The recent Supreme Court decision in Cunningham v. Cornell University has made it easier for employees to bring certain claims under the Employee Retirement Income Security Act (ERISA), but whether your employer owes you money depends on specific details of your retirement plan and its management.
What Did the Supreme Court Decide?
In Cunningham v. Cornell University, the Supreme Court ruled that employees (plan participants) alleging a “prohibited transaction” under ERISA ยง406(a)(1)(C) only need to claim that (1):
- The plan engaged in a transaction with a “party in interest” (like a service provider).
- The transaction involved the furnishing of goods, services, or facilities.
- The fiduciary knew or should have known the nature of the transaction.(2)
Previously, courts required plaintiffs to also prove that no exemptions applied to these transactions. The Supreme Court clarified that it’s the employer’s responsibility to demonstrate that any exemptions (like paying reasonable fees for necessary services) apply (3).
Does This Mean Your Employer Owes You Money?
Not automatically. While the ruling lowers the initial barrier to bring a claim, it doesn’t determine the outcome. To succeed, you would need to show that:
- Your employer’s retirement plan engaged in transactions with parties in interest.
- These transactions were not exempt (i.e., they didn’t involve reasonable fees for necessary services).
- You suffered a financial loss as a result (4).
The Supreme Court’s decision means you don’t have to prove the absence of exemptions at the outset, but ultimately, the burden shifts to the employer to justify the transactions (5).
What Should You Do?
If you suspect that your employer’s retirement plan has engaged in prohibited transactions:
- Review Plan Documents: Examine the fees and services associated with your retirement plan.
- Consult an ERISA Attorney: Legal experts can assess whether there’s a viable claim based on the specifics of your plan.
- Monitor Legal Developments: Stay informed about similar cases, as outcomes can influence your situation (6).
Remember, the Cunningham decision empowers employees to challenge questionable transactions more easily, but each case depends on its unique facts and circumstances.