Laws Protecting Employee Benefits

Private sector workers who participate in employee benefit plans, including 401K plans, pension plans, and health and welfare plans, are protected by the Employee Retirement Income Security Act of 1974 (Pub.L. 93-406, 88 Stat. 829), which is also known as ERISA.

Employees who participate in ERISA plans are entitled to basic information about the plan, including a copy of the summary plan description and the plan itself.  In addition, the plan administrator must automatically give employees each year a copy of the plan's summary annual report.  This is a summary of the annual financial report that most pension plans must file with the Department of Labor.  These reports are filed on government forms called Form 5500 or 5500-C/R.  With regard to the plan itself, the plan trustee or directors are required as a matter of law to act in the "sole"� interest of plan participants.

While the Supreme Court recognized in NLRB v. Amax Coal Co., 453 U.S. 322 (1981), that plan trustees sometimes wear two hats and have responsibilities to both plan employees and their corporation or labor unions, when fulfilling their obligation as plan trustees, they must act in the sole interest of the participants.

Where plan trustees act in the interest of their corporate employer as opposed to participants, they can be in breach of their fiduciary duties.  Examples of this behavior include when a plan administrator knew adverse information about the company's prospects yet continued to allow the purchase of company stock with plan funds, or directing the plan sponsor to make certain changes to investments, but he or she fails to carry out the directions.