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PBGC Proposed Rule Would Exempt 90 Percent of Plans and Plan Sponsors from Reportable Event Requirements

The Pension Benefit Guaranty Corporation (?Ç£PBGC?Ç¥) recently issued proposed Rule 2013-07664, which would exempt most pension plans and plan sponsors from reporting many corporate and plan events under ERISA. Currently, ERISA plans and plan sponsors must report certain events to PBGC, such as active participant reductions, missed contributions, and an inability to pay benefits when due, among others. The proposed rule significantly changes the reportable event waiver structure currently in place and adds new funding-based and financial soundness safe harbors. Consequently, the proposed rule would reduce the reporting requirements of plans and plan sponsors that are financially sound and would permit PBGC to focus its resources on those plans that are at risk. The proposed rule includes a summary chart that compares the current and proposed reporting waiver structures. Additionally, the proposed rule makes electronic filing of reportable event notices mandatory. The proposed rule would apply to reportable events occurring… Continue Reading

FAQs on Use of Exchanges to Offer Ancillary Insurance Products

On March 29, 2013, the Centers for Medicare & Medicaid Services (?Ç£CMS?Ç¥) released a set of Frequently Asked Questions (?Ç£FAQs?Ç¥) regarding the use of health care reform exchanges (?Ç£Exchanges?Ç¥) to offer ancillary insurance products, such as stand-alone vision, disability, and life insurance coverage. ?áThe FAQs clarify that an Exchange may offer only ?Ç£qualified health plans?Ç¥ (?Ç£QHPs?Ç¥), which include stand-alone dental plans, to qualified individuals and qualified employers, but that ancillary insurance products may be offered by separate state programs that share resources and infrastructure with a state-based Exchange.?á In addition, Exchanges are permitted to provide information about ancillary products, such as explanations of the coverage the ancillary products provide, but must also caveat that enrollment in an ancillary product does not qualify as enrollment in a QHP. A copy of the FAQs is available here.

Federal Court Lacks Jurisdiction to Consider Arbitration or ERISA Benefit Related Issues under Employment Agreement

The U.S. Court of Appeals for the Eighth Circuit recently held that it lacked jurisdiction to hear a motion to enjoin a request for arbitration to settle disputes under an employment agreement. Dakota, Minnesota & Eastern Railroad Corporation (?Ç£DM&E?Ç¥) entered into an employment agreement with its president and CEO (the ?Ç£Defendant?Ç¥) to encourage his retention following an anticipated change of control. With a merger imminent, DM&E terminated the Defendant without cause and triggered the employment agreement’s severance provisions; the Defendant filed a demand for arbitration. DM&E then filed an action in federal court to enjoin the arbitration. The Eighth Circuit agreed with the district court that the benefits sought in the Defendant’s arbitration demand were not claims for benefits due under an ERISA plan. The circuit court held that the benefits being demanded under the employment agreement (i.e., the continued provision of employee benefits or cash payments if such benefits… Continue Reading

SEC Clarifies the Application of Regulation FD to Social Media Disclosures

Since the announcement of the investigation by the SEC of the CEO of Netflix, Inc. for a July 2012 Facebook post celebrating a company milestone, there has been considerable uncertainty as to whether companies can use social media outlets, like Facebook and Twitter, to communicate with investors without violating Regulation Fair Disclosure (?Ç£Regulation FD?Ç¥). On April 2, 2013, the SEC addressed this uncertainty by issuing a Report of Investigation (the ?Ç£Report?Ç¥) in which it clarified the rules applicable to companies releasing information to the public through social media. The Report indicates that the SEC is amenable to the increased use of social media outlets by companies while also reinforcing the applicability of Regulation FD to any such disclosures. Regulation FD contains the federal securities regulations requiring public companies to disclose material, non-public information to investors in a manner reasonably designed to achieve effective broad and non-exclusionary distribution to the public… Continue Reading

6th Circuit Reverses Trial Court?ÇÖs ?Ç£Mechanical Application?Ç¥ of Statutory Pre-Judgment Interest Rate Applied to Pension Benefit Award

The U.S. Court of Appeals for the Sixth Circuit recently affirmed a trial court?ÇÖs award of more than $3 million in unpaid pension benefits but reversed the trial court?ÇÖs award of pre-judgment interest at the statutory rate. The Sixth Circuit agreed that a class of plaintiffs?ÇÖ claims for unpaid pension benefits were not precluded by their execution of severance agreements, which included a release of claims, because the claims allegedly released (i.e., lump sum benefit calculations) had not yet accrued at the time the severance agreements were signed, since lump sums were not yet available for those who signed the releases, and because there was no mention in the releases of future pension or ERISA claims. The circuit court held that its ruling was consistent with the law that waivers of future ERISA violations are unenforceable. Nevertheless, the Sixth Circuit reversed the trial court?ÇÖs application of the statutory pre-judgment interest… Continue Reading

IASB Proposed Amendment to IAS 19: Accounting for Employee Contributions to a Defined Benefit Plan

The International Accounting Standards Board (?Ç£IASB?Ç¥) recently proposed amending IAS 19 to address the proper method of accounting for contributions from employees or third parties to a defined benefit plan when such contributions are required by the defined benefit plan?ÇÖs terms. The amendment is intended to clarify when an employer can recognize such contributions as a reduction in its short-term employee benefits costs instead of a reduction in its post-employment benefits costs. The proposed amendment would permit an employer to recognize the contributions as a reduction in its short-term employee benefits costs in the same period in which the benefits are payable if, and only if, the contributions are linked solely to the employee?ÇÖs services rendered during that period, for example, employee contributions based on a fixed percentage of the employee?ÇÖs salary regardless of the employee?ÇÖs years of service to the employer. Interested parties may submit comments to IASB through… Continue Reading

What Happens on Facebook, Stays on Facebook (When It Is Subject to a Discovery Request)

As readers of this blog know, social media evidence, like other electronically stored information, must be preserved when a party ?Ç£reasonably foresees?Ç¥ or ?Ç£reasonably anticipates?Ç¥ that it may be needed in litigation.?á As a New Jersey federal judge recently made clear, attempts to evade this requirement by deleting social media information may result in sanctions. In Gatto v. United Airlines, Inc., defendants in a personal injury lawsuit sought access to a number of plaintiff?ÇÖs social networking accounts to find evidence relating to his credibility and his online businesses, which would be relevant to the plaintiff?ÇÖs damages. Case no. 2:10-cv-01090?á?á (D. N.J. March 25, 2013).?á At mediation, plaintiff agreed to change his Facebook password so that he could share his account information with defendants?ÇÖ counsel. Defendants?ÇÖ counsel then accessed plaintiff?ÇÖs account, causing Facebook to alert plaintiff that his account had been accessed by an unknown IP address. ?á?áThe plaintiff then deactivated… Continue Reading

April 2013