Blog

BUSINESS LAW 5: ERISA holds employers liable for the promises of pensions.

Private employers are not required to offer pension plans, but if they do, ERISA requires that the pension plans meet certain standards and retain certain protections. That way, if a worker has been promised a defined pension benefit upon retirement—and if he has fulfilled whatever conditions are required to obtain a vested benefit—he actually will receive it.  Before ERISA, lack of oversight and legal standards often left pension plans without enough money, and employees who counted on those funds with nothing for retirement.

Subchapter III of ERISA requires PBGC to charge participating companies premiums so that if a pension plan fails, PBGC can provide for the timely and uninterrupted payment of pension benefits to participants and beneficiaries.

In this case, the company produced auto parts before going out of business in 2009. Since 1964 it had offered pension benefits to some of its employees, and by the time production was stopped, its pension obligation was underfunded by millions of dollars. To satisfy that liability, PBGC looked to assets that might be treated as the company’s—specifically, a trust started by its founder and assets purchased from the company by the founder’s son in 2009.

When an employer terminates its pension plan, ERISA liability does not end with the company that actually promised pension payments. Instead, a trade or business under common control of the employer is treated as part of the employer and so incurs liability under ERISA.

The Trust assumes but does not concede that it and the Company were under common control. The trust contends, however, that it is not a trade or business under ERISA.

ERISA does not define trades or businesses, and neither the Supreme Court nor this court have defined the phrase in the context of ERISA, but courts, instead, have concluded that the entity that leases property to its commonly controlled company is categorically a trade or business for ERISA purposes.

Structurally, ERISA holds employers liable for the promises of pensions that they make to employees. After a PBGC determination that a pension plan has insufficient assets to meet its liabilities, ERISA holds the plan sponsor liable. The statute then guarantees that a liable sponsor cannot evade its responsibility through tactics such as corporate reorganization or sales to avoid liability for an impending plan termination.

Because there is a body of federal common law applying successor liability in employment and labor cases, it is appropriate to apply that law here, too.

The court held that it was appropriate to apply the federal common law of successor liability, rather than the state’s common law. It vacated the district court’s order of dismissal and remanded for further proceedings.

If you are a business owner facing litigation, obtaining the right legal representation is essential.

At Aldrich Legal Services, you will work with an attorney who has the extensive litigation experience necessary to help you reach an effective resolution that protects your interests.

Contact Aldrich Legal Services

Top 3 Misconceptions on Power of Attorney

Considering leaving the country for a long time while maintaining a business or selling a home in the US? Were you recently diagnosed with a terminal or degenerative disease? For these and many other issues, it may become necessary for someone...

FAMILY LAW 29: Quitclaim deed signed after prenuptial agreement prevails.

The court ruled that title to the land prevails and that once the deed was signed, the property became the undivided whole interest for both the decedent and appellee and became appellee’s property upon the decedent’s death. Consequently, the court concluded that the prenuptial agreement did not have any impact on the property rights of appellee in this case.

Know the Differences between Annulment and Divorce

  Marriage can end through two ways: divorce and annulment. Though both of these options have the same result, each has different requirements. There are many similarities and differences between a divorce and an annulment, so many...

Understanding Vaping Laws for Minors

  Vaping is a fad that is quickly solidifying into a stable industry of products around the world. Vaping and electronic cigarette (or e-cigarette) use have dramatically increased from roughly “seven million [users] in 2011 to 35...

Michigans New Marijuana Laws

The 2018 ballot initiative titled “the Michigan Regulation and Taxation of Marihuana Act (MRTMA) passed with 56% of the vote. Michigan joins nine states and D.C. in legalizing some form of recreational marijuana use.  Due to the...

Cyberbullying Is Now A Punishable Crime In Michigan

Beginning in March 2019, cyberbullying will now be illegal in the state of Michigan. The House Bill 5017 now makes cyberbullying a punishable crime by Michigan law, meaning that those who harass others online could face potential jail...

The Difference Between Theft, Robbery and Burglary

Often, burglary, robbery, and theft are used interchangeably even though there are distinct differences between all of them. Though, what all three do have in common is they may involve the unlawful taking of someone’s personal property by...

Do I Have To Go To Court If I Get A Divorce?

If you’re contemplating a divorce in Michigan, you probably have a lot of questions. One of the most intimidating aspects of getting a divorce in Michigan or anywhere else is the idea of having to appear in court. The laws for getting a...

Do I Need A Prenuptial Agreement?

A prenuptial agreement is not only for the wealthy people in society, like Hollywood celebrities and the like but also for any couple that brings personal assets, property, debts or children from a former relationship into the marriage. This...

PROBATE 19: Respondent argues she did not receive notice of hearing until five days before.

Respondent argues that she was denied her right to due process of law because she did not receive notice of the hearing until five days before it took place. Respondent argues that the five-day notice of hearing violated her right to due process. Due process generally requires that notice be reasonably calculated to apprise interested parties of the action and to provide them an opportunity to be heard.

WILLS/TRUSTS 11: Allegations that a trustee violated his fiduciary duties.

MCL 700.7803 states that a trustee shall act as would a prudent person in dealing with the property of another, including following the standards of the Michigan prudent investor rule. If the trustee has special skills or is named trustee on the basis of representation of special skills or expertise, the trustee is under a duty to use those skills. MCL 700.7810 states that a trustee shall take reasonable steps to take control of and protect the trust property.

How Is Probation Violated?

If you are on probation, it means you have the judge's trust and have been allowed some level of freedom. Now you must work on ensuring you don’t violate your probation. You will need to abide by every term that the criminal court judge...

Don't let a bad decision, unfair contract, or a messy divorce get in the way of a promising future!
Contact the experienced team at Aldrich Legal Services today to schedule your free initial
consultation
and secure reliable and trustworthy representation today!
Get the Help You Need From a Team You Can Truly Count On: (734) 404-3000