ERISA Section 4062(e) significantly reformed

Pres Barack Obama signed into law, late last year, the Consolidated and Further Continuing Appropriations Act, which contains provisions that significantly reform ERISA Section 4062(e). The new law is meant to ensure that ERISA Section 4062(e) liability occurs only when there is a substantial shutdown of operations at a facility relative to the total size of the employer. The Act ensures that a shutdown event is not triggered unless the employees actually lose their jobs, and significantly reduces the amount of the shutdown liability. "Eligible employees" under the Act are now those persons eligible to participate in any defined contribution or defined benefit plan established and maintained by the employer. Employers should view these changes favorably, because the Act signals a return to the sensible application of ERISA Section 4062(e) enforcement.