Nearly 50 years ago, President Gerald Ford signed the Employee Retirement Income Security Act (ERISA) on Labor Day in 1974. The law was enacted to protect employees' retirement savings after Studebaker employees lost their jobs and pensions when the carmaker went out of business.
Congress vested regulatory authority under ERISA in the U.S. Department of Labor so that those who manage and control retirement plan assets exercise fiduciary responsibilities, such as acting in the best interest of plan participants.
Originally targeting pension plans, ERISA was amended over the years to be a broad, all-encompassing employee benefits law and governs defined contribution plans such as 401(k) plans as well as various healthcare insurance plans.
Acts tied to ERISA include the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, which provides for the continuation of healthcare coverage for employees and their beneficiaries under certain circumstances. Another, the Health Insurance Portability and Accountability Act, added protections for sensitive patient health information. "ERISA turns 50 soon. Experts say its evolution isn't over yet." www.hrdive.com (Aug. 26, 2024).
Commentary
Over the years, the U.S. Supreme Court further defined the parameters of fiduciary responsibilities. In 2015, the U.S. Supreme Court issued Tibble v. Edison International, in which the Supreme Court held that ERISA requires fiduciaries to continually monitor investments and remove imprudent ones. The Supreme Court further explained this requirement in the 2022 decision in Hughes v. Northwestern University.
Other changes to ERISA include the SECURE 2.0 Act's creation of pension-linked emergency savings accounts, a form of short-term savings account that can be maintained as part of a retirement savings plan.
In a recent ruling on June 28, 2024, in Loper Bright Enterprises v. Raimondou, the U.S. Supreme Court up-ended more than 30 years of stare decisis, and overruled the 1984 case, Chevron, USA Inc. v. Natural Resources Defense Council.
Chevron had required courts to defer to the expertise of federal agencies, including agencies that enforce labor and employment laws.
Under Loper, federal court will no longer defer to an agency's interpretation of federal law. Instead, federal courts will now give statutes their "best" interpretation.