It is common knowledge among the benefits community that there is now a flood of class action lawsuits being filed against plan fiduciaries alleging that they have breached their fiduciary duties under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Allegations include plan fiduciaries causing their plan to pay excessive recordkeeping costs and offering costly and underperforming investment funds. The stakes are high, and these lawsuits affect plans of all sizes.
What can plan fiduciaries do to protect themselves? Aside from engaging in good fiduciary practice, plan fiduciaries should consider adopting an amendment to their plan which provides for mandatory arbitration and a class action waiver. This column explores the relevant issues and offers advice for plan fiduciaries who wish to consider such an amendment.