Employee benefits are an important form of compensation offered by many employers. Some benefits plans are covered by the Employee Retirement Income Security Act of 1974 (ERISA). When employers violate ERISA laws, employees may be able to file a lawsuit to recover money lost from their employee savings plan, employee stock options plan or other benefits plans covered by ERISA.
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The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for pension and health plans offered by private businesses to their employees. ERISA was designed to protect employees who participate in such plans.
ERISA covers health plans, retirement plans and employee stock options plans, in which employees are given the opportunity to purchase shares of a company's stock at a certain price, often lower than the actual or anticipated market price of the shares.
Under ERISA laws, the people responsible for overseeing employee benefits plans (often referred to as fiduciaries) must follow specific guidelines. 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.
Plan fiduciaries include plan trustees, plan administrators and people who sit on the plan's investment committee. Fiduciaries are required to act prudently, diversify investments and avoid conflicts of interest when managing a plan's assets.
Employee stock option litigation often involves a breach or misrepresentation of Stock Option Agreements; some scenarios include:
- A group of employees' invested employee stock options are wrongfully canceled (i.e., their Stock Option Agreements are breached) when their subsidiary or division is sold by the parent corporation that granted them their options even though the employees continue to work for the same company and in the same jobs after the acquisition;â€¨
- An employee is denied the rights granted to him by a Stock Option Agreement to accelerated vesting of unvested options following a change in control (merger or sale), despite the fact that his income and/or job duties are dramatically reduced after the merger or sale;â€¨â€¨
- An employee or group of employees is terminated (or their division is sold) specifically to prevent the vesting of unvested employee stock options, which, at least in California, could be a breach of the covenant of good faith and fair dealing;â€¨
- A company engages in fraud by lying to its employees about the number of options they will be given, their exercise prices, their vesting schedules and/or their entitlement or lack of entitlement to employee stock options; andâ€¨
- A fiduciary makes decisions about the plan based on what is best for the company but not what is best for plan participants. â€¨
An ERISA lawsuit was filed against YRC Worldwide Inc., also known as Yellow Freight, alleging employees lost value in their plans because of imprudent investments by plan administrators.
Employee stock option lawyers have experience handling all types of employee stock option cases, and exclusively represent employees and focus their practice on employee stock option disputes, employee stock option cases, employee stock option litigation, employee stock option class actions, deceptive trade practices, and breach of Stock Option Agreements in connection with employee stock options.
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If you have suffered stock losses from the cancellation or devaluation of employee stock options, please click the link below to submit your complaint to a lawyer who will review your claim for free.
Last updated on May-14-13
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