Plan Sponsors To Lose Discretionary Authority?

Plan Sponsor Employs Discretionary Authority

Does your plan contain a discretionary authority provision? The government may be taking that away if HR 7740 passes. It will prohibit arbitration in ERISA claims and discretionary authority clauses.

As it stands now, when a plan document incorporates a discretionary authority provision, courts must defer to the decision of the plan sponsor, unless they find the decision to be an abuse of discretion, or arbitrary and capricious. In the later case the judge will call it the way the judge sees it.

BILLS-117hr7740ih.pdf (congress.gov)

“To amend the Employee Retirement Income Security Act of 1974 to provide that any mandatory predispute or coerced postdispute arbitration clause, class action waiver, representation waiver, or discretionary clause with respect to a plan is unenforceable, to prohibit any such clause or waiver from being included in a plan document or other agreement with plan participants, and for other purposes.”

Plaintiff attorney calls Plan Sponsor to the witness stand…….

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