in our Chicago office, also contributed to this article.

IBM estimated last year that data breaches cost companies $148 per stolen record. Given that, not surprisingly, many employers have grown increasingly concerned about the potential impact of such breaches, including breaches that may affect employer-sponsored benefit plans.

Courts have not yet formally addressed whether ERISA requires benefit plan fiduciaries to manage cybersecurity risks. However, a federal district court recently rejected a motion to dismiss filed by defendants seeking to avoid liability for fraudulent distributions from a plan caused by cyber criminals. There, the court held that the defendants were plan fiduciaries and that the plaintiffs had pled facts sufficient to allege that the defendants breached their fiduciary duties. Although this decision only relates to a motion to dismiss, the case underscores the potential for plaintiffs to assert, even in the absence of clear guidance, that plan fiduciaries are not doing enough to protect plan participants from cybersecurity risks.

As a result, with cybersecurity concerns on the rise, plan fiduciaries are continuing to enhance their focus on the best ways to protect employee data. Recently, on Law360, McDermott’s Mark E. Schreiber discussed four helpful tips for handling cybersecurity risks.

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Over the past several years, the IRS and DOL have significantly increased the number of benefit plans audits conducted each year.

As a result, it is important for plan sponsors to understand the types of issues that often arise in connection with such audits. At the recent PSCA 2019 National Conference, Brian Tiemann explained what plan sponsors should expect if their benefit plan is selected for audited. More specifically, Brian discussed the ways audits are typically triggered and how to respond when a plan is audited. In addition, Brian outlined some of the most common retirement and health and welfare compliance issues identified in plan audits. He also discussed how plan sponsors can prepare for audits and even address potential compliance issues before they occur.

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Connecticut enacted a paid family and medical leave law, which provides paid leave to eligible employees and expand allowable reasons for such leave. This Connecticut statute closely tracks Massachusetts’s parallel statute and appears to be among the most generous paid family leave laws in the country. All private sector employers (and their employees who work in Connecticut) are covered.

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Preemption technically means situations where federal law displaces state law: a function of the supremacy clause of the US Constitution. Often, lawyers speak of preemption even where it is one federal law displacing another or one state law displacing another. When statutory laws abut or overlap like tectonic plates, which should apply?

As large-scale cases proliferate under federal and state wage-and-hour laws, there is more and more reason to study plate tectonics for potential defenses. Thinking about preemption requires looking beyond the intricacies of the case at hand to broader issues of public policy; applying preemption as a defense requires thinking about more than the statute alleged in the complaint.

Finding preemption, like throwing the Eephus pitch, is an arcane but game-winning skill. Learn how to find it in this article from Michael Giambona.

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Originally published by Law360, April 2019.

The Financial Accounting Standards Board (FASB) adopted changes to the required financial statement disclosures of employee benefit plans with investments in master trusts. The changes will standardize the content and presentation of information reported in plans’ financial statements. Learn about the six significant items the FASB guidance addresses.

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The US Supreme Court recently agreed to hear Sulyma v. Intel Corp. Investment Policy Committee, a case in which the Ninth Circuit ruled that ERISA’s three-year statute of limitations requires a plaintiff to actually read materials in order to start the running of ERISA’s three-year statute of limitations. ERISA § 413(2) bars actions more than three years after “the earliest date on which the plaintiff had actual knowledge of the breach or violation,” and the Ninth Circuit held that a plaintiff who receives all the relevant information relating to her claim, but does not read it or does not recall reading it, does not have “actual knowledge” to start the limitations period. The Sixth Circuit, however, has held differently; in Brown v. Owens Corning Investment Review Committee, 622 F.3d 564, 571 (6th Cir. 2010), it held that the failure to read documents will not shield a plaintiff from having actual knowledge of the documents’ contents. Several district courts have held similarly, determining that the three-year limitations period begins when the plaintiff receives the relevant information, whether she reads it or not. Continue Reading Supreme Court Agrees to Hear Sulyma v. Intel Statute-of-Limitations Decision