The federal Department of Labor in Washington, D.C., has intervened in a case that could have a significant effect on how workers affected by ERISA protect their rights against plan fiduciaries that make unfair changes. A class-action lawsuit representing terminated employees of Wawa, a large convenience store chain, accuses Wawa, its employee stock ownership plan (ESOP) trustees and plan administrators of violating ERISA, the Employee Retirement and Income Security Act of 1974. The law aims to protect employees from losing their pensions, health insurance, disability insurance and other employee benefits due to plan administrators’ misconduct.
According to the lawsuit, Wawa’s ESOP amended its plan in 2015, eliminating the previously existing right of terminated employees to continue to hold stock under the program. They also forced terminated employees to accept a liquidation payment for their existing stock holdings at a fixed price, which the complaint alleges sat below market value. They also say that ERISA was violated when plan administrators provided misleading information that led them to lose out when the stock later grew in value.
The district court upheld the terminated employees’ arguments, allowing the case to move forward. However, Wawa’s plan fiduciaries have argued that the court was wrong in not forcing the plaintiffs to show that they relied on false representations to their detriment. The Department of Labor has weighed in here to support the district court’s contention that people covered by ERISA do not need to show detrimental reliance in order to pursue a claim for misrepresentation.
The federal department’s stand is significant because it protects the ability of employees affected by ERISA to bring class-action lawsuits. People who have lost stock options, insurance or other benefits due to the actions of plan administrators may consult with attorneys about how ERISA benefits claims litigation might protect their rights.