Employer may have a duty to speak up when considering ERISA plan changes

Q: An employee recently gave notice that he is planning to retire at the end of the year. It has not yet been announced to employees, but the company is seriously considering implementing a new, more generous retirement plan early next year. I know that this employee would benefit if he stayed employed long enough to take part in the new plan. Do I have an obligation to tell him that?

A: You might. Under the federal Employee Retirement Income Security Act (ERISA), the law that governs employee benefit and pension plans, you may have a fiduciary duty to disclose this kind of information to the employee if the change in benefit plans is under serious consideration. Generally, “serious consideration” exists when there is a specific proposal under consideration, which is being discussed for purposes of implementation by senior management with the authority to implement the change. So your duty to disclose will depend on your specific circumstances. A good rule of thumb is that if these criteria are met, and it’s reasonable to think that the employee might reconsider his decision to retire if he had that information, then you probably have a fiduciary duty to disclose the information (see Soland v. The George Washington University, D DC, Jan. 2013). Even if it’s not an ERISA-covered plan that you’re considering (and therefore you have no ERISA fiduciary duty to disclose information), failure to disclose information that would otherwise influence an employee’s decision could lead to other non-ERISA types of legal claims. If this type of situation arises, contact your Vigilant staff representative for assistance.