Evan Belosa, Tony Bongiorno and Andrew Liazos summarize key changes and important issues associated with Massachusetts Noncompetition and Trade Secret Law and next steps to consider as the date of effectiveness approaches.

The Massachusetts Noncompetition Agreement Act and Trade Secret Law will become effective October 1, 2018.

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During the most recent Tax in the City event in Dallas, Partners Erin Turley and Judith Wethall, presented on the rise of consumer driven health care. Some popular programs they discussed include wellness, smoking cessation, high deductible health plans and HSAs, telemedicine, direct contracting and affordable care organizations. They also discussed the compliance complexities associated with these programs, including ERISA, FLSA and HIPAA privacy concerns.

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The US Court of Appeals for the Eighth Circuit recently affirmed a Minnesota district court’s dismissal of a claim against Wells Fargo & Company (Wells Fargo) under ERISA. A former employee had alleged Wells Fargo breached fiduciary duties by retaining Wells Fargo’s own investment funds as a 401(k) option, and defaulting to those funds when plan participants failed to elect another option.

In holding that the former employee failed to state a claim, the court in Meiners v. Wells Fargo & Co. reasoned that the plaintiff failed to plead facts showing the Wells Fargo investment funds were an imprudent choice. Specifically, the court found that the plaintiff’s allegations that an allegedly comparable fund performed better was not sufficient, especially given the other fund’s differing investment strategy. The court’s prior decision in Braden v. Wal-Mart Stores, Inc. established that plaintiffs could show that “a prudent fiduciary in like circumstances” would have selected a different fund by providing a basis for comparison–in other words, a benchmark. However, the Eighth Circuit declined the plaintiff’s invitation to extend the rationale of Braden by allowing a plaintiff to demonstrate imprudence with a benchmark that only possesses some similarities to the fund at issue.

The Eighth Circuit’s decision is in line with other courts’ rejection of ERISA claims based on the plaintiffs’ subjective views of which funds are the best overall investment. A US district court judge for the Northern District of Illinois recently labeled such breach of fiduciary duty claims “paternalistic” while dismissing a class action against Northwestern University.

Join us on Thursday, September 6 at 1:00 PM EDT for a webinar designed to address questions around the Massachusetts Noncompetition Agreement Act (the Act), signed into law by Governor Baker on Friday, August 10. The Act, which takes effect on October 1, requires all employers doing business in Massachusetts to change the way they establish and structure noncompetition agreements and related forfeiture provisions under compensation arrangements.

Our panel of lawyers focused on litigation, employment and employee benefits law from Massachusetts and other states, will discuss key aspects of this legislation, strategies and best practices. Questions that will be addressed by the panel include:

  • What changes should be made to support noncompetition agreements going forward?
  • How can a noncompetition agreement be used in connection with providing severance benefits?
  • What is the status for existing non-competition agreements? When is grandfathering available?
  • Are there other available types of agreements that can adequately protect employers’ interests?
  • Might ERISA preempt the new Massachusetts noncompetition law as related to benefit plans?
  • How will the changes to Massachusetts law impact corporate transactions?
  • How will the changes in Massachusetts law affect restrictive covenant litigation in Massachusetts courts?
  • What approaches to address the Massachusetts changes will make sense for multi-state employers?

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The Internal Revenue Service (IRS) recently released “Issue Snapshots” on a number of topics related to tax-qualified retirement plans, including both pension and savings plans. Historically, the snapshots have explained new(er) laws and guidance, and have often included audit tips for IRS examiners. As a result, although the IRS has indicated that the snapshots are not official pronouncements of law or directives, the snapshots provide helpful insight into issues that the IRS thinks merit further discussion or clarification. Therefore, the snapshots can be instructive for plan sponsors and plan administrators.

Continue Reading IRS Issues “Snapshot” Guidance on Qualified Retirement Plan Issues

While momentum may be building for a single-payer health care system in New York, such a dramatic shift in the way health care is financed will have to overcome a number of significant obstacles. With ERISA preemption being one of those hurdles, Andrew Liazos comments, “There will be a challenge from somewhere. I don’t know who will lead the challenge, but I don’t think employer groups will just sit by idly.”

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Originally published in Bloomberg Law, August 2018.

ERISA broadly preempts state laws that “relate to” ERISA-governed employee benefit plans to ensure a uniform federal regulatory scheme and to relieve ERISA plans from the burdens of satisfying a patchwork of state laws. Recently, however, several states have enacted legislation designed to regulate the prices that pharmacy benefit managers, as third-party administrators for ERISA-governed plans, agree to reimburse pharmacies for dispensing prescription drugs to ERISA plan members. These regulations run afoul of ERISA, as the US Court of Appeals for the Eighth Circuit has twice held.

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Recent litigation and audit activity is focusing on the process undertaken by fiduciaries in connection with a transaction involving an ESOP. Eliot Burriss presented at the 2018 National Center for Employee Ownership Conference summarizing relevant litigation cases, exploring roles and responsibilities, and providing best practices.

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The US Department of Labor published a final rule that makes it easier for a group or association of employers to act as a single “employer” sponsor of an Association Health Plan under ERISA. By creating an opportunity for small employers and self-employed individuals to take advantage of the economies of scale that are usually enjoyed by large employers, the final rule is intended to expand access to affordable health care.

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