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Employee Stock Options Lawsuit FAQWhat is ERISA?
ERISA is the Employee Retirement Income Security Act of 1974. It sets minimum standards for pension plans in private industry. For example, if your employer offers a pension plan, ERISA establishes when you (as an employee) must be allowed to participate in the plan and how long you can be away from your employment before it affects your benefit, among other things. Employers are not required by ERISA to provide pension plans; rather, ERISA ensures that employers who do offer pension plans meet certain standards.
What does ERISA provide for employees?
ERISA does the following for plan participants (employees who participate in employer-sponsored plans):
- Requires plans to provide information about the plan, including plan features and plan funding;
- Sets minimum standards for participation, vesting, benefits and funding of the plan;
- Requires fiduciaries (those who have authority or control of a plan's management or assets) to be accountable for their decisions;
- Gives participants the right to sue if there is a breach of fiduciary duty;
- Guarantees that certain benefits will be paid if a defined plan is terminated.
ERISA laws include benefits plans such as employee retirement plans, employee stock options plans and health plans.
What is an ERISA breach of fiduciary duty?
Under ERISA, the people who oversee employer benefits plans, including those who have discretionary authority, have a responsibility to act in the best interests of plan participants and to avoid any conflicts of interest when managing the plan. Failure to do so can be considered a breach of fiduciary duty. Fiduciaries often include plan trustees, plan administrators and people who are involved in the plan's investment committee.
Breach of fiduciary duty can include putting all a plan's assets into company stock when it is imprudent to do so, failure to inform plan participants about the material information about a plan, failure to diversify investments to minimize the risk of losses and failure to act with prudence and diligence.
Fiduciaries who breach their duties must make the plan whole by restoring losses and, if applicable, restoring any profits made through use of plan assets.
What are some ERISA violations?
Examples of ERISA violations include wrongful termination of an employee stock option plan, misrepresenting material information regarding an employee benefit plan and denying an employee the rights granted to him by a Stock Option Agreement.
Are ERISA lawsuits only for employees of large companies?
No. ERISA lawsuits cover any company in the private industry that provides employee benefits plans.
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Last updated on Nov-9-10