Employment

On April 17, 2025, the Supreme Court issued its opinion in Cunningham v. Cornell University, No. 23-1007, 604 U.S. ___ (2025), a case addressing the pleading standard for prohibited-transaction claims under § 406(a) of the Employee Retirement Income Security Act of 1974 (ERISA).  Section 406(a) proscribes certain transactions between plans and “parties in interest” absent a statutory exemption enumerated under ERISA § 408.  The core question on appeal was whether plaintiffs must allege, as an element of a prohibited-transaction claim under § 406(a), that an exemption under § 408 does not render the challenged transaction lawful.

In a decision that is expected to have wide-ranging implications, the Court held that exemptions under § 408 provide affirmative defenses to liability under § 406(a).  Consequently, plaintiffs need not allege that any of the exemptions set forth in § 408 are unavailable to state a plausible claim for relief.  Rather, the burden falls on plan fiduciary defendants to plead and prove that an exemption under § 408 nullifies a plaintiff’s claim.Continue Reading A Closer Look:  Supreme Court Rejects Heightened Pleading Standard for Prohibited-Transaction Claims under ERISA § 406(a)

Likely spurred by plaintiffs’ recent successes in cases under Illinois’s Biometric Information Privacy Act (“BIPA”), a new wave of class actions is emerging under Illinois’s Genetic Information Privacy Act (“GIPA”). While BIPA regulates the collection, use, and disclosure of biometric data, GIPA regulates that of genetic testing information. Each has a private right of action and provides for significant statutory damages, even potentially where plaintiffs allege a violation of the rule without actual damages.[1] From its 1998 enactment until last year, there were few GIPA cases, and they were largely focused on claims related to genetic testing companies.[2] More recently, plaintiffs have brought dozens of cases against employers alleging GIPA violations based on allegations of employers requesting family medical history through pre-employment physical exams. This article explores GIPA’s background, the current landscape and key issues, and considerations for employers.Continue Reading Employers Beware: New Wave of Illinois Genetic Information Privacy Act Litigation

Last week, a divided Second Circuit panel affirmed a district court ruling denying a motion to compel arbitration of a putative class action seeking classwide equitable remedies under ERISA for alleged mismanagement of an employee stock ownership plan.  The Second Circuit found the defined contribution plan’s mandatory arbitration clause unenforceable because it limited plaintiff’s ability to assert a claim that would result in any relief other than individual relief, and specifically prevented him from pursuing the plan-wide remedy authorized by ERISA Section 502(a)(2).  The Court’s decision extends the “effective vindication exception” and raises questions about the extent to which plans can force individual arbitration of ERISA claims that apply to an entire plan.  

In Cedeno v. Sasson, 2024 WL 1895053 (2d Cir. May 1, 2024), the plaintiff asserted claims under ERISA Sections 502(a)(2) and 409(a), alleging that defendants breached fiduciary duties by purchasing stock shares for purportedly more than fair market value, saddling the Plan with tens of millions of dollars of debt and decreasing its value. Continue Reading Second Circuit Blocks Use of Arbitration Clause to Prevent Class Action ERISA Claims

On June 15, the Supreme Court issued its decision in Viking River Cruises, Inc. v. Moriana, No. 20-1573, holding that the Federal Arbitration Act (“FAA”) requires California courts to honor agreements to arbitrate individual claims under the California Labor Private Attorneys General Act of 2004, Cal. Lab. Code § 2698 et seq. (“PAGA”).  Although Viking River Cruises is a significant win for California employers, it remains to be seen whether and to what extent the full scope of that win will be durable.Continue Reading Supreme Court Hands California Employers a Significant (if Qualified) Win

A recent Fifth Circuit decision continues the trend of courts rejecting putative class and collective actions where absent class members are subject to arbitration agreements.

Exotic dancers sued A&D Interests, Inc. (doing business as the “Heartbreakers Gentlemen’s Club”) in a putative Fair Labor Standards Act collective action for allegedly misclassifying…

Continue Reading Heartbreakers Gentlemen’s Club Gets Lucky with Arbitration Win in Fifth Circuit

A new law signed by President Biden brings significant changes to employers’ ability to require arbitration of certain disputes with employees and could lead to an increase in sexual assault and sexual harassment claims against employers in court.  On March 3, 2022, President Biden signed into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Act”).  The Act amends the Federal Arbitration Act (“FAA”) to provide that predispute arbitration agreements and predispute joint-action waivers relating to sexual assault and sexual harassment disputes are unenforceable at the election of the person or class representative alleging the conduct.  The Act took effect immediately upon signing.Continue Reading A Closer Look: New Law Ends Mandatory Arbitration for Sexual Assault and Sexual Harassment Claims