Glossary

The Employee Retirement Income Security Act (ERISA) of 1974 is a federal law that established rules and regulations to govern employer-provided pensions and other employee benefits provided to US employees.

Section 404(c) of the Employee Retirement Income Security Act (ERISA) protects a fiduciary against liability for investment losses arising from allocation choices in employee-directed retirement plans (e.g., 401(k) plans) if certain requirements are met.

The Employee Retirement Income Security Act (ERISA), Section 510, prevents employers from taking actions that might abridge or impair an employee from collecting benefits. Section 510 also prevents an employer from taking punitive action against a participant for exercising his or her rights under an employee benefit plan. More specifically, Section 510 of ERISA bars employers from (1) discriminating or taking adverse action against plan participants or beneficiaries for exercising their rights under ERISA plans, (2) interfering with participants' or beneficiaries' attainment of rights under ERISA, and (3) retaliating against individuals for giving information or testifying in any inquiry or proceeding under ERISA. For example, Section 510 would prohibit an employer from terminating an employee, without cause, immediately prior to the date on which he or she is scheduled to become vested in the company's pension plan.

Employee Retirement Income Security Act stock drop litigation refers to a lawsuit brought against corporate directors and officers and trustees of corporate 401(k) plans after the company's stock drops sharply resulting in 401(k) losses. Such litigation, normally filed in the form of a class action lawsuit, arises when the market price of a company's stock drops sharply, and, as a consequence, employee 401(k) plan holders lose substantial sums of money because they hold large amounts of company stock in their individual accounts. In these lawsuits, employee-plaintiffs allege that the directors and officers were fiduciaries of the 401(k) plans and that the conduct governing the administration of such plans is therefore governed by the provisions found within the Employee Retirement Income Security Act. Among the most common allegations of negligence asserted in these claims include: (1) intentional disclosure of false and misleading information about the company's finances, which induced the employees to buy shares of the company's stock; (2) failure to disclose material information about the company and its financial condition and performance, in statements to the general public, to shareholders, or to employees; (3) failure to disclose such information to other plan fiduciaries (such as investment advisers and brokers) who had responsibility for investing plan assets; and (4) failure to correct misleading statements made by other officers and plan fiduciaries and failure to adequately monitor wrongdoing by other plan fiduciaries.

Employee Retirement Income Security Act "tag-along" claims involve plaintiffs who assert that, in addition to pension plan fiduciaries, corporate directors and officers are also liable for pension plan defaults and payment shortfalls and therefore must also "tag along" as named defendants in such lawsuits.

Employee stock ownership plans (ESOPs) are a type of defined contribution benefit plan in which most or all of the assets are invested in the employer's stock. Contrary to how it sounds, employees do not individually buy shares in the company through an ESOP. Rather, the company contributes shares to the plan, and the plan buys additional stock with loans to be repaid by the company. (The ability to leverage the plan has significant tax benefits.) "Vested" employees receive a payout of benefits when they leave the company.

An employee stock purchase plan allows employees to buy company stock through payroll deductions, usually at a discounted price. Employees can sell stocks purchased through these plans at any time. Because they are buying at a discounted price, immediate profits are often possible. (Stock purchase plans are usually set up as tax-qualified "Section 423" plans.)

Employee welfare benefit plans are plans, funds, or programs created by an employer or a union to provide medical, sickness, accident, disability, death, unemployment, and vacation benefits; apprenticeship and training programs; day care centers; scholarship funds; prepaid legal services; or any benefit allowed by the Taft-Hartley Act. These plans are distinguished from employee pension benefit plans that provide for retirement income or the deferral of income (e.g., "traditional" defined benefit pension plans, 401(k) plans).

Employers excess indemnity insurance is insurance coverage purchased by employers that do not subscribe to the Texas workers compensation law. It is usually purchased in conjunction with occupational accident policies and reimburse the employer for liability settlements and judgments applying to pain/suffering, permanent disfigurement, and lost future earnings.

Employers liability (EL) coverage is provided by part 2 of the workers compensation policy. It provides coverage to the insured (employer) for liability to employees for work-related bodily injury or disease, other than liability imposed on the insured by a workers compensation law.