The federal Employee Retirement Income Security Act, designed to protect employee benefits, has been used by employers as a shield against lawsuits. Federal appeals courts, interpreting Supreme Court decisions dating to 1993, consistently have said companies that offer health, life and retirement benefits under ERISA are protected from most lawsuits. Employees can be sued only in a very limited fashion and the damages that can be recovered are minimal. The result is that a good number of employers use ERISA as a shield against lawsuits based on their bad conduct.
So far the U.S. Supreme Court has refused to clear up the confusion caused by the federal appeals court rulings. Congress, which could amend ERISA to make clear that valid lawsuits are allowed, also has taken no action. The result, in the view of many ERISA experts, is that employees are using ERISA for a purpose never intended by Congress.
Senator Patrick Leahy, chairman of the Senate Judiciary Committee, pointed out at a recent hearing that before ERISA became law, employees clearly could sue for benefits in state courts. Court rulings, according to Senator Leahy, have left people “more vulnerable than they were before the law was passed.” There is a definite need for either the U.S. Supreme Court or Congress to provide “some sort of meaningful remedy for employees when employees have a breach of fiduciary duty.”
Source: Associated Press
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