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In its decision in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College and Students for Fair Admissions v. University of North Carolina[1] issued on June 29, 2023, the Supreme Court held that the undergraduate admissions programs of Harvard College and the University of

Continue Reading Considerations for Employers Following the EEOC’s Response to the Supreme Court’s Ruling on Race-Conscious College Admissions

What happens when a plan participant seeks benefits that he or she claims are set forth in a summary plan description (“SPD”) but are found nowhere in the plan itself?  On one level, the Supreme Court in Cigna Corp v. Amara answered this question decisively:  SPDs and other written disclosures about the plan do not constitute terms of the plan and cannot modify the plan’s terms.  Accordingly, participants cannot claim under ERISA Section 502(a)(1)(B) that they are entitled to benefits under the plan based on statements that appear only in the SPD.

However, the Supreme Court also stated that a participant could obtain “appropriate equitable relief” under ERISA Section 502(a)(3) for statutory disclosure violations.  The Supreme Court identified three possible equitable remedies:  reformation, estoppel, and surcharge.  Although the Supreme Court made clear that the traditional requirements in equity for obtaining any such relief must be satisfied, it left to the district court the task of determining when such remedies are appropriate.
Continue Reading Amara Decision Affirms Broad Equitable Remedy for Inaccurate SPD

Treasury and the IRS recently issued long-awaited regulations governing cash balance and other hybrid pension plans.  Final regulations implement the intent of Congress in the Pension Protection Act of 2006 (the “PPA”) to eliminate the so-called “whipsaw calculation” and permit more generous rates of return for employees and retirees.  Proposed
Continue Reading Hybrid Plan Regulations Could Reinvigorate the Defined Benefit Plan System

A recent Seventh Circuit case, Killian v. Concert Health Plan (Nov. 7, 2013), highlights two important principles for any plan sponsor or fiduciary:

  1. If a plan document or summary plan description leaves out information and says to call a phone number for details, plan fiduciaries can be responsible for call center representatives’ oral statements and omissions.
  2. A call center representative might have a responsibility to provide more information than a caller specifically requests, if the caller’s questions indicate that additional information would be important to the caller under the circumstances.

The Killian case involved unfortunate circumstances.  An employee was admitted to a hospital for emergency cancer surgery.  The insurance certificate for the employee’s health plan cautioned participants to call a phone number to confirm that their health provider was in-network.  The employee’s husband followed this suggestion and called the number.

The husband explained to the call center representative that his wife needed immediate treatment, and was seeking admission to St. Luke’s Hospital.  The representative could not find St. Luke’s Hospital in her database (possibly because St. Luke’s had changed its name to Rush several years earlier), but told the caller to “go ahead with whatever had to be done.”  The caller never asked whether the hospital’s services would be covered, and the representative did not address that question.  She told him to call back later.
Continue Reading Fiduciaries May Be Responsible for Call Center Statements to Fill in Gaps in SPD

Corporate lawyers negotiating asset purchase agreements believe strongly in the concept of freedom of contract.  Asset purchase agreements invariably have carefully crafted provisions dictating which assets and liabilities transfer to the buyer and which assets and liabilities remain with the seller.

Unfortunately, when it comes to employee and employee benefit liabilities, courts don’t always respect these carefully written contracts.  Courts are loathe to rule against employees or retirees who have lost certain rights or benefits as a result of a transaction, and an unsuspecting buyer can easily find itself responsible for employee-related liabilities that the buyer thought it had avoided.

In a recent example of this “buyer beware” phenomenon, the 7th Circuit held in Teed v. Thomas & Betts Power Solutions that an asset buyer was on the hook for a $500,000 settlement award for violations of the Fair Labor Standards Act (“FLSA”), even though the buyer expressly disclaimed the liability in the asset purchase agreement.
Continue Reading Buyer Beware: Asset Purchaser Liable for Predecessor’s FLSA Liability

The Equal Employment Opportunity Commission held a hearing this week on “Wellness Programs Under Federal Equal Employment Opportunity Laws.”  Amy Moore testified at the hearing on behalf of long-time Covington client The ERISA Industry Committee (“ERIC”), a non-profit association committed to the advancement of the employee retirement, health, and other benefit programs of America’s largest employers.

The hearing focused on the treatment of wellness programs under the Americans With Disabilities Act (“ADA”).  The ADA permits employers to offer voluntary medical examinations or request voluntary medical histories as long as they keep the information confidential and do not use it for discriminatory purposes.  The EEOC issued enforcement guidance in 2000 stating that voluntary wellness programs can qualify for this exception; but the EEOC has never made it clear whether a wellness program is “voluntary” if it offers employees incentives to participate in the program. 
Continue Reading EEOC Holds Hearing on Workplace Wellness Programs

We recently came across this wonderful explanation of the key actors in the financial markets:  investors, speculators, market makers, and arbitrageurs.  The guts of the explanation appears in minutes 5-20 of the video, and is part of a presentation by Yaron Minsky, head of technology and programming at Jane Street
Continue Reading Investors, Speculators, Market Makers, and Arbitrageurs