What is an Employee Retirement Income Security Act (ERISA) class action?

By on March 1, 2013

The Employee Retirement Income Security Act (ERISA) is a federal regulation that sets minimum standards for pension and health plans provided by businesses to their employees. ERISA was created to shield employees who are part of these plans.  Employee retirement plans are also called Employee Savings, Profit-Sharing, 401K, or Stock Ownership Plans.

Under ERISA regulation, the people in charge of managing employee benefit plans, known as fiduciaries, must abide by specific guidelines set by the law.  These include acting in the best interests of the plan participants; providing participants with plan information, including information about plan features and funding; and providing a grievance and appeals process for participants.  Breaches of fiduciary duty can result in a lawsuit being filed against plan fiduciaries.

One reason to bring an ERISA lawsuit is when plan fiduciaries over-allocate company shares within a retirement plan when such an investment is considered imprudent.  Often times, ERISA lawsuits are brought when company shares are heavily invested within a plan and the stock has been declining for several years.