Supreme Court Finds Employer Liable For Employee’s 401(k) Losses
The Door Is Open to Employee Claims
Employer Held Personally Liable for $150,000 Claim
On February 20, 2008, the US Supreme Court ruled that James LaRue of Southlake, Texas, could file a claim for $150,000 against his employer. Mr. LaRue's 401(k) account declined $150,000 in value after he asked the plan’s administrator to switch to safer investments. The Court’s ruling has opened the door to employee lawsuits. And because ERISA regulations hold that employers, sponsors and administrators are plan fiduciaries, they can be held personally liable for employee losses.
A Tool to Avoid Potential Claims
PlanRiskProfile was created to help employers identify defects in their 401(k) plans that can lead to employee claims. In the LaRue case had the plan’s sponsor made a simple election there never would have been any basis for filing a claim. This would have saved the employer $150,000 plus the cost of defending the claim all the way to the Supreme Court.
A Bear Market And Litigious Employees Spells Trouble
Employers can find themselves dragged into lawsuits simply because they are fiduciaries and unaware of potential flaws in their retirement plans. Given today's litigious environment and the current state of the stock market, plan sponsors need to protect themselves from avoidable claims. Faulty plan design and innocent plan changes can result in big liabilities. A plan can be in compliance with ERISA regulations yet still be subject to claims from aggressive litigants.
Reduce Your Exposure to Frivolous Claims
Since 2001 over 15,000 lawsuits have been initiated by employees and government agencies against 401k sponsors. We’ve analyzed data from over five million retirement plan filings going back to 1999. Using this data we’ve created an easy to read report identifying plan flaws that could increase your exposure to liability from participant claims. Your report is based solely on the information you included in your plan filing.
Protect Yourself for Just $12.95
So protect yourself, today! Your report(s) are on-line and ready to print or review. Find out what you don’t know about your plan and protect yourself from unnecessary employee claims. For just $12.95 we can put your mind at ease and possibly save you thousands in litigation costs.