ERISA Rights Vital for Employees

San Jose, CAGiven the current economic climate it is no surprise that many people consider their employee stock options to be a vital part of their financial future. Those stock options are protected by ERISA law, which regulates how employee stock option plans are run. Unfortunately, not all employers follow ERISA regulations, leading to complaints and lawsuits being filed against those employers. The law does not look kindly upon employers who take advantage of their employees and mismanage their stock options plans.

Some lawsuits are brought by members of employee stock option plans themselves, when they believe their plans are being mismanaged. Currently, a potential lawsuit is being investigated alleging Medtronic violated its ERISA duties. The investigation is focused on the Medtronic, Inc. Savings and Investment Plan and the Medtronic Puerto Rico Employees' Savings and Investment Plan.

Concerns about the Medtronic Plans include that Medtronic and the company's Plan administrators may have breached their fiduciary duties of loyalty and prudence to Plan participants and beneficiaries by investing Plan assets in Medtronic stock when such stock was not a prudent investment. Furthermore, the firm is being investigated by a law firm for possibly not disclosing the extent to which revenues from INFUSE Bone Graft depended on the US FDA rejecting applications and that Medtronic did not disclose reports of medical injuries suffered by INFUSE patients. Finally, the investigation will look into whether or not Medtronic illegally campaigned to have INFUSE used for off-label purposes (that is, purposes not FDA approved).

In addition to lawsuits brought by plan participants, some lawsuits are brought by the US Department of Labor. One such lawsuit was filed against Power & Data Technology and the company's president, to recover $39,325 in assets from the company's 401(k) profit-sharing plan. According to the Department of Labor's lawsuit, the company violated ERISA by abandoning the 401(k) plan after the company stopped doing business. Furthermore, the lawsuit alleges that the 401(k) plan was mismanaged and misused.

With the economic crisis showing no signs of stopping, people are doing everything they can to hold on to their money. Every little bit helps, including employee stock option plans. That is money that they were promised would be there for them and that they paid into faithfully. It is important to ensure that those plans are run fairly and with the employees' best interests in mind. In fact, it is mandated under ERISA law that plan administrators review, evaluate and continue to monitor the suitability of a company's retirement plan or stock option plan investments. If the investments are no longer suitable it is up to the administrator to take appropriate action, making sure to act for the plan participants' benefit.

Failure to do so constitutes a breach of ERISA law and can result in lawsuits filed either by employees or by the US Department of Labor. After all, employees work very hard for their money. They shouldn't lose that money because of an administrator's negligence.