ERISA: Protecting Employees With Retirement Plans

On behalf of Wolf Popper LLP

The Employee Retirement Income Security Act, also known as ERISA, sets standards for how employers handle retirement and other such plans, such as 401(k) plans. This act is designed to protect the employee's best interests regarding their investments and financial security when they reach retirement age. It does this by providing some standards that must be followed:

  • Employees must have access to information about their plan
  • There must be a minimum set of standards to participate in the plan
  • Those managing employee plans have a responsibility to the plan holder
  • Employees must be allowed to appeal when seeking benefits
  • Certain payments are still required if the plan is terminated
  • Employees are allowed to sue if their employer acts against any of these requirements

In the simplest of terms, employers are expected to act in the employee's best investment and financial interests, not their own interests. For example, if company stock is an option in a retirement plan, those managing your plan should not invest you in those stocks at a time when stock prices are suffering. They have a duty to avoid losses wherever possible.

Does every employer have to follow ERISA?

The public sector (government employers) and churches do not have to follow ERISA, but all private-sector employers are subject to its rules. It's important to note that ERISA does not require employers to offer retirement plans. It simply puts rules and standards in place for employers who choose to offer them.

What if my employer violates ERISA?

An employer must follow the standards explained above. There are a number of violations that would allow an employee to sue the company, such as mismanaging an employee's plan or causing a conflict of interest. An employee may also be able to sue if their employer keeps encouraging investments in plans without disclosing that the company is struggling and that it might not be a wise financial decision to put money into a plan.

If your employer offers retirement or other benefits plans to you and you believe they are in violation of ERISA, seek the help and advice of an attorney with experience in ERISA litigation cases. This area of law gets very complex and is nearly impossible to navigate without legal advice.