Wall Street Collapse = ERISA Stock Drop Litigation

Graphup Not a surprising development at all. From BNA Daily Labor Report (subscription required):

As several heavy hitters in the financial world have come under pressure or have gone bankrupt in the past couple of months because of the subprime mortgage and lending crisis that has battered investment firms and banks, the employer “stock drop” cases that proliferated in the post-Enron Corp. and post-WorldCom Inc. age are on the rise.

Although the Employee Retirement Income Security Act claims raised in these stock drop cases have not been identical, there are two central claims that arise in these cases. The first claim typically raised is that the plan fiduciaries breached their duties by offering company stock as a plan investment option when the stock was an imprudent or unwise investment. The second claim focuses on the disclosure obligations of the plan fiduciaries and often alleges that the fiduciaries breached their duties by not telling plan participants of financial matters of the plan sponsor that made the sponsor’s stock an imprudent investment.

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The Scope of IRCA Preemption

Scales Thanks to Ross Runkel for bringing to my attention this case from the 9th Circuit concerning whether the Legal Arizona Workers Act (LAWA)  is preempted by Immigration Reform and Control Act (IRCA).  In CPLC v. Napolitano (9th Cir 09/17/2008), the court examined LAWA, which allows state courts to suspend or revoke the business licenses of employers who knowingly or intentionally hire “unauthorized aliens.”  As Ross explains:

That act also requires employers to use the federal E-Verify system (an internet-based system that allows an employer to verify an employee’s work authorization status).

But:

The 9th Circuit rejected various facial challenges to the Act, concluding (among other things) that it is not expressly preempted by the federal Immigration Reform and Control Act (IRCA).  In reaching that conclusion, the court determined that the Act fell within the scope of the “savings clause” of IRCA’s express preemption provision as a “licensing law.”

So it seems that IRCA, like ERISA, recognizes federalism concerns by exempting certain types of state laws that have historically been in the domain of state regulation.

Cross posted at Workplace Prof Blog.

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ERISA Preemption and State Apprenticeship Laws

Erisa The Sixth Circuit decided an important ERISA preemption case yesterday, Associated Builders & Contractors, Saginaw Valley Area Chapter v. Michigan Dep’t of Labor & Economic Growth, No. 07-1639 (6th Cir. Sept. 16, 08) ,concerning the continuing validity of state apprenticeship laws in light of ERISA.

From the Daily Labor Report today (subscription required for full article):

The Employee Retirement Income Security Act does not preempt a Michigan law that sets ratio and equivalency requirements for apprentice electricians, the Sixth Circuit rules in lifting an injunction issued in 1992 that barred the state from enforcing the apprenticeship laws.

In ruling that the Michigan Department of Labor and Economic Growth can now enforce the ratio and equivalency requirements set out in the state’s electrician apprenticeship law, the three-judge appellate panel finds that the state law imposed mandates on apprenticeship training programs, but those mandates did not affect ERISA-regulated concerns.

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