Category: Employee Benefits

Supreme Court Rules ERISA Statute of Limitations Does Not Bar Breach of Fiduciary Duty Claim Challenging 401(k) Plan Investments Made More Than 6 Years Before Filing of the Claim

The statute of limitations governing breach of fiduciary duty claims brought under the Employee Retirement Income Security Act (“ERISA”) provides that such claims are untimely if not brought within 6 years after “the date of the last action which constituted the breach or violation” or “in the case of an omission, the latest date on which the fiduciary could have cured the breach or violation” (29 U.S.C. § 1113). In Tibble v. Edison International, the U.S. Supreme Court ruled that ERISA’s statute of limitations did not bar plaintiffs from pursuing their breach of fiduciary duty claim arising out of investments made by their employer’s 401(k) plan, although the investments were made more than 6 years before plaintiffs filed their claim. The Court held that ERISA plan fiduciaries have an ongoing duty to monitor plan investments and to remove imprudent investments. As long as the alleged breach of this continuing duty occurred within 6 years of suit, a claim challenging a fiduciary’s failure to act will be timely. The Court rejected the argument that only “a significant change in circumstances” triggers the duty to remove imprudent investments.

Pennsylvania’s Paid Sick Leave Ordinance May Be Put On Permanent Bed Rest but Trenton’s Ordinance Survives Court Challenge

In response to the growing trend of municipalities enacting paid sick leave ordinances, business groups are trying to fight back. On April 15, 2015, the Pennsylvania Senate passed a bill that would overturn Philadelphia’s new paid sick leave law. In New Jersey, however, a court challenge to Trenton’s paid sick leave ordinance has hit a roadblock.

Gibbons Employment Article Featured on Cover of The Metropolitan Corporate Counsel

“Five New Year’s Resolutions for Employers,” written by Employment & Labor Law Department Directors Kelly Bird and Carla Dorsi, was the featured cover story in this month’s Metropolitan Corporate Counsel. The article outlines the following five employment practices for clients to focus on in 2015. Resolution #1: I will review my company’s arbitration agreements. Resolution #2: I will examine my company’s hiring practices, from job postings through background checks. Resolution #3: I will ensure my company’s paid time off policies and practices are compliant with paid sick leave laws. Resolution #4: I will rethink my company’s policies and practices concerning pregnant employees. Resolution #5: I will equip my employees with the knowledge and ability to comply with and enforce my company’s policies and our legal obligations.

Paid Sick Leave is Gaining Momentum in New Jersey

Trenton and Montclair became the latest New Jersey municipalities to approve paid sick leave laws in 2014. The issue was put before voters on Election Day and was approved by a comfortable margin in both cities. The Trenton and Montclair ordinances, which will take effect on March 4, 2015, are part of a growing trend in the state of New Jersey which began last year when Jersey City became the first municipality in the State to pass such a law. In early 2014, Newark followed suit with a similar law. Thereafter, Passaic, East Orange, Paterson, and Irvington have all passed paid sick leave laws scheduled to take effect between December 31, 2014 and January 7, 2015. In addition, a bill is pending in the New Jersey State Legislature which would, if passed, make paid sick leave a statewide law.

Newark City Council Passes Paid Sick Leave Ordinance

On January 28, 2014, the Newark, New Jersey City Council passed a paid sick leave ordinance making it the second New Jersey municipality ─ along with Jersey City ─ to pass such a law. The Newark ordinance, which takes effect 120 days after its enactment, requires Newark employers of all sizes (with the exception of governmental entities) to provide a minimum number of paid sick leave days to employees.

Jersey City Ordinance Mandates Paid Sick Leave

On September 25, 2013, the City of Jersey City became the first municipality in New Jersey to pass paid sick leave legislation. City Ordinance 13.097, which takes effect on January 23, 2014, makes Jersey City the seventh U.S. state or municipality to enact legislation mandating paid sick leave. Previously, New York City, San Francisco, Seattle, and Portland passed similar laws. The District of Columbia and the state of Connecticut have also passed such legislation. The Jersey City ordinance mandates that individuals employed by employers with 10 or more employees accrue 1 hour of paid sick time for every 30 hours worked, up to a maximum accrual of 40 hours. Those individuals employed by employers with less than 10 employees will accrue sick time under the same formula, however it need not be paid.

U.S. Supreme Court Ruling in Windsor Striking Down DOMA Will Expand Workplace Protections for Employees in Legally Recognized Same-Sex Marriages

The U.S. Supreme Court issued a critical decision on June 26, 2013, striking down a provision of the Defense of Marriage Act (“DOMA”) that limited the definition of marriage for federal purposes to unions of opposite-sex couples. The Court’s ruling in United States v. Windsor will have far-reaching implications for employers, at least in those states that recognize same-sex marriages, in terms of leave administration, benefits eligibility and workplace protections. In another case decided the same day, Hollingsworth v. Perry, the Court let stand a Federal District Court ruling in California that an amendment to the California Constitution limiting marriage to opposite sex couples was unconstitutional. In neither case did the Court require all states to recognize same-sex marriages.

New COBRA Notice Form Issued by DOL

Employers are reminded that the Federal Department of Labor (“DOL”) has issued new model COBRA election notices for single employer health plans aligned with Patient Protection Affordability Care Act (“PPACA”) requirements. Under COBRA (the Consolidated Omnibus Budget Reconciliation Act), employees who experience a qualifying event, such as a loss of employment, are able to continue coverage under the employer’s group health plan for themselves and qualified beneficiaries by paying the COBRA premium. The new model notices are available on the DOL website in both English and Spanish.

Supreme Court Reviews Employer Reimbursement Provisions in Employee Benefits Plans

In US Airways, Inc. v .McCutchen, decided on April 16, 2013, the U.S. Supreme Court once again emphasized that in disputes involving employee benefits plans governed by the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (“ERISA”), it is the unambiguous language of the plan in question that controls the rights of the parties and that general equitable principles cannot be used to supersede the terms of the plan. In areas where the plan is silent, however, courts may employ appropriate equitable principles to construe the plan. At issue in US Airways was the reimbursement provision of an employer’s health benefits plan that purported to give the employer the right to recoup medical benefits paid to an employee injured in an automobile accident who thereafter recovered funds from third parties as a result of the accident, although the amount the employee actually recovered after paying his attorney was less than the amount he owed his employer. The Supreme Court rejected the employee’s attempt to apply equitable principles of unjust enrichment to limit the application of the reimbursement provision. Holding, however, that the plan was silent as to the allocation of the costs, including attorneys fees, incurred by the employee in his efforts to recover from third parties, the Court further held the equitable principle known as “the common fund rule” should apply, entitling the employee to reasonable attorneys fees from the funds recovered. The decision makes clear the importance to employers of accomplishing the objectives of their benefits plans with clear-cut language.

Legislation to Invalidate Certain Non-Compete Agreements Introduced in New Jersey

Earlier this month, a new bill, A3970, was introduced in the New Jersey State Assembly by Assemblymen Peter J. Barnes, III, Joseph V. Egan, and Wayne P. Deangelo limiting the enforcement of certain provisions in employment contracts if the individual is eligible for unemployment compensation. It is unclear if the bill will ultimately pass, and be signed into law by the Governor, but there appears to be support within the state Assembly and Senate. The bill provides that if an unemployed individual is found to be eligible to receive unemployment compensation benefits, that individual shall not be bound by any covenant, contract, or agreement not to compete, not to disclose, or not to solicit. The bill only applies to agreements entered into AFTER the date of enactment.