In the string of pension-plan related, actuarial equivalence lawsuits, the court in DeBuske, et al. v. PepsiCo, Inc., et al. recently handed down the first decision favorable to plan sponsors. The DeBuske court’s narrow decision may, however, have limited impact going forward.

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While campaigning for President in 1932, Franklin Roosevelt promised a crowd in Pittsburgh that he’d balance the federal budget while cutting “government operations” by 25 per cent. When he returned to Pittsburgh during his 1936 campaign, Roosevelt asked his staff how to answer questions about that unfulfilled promise and was told “deny you were ever in Pittsburgh.”

So much has changed since then: what is said and done is now instantly visible. This lesson came earlier to politicians, it is now unavoidable for business entities. There is no option to deny that you were there.

Let’s look at some consequences of this global visibility:

  • El Super, a small California-based grocery chain with approximately 600 unionized workers, failed to resolve a routine labor dispute at one store with the union representing those employees. As a result of this dispute involving just one store, El Super’s Mexican parent company, Chedraui Commercial Group, found itself subject to double barrel complaints filed by US and Mexican labor unions under the North American Free Trade Agreement labor agreement and Organization for Economic Cooperation and Development guidelines.
  • Vedanta found itself subject to a lawsuit by individuals living more than 5,000 miles away when an appellate court in the United Kingdom held that farmers from a Zambian village could bring a claim against Vedanta and its Zambian subsidiary (Lungowe and Ors. v Vedanta Resources PLC and Konkola Copper Mines PLC [November 2017] EWCA Civ 1528). The court’s decision expanded the potential “duty of care” that parent companies have under UK law to employees of their subsidiaries, to include even non-employees who might be affected by its subsidiaries’ operation.

Continue Reading The Global Repercussions of Local Employment Risks

As presidential hopefuls bemoan the high cost of healthcare, McDermott’s Ted Becker imagines a stack of lawsuits pushed toward corporations and insurance companies. If workers can use the Employee Retirement Income Security Act to challenge 401(k) plans’ fees and investments, why can’t they use it to sue over how their health insurance plans are managed?

In a Q&A recently published on Law360, Becker discusses his prediction that health and welfare plan management suits will be the next frontier for ERISA plaintiffs, and how McDermott is preparing clients.

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Although multi-jurisdictional compliance is a challenge in relation to every aspect of employment law, the structure of employment contracts and the enforcement of global policies require particularly careful consideration.

The need to coordinate individual country compliance across numerous countries whilst still maintaining a common company culture requires extensive knowledge of national laws and considerable flexibility.

Continue Reading Global Employment Contracts: The Modern Tower of Babel

A US Supreme Court case pitting pensioners against US Bank could have a wide-ranging impact on who can bring suit under ERISA, whether they participate in a defined benefit pension plan or a 401(k) plan.

Recently, on Law360, McDermott’s Richard J. Pearl weighed in on the impact of Thole v. US Bank, one of three ERISA cases that the US Supreme Court will decide this term. The case, discussed in greater detail in our On the Subject, will address whether defined benefit pension plan participants have standing to bring suit under ERISA if their plan is fully funded.

Although the case focuses on participants’ ability to bring suit on behalf of defined benefit pension plans, according to Pearl, the case seems to ask the high court to answer a question that often crops up in defined contribution plan litigation, as well: Whose injury matters, the plan’s or the person’s? As a result, the court’s decision could impact not only litigation involving defined benefit pension plans, but also defined contribution plans, where case law is still being developed around what gives a participant grounds to sue on behalf of a plan.

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This month, Assembly Bill 5 (A.B. 5) was signed into California law. A.B. 5 codifies the “ABC Test”—used to determine if a worker is an independent contractor—which is broader, harsher and more inclusive than the common law test with which most businesses are familiar.

A.B. 5 appears to be the death knell of convenience for retaining contractors in the Golden State, as well as the advent of a new wave of wage and hour litigation.

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In today’s high-stakes environment, in-house counsel and HR professionals are often on the frontlines, responding to headlines that threaten business and reputational objectives.

Join McDermott Will & Emery’s Employment and Employee Benefits practice groups at a half-day forum in our Chicago office on Oct. 10. This forward-looking program is designed to drive conversation around emerging trends to help employers craft their own narrative, instead of being held captive by it.

See full event details and register here.

The Internal Revenue Service (IRS) has once again extended the temporary nondiscrimination relief for frozen defined benefit plans, now through 2020. Frozen pension plans are pension plans that have been closed to new participants but continue to provide ongoing benefit accruals for certain participants. This extended relief is intended to enable frozen pension plans to satisfy certain nondiscrimination testing requirements. In most cases, the relief allows the frozen defined benefit plan to be aggregated with a defined contribution plan to satisfy the nondiscrimination testing requirements. The relief assists the aggregated plan in passing nondiscrimination requirements that apply to accrued benefits and to certain rights and features relating to those benefits.

Continue Reading Once Again, IRS Extends Nondiscrimination Relief for Frozen Defined Benefit Plans

The Pension Benefit Guaranty Corporation (PBGC) recently issued a press release announcing that the Multiemployer Insurance Program remains in a dire financial condition, nearing insolvency. The agency’s insurance program for multiemployer pensions, covering more than 10 million people, will likely run out of money by the end of fiscal year 2025, according to the FY 2018 Projections Report. On the other hand, the PBGC’s projection for the Single-Employer Program shows continued improvement. However, these positive projections are subject to a range of potential outcomes due to the Program’s sensitivity to economic conditions.

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An employer learned the full cost of ambiguity when a Connecticut federal district court agreed with an employee’s widow that the word “maximum” was ambiguous in the company’s life insurance plan, thus making the widow entitled to an additional $4 million in benefits. This decision serves as a warning for employers sponsoring insured benefits.

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