It’s that time of year again when employee benefit plan audits are gearing up so it’s also a good time for a reminder regarding the importance of ERISA compliance. Plan sponsors who have good oversight over their plans and have annual audits may tend to not keep apprised of legal proceedings involving benefit plans. Some plan sponsors may even feel as though it will never happen to their plans; however, the reality is, litigation does happen. Here is a recent example:
A retired nurse sued her former employer in a federal court alleging she was not credited for all hours worked; thus affecting her retirement benefits. Her former employer asked her to work through her lunch on a regular basis and to come in 30 to 40 minutes early to review patient charts, rather than do it at the beginning of her shift. Despite this, the hospital did not pay her until her shift started and deducted 30 minutes for her lunch breaks, even though she did not take them. The federal judge ruled that the hospital’s retirement plan only required them to report hours for which employees are compensated and dismissed the case. The case was appealed to the 3rd Circuit Court of Appeals where the dismissal was affirmed; however, if the nurse was successful in her other litigation pending with the state regarding wage law violations, then she can file another federal lawsuit under a different section of ERISA.
Even though this case was dismissed twice in favor of the hospital, it illustrates how litigation can extend over a long period of time resulting in a high amount of legal fees which are usually absorbed by the plan sponsor.