A number of lawsuits have been launched against companies who don't follow the laws around stock options, 401k plans and retirement funds.
ERISA, the Employee Retirement Income Security Act, has special rules for companies that offer stock options as a retirement plan investment. This includes a company's fiduciary duties to their employees. Simply put, "fiduciary duties" means a company offering stocks has obligations to people who invest in them.
Employees in the stock option suits make claims that if proven in court, will cost employers millions of dollars. There are two general types of claims being made:
• Fiduciary duty: The employer withheld important information, put the company's interest ahead of the investors', or outright lied when giving employees investment information
• Unfair denial of benefits: The best example of this involves a case where employees claimed they were laid off just before they would have become eligible for lucrative stock option benefits. Other claims say that when their company was bought out, the new employer refused to honor stock option and 401k retirement obligations.
No excuses for not following ERISA
In February of 2006, the Department of Labor (DOL) is launching a campaign to help employers understand the rules of ERISA. It's even offering employers who haven't followed the law an amnesty. The DOL will let companies fess up to not following all the rules, and if they report everything properly now, they won't be penalized as heavily.
It's an offer worth considering; one company paid out 55 million dollars to settle a class action suit.
LAWSUITS NEWS & LEGAL INFORMATION
Stock Options and Your Retirement Fund: Is Your Employer Obeying ERISA?
|. By Jane Mundy|
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