There continue to be developments on the Department of Labor’s (DOL’s) fiduciary rule. Recently, additional fiduciary rule transition FAQs were published, providing guidance on 408(b)(2) disclosure issues and when communications on plan or IRA contributions do not constitute fiduciary investment advice. The DOL also has taken action to propose an extension of the fiduciary rule transition period, which is expected to further postpone the applicability of the additional conditions of certain exemptions from January 1, 2018 to July 1, 2019 (subject to clearance from the Office of Management and Budget, publication of a proposed notice in the Federal Register, and a comment period).

We will keep you informed of further developments in this area.

We are proud to report that Morgan Lewis has been named one of the “Best Law Firms for Female Attorneys” as part of Law360’s Glass Ceiling Report. The firm tied for the #6 spot on the publication’s list of the top 10 firms with 600-plus lawyers that are ahead of the pack in gender parity. In addition, as part of this year’s report, Law360 included perspectives from Firm Chair Jami McKeon and other female leaders whose firms have “beaten the odds.”

On July 20, the Nashville-based United Furniture Workers Pension Fund A (the Fund) became the second multiemployer pension plan to receive the US Department of the Treasury’s approval to suspend benefits under the Multiemployer Pension Reform Act of 2014 (MPRA). This is the first application approved under the Trump administration.

The Fund, which withdrew and resubmitted its application on March 15, 2017, proposed reducing all 9,900 participants and beneficiaries’ benefits to the maximum extent allowed by MPRA (i.e., to 110% of the Pension Benefit Guaranty Corporation (PBGC) monthly guarantee). Simultaneously, the PBGC conditionally approved the Fund’s request to partition all of the guaranteed benefit liabilities of its terminated vested participants and 56% of its retirees, beneficiaries, and disabled participants to a separate plan paid for by the PBGC.

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Based on the Pension Benefit Guaranty Corporation’s (PBGC’s) statutory authority to seek involuntary termination of a pension plan when it determines that the possible long-run loss to the PBGC may reasonably be expected to increase unreasonably if the pension plan is not terminated, the PBGC initiated its Early Warning Program (EWP) in 1993.

Under the EWP, the PBGC has focused on corporate transactions involving financially troubled companies, as well as companies with substantially underfunded pension plans. Informally, the PBGC has said that it monitors transactions by companies that are members of controlled groups with pension plans that in the aggregate (1) are underfunded by $50 million or more or (2) have 5,000 or more participants.

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The US Department of Labor (DOL) released its “Request for Information Regarding the Fiduciary Rule and Prohibited Transaction Exemptions” on June 29. Highlights from the RFI, which was published in the Federal Register on July 6, include the following:

• Potential delay of January 1 compliance date. The DOL requests comments on whether to extend the transition period by delaying the applicability of certain conditions of the exemptions beyond January 1, 2018. Comments on the delay are due July 20.

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Congratulations to Gina L. Lauriero on her election to the Morgan Lewis partnership in our employee benefits and executive compensation practice! Effective October 1, 2017, Gina, who is resident in New York, will join 30 other newly elected partners from 12 offices and 10 practices. For information about all of the firm’s newly elected partners, please see Morgan Lewis Elects 31 New Partners.

On June 22, the US Senate released a discussion draft of the “Better Care Reconciliation Act of 2017” (BCRA), the Senate’s substitute for the US House of Representatives–passed H.R. 1628.

In the areas of the BCRA that are of major importance to sponsors of employer group health plans, the BCRA is not significantly different than the predecessor House legislation (click here for our prior post on the House legislation)—although the timing of certain provisions is slightly different.

As the Senate bill is part of a budget reconciliation process, Senate Republicans only need 50 votes to pass the BCRA, but are limited to provisions that impact the federal budget (which is why a full “repeal and replace” is not possible).

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On June 16, the US Departments of Labor, Health and Human Services, and Treasury (collectively, the “Departments”) released additional guidance under the Mental Health Parity and Addiction Equity Act (MHPAEA), as amended.

The guidance consists of a frequently asked question (FAQ) and a draft model form to help participants request information from health plans regarding nonquantitative treatment limitations that may affect their mental health or substance use disorder benefits or to obtain documentation to support an appeal after an adverse benefit determination involving such benefits.

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Following in the footsteps of states that already have passed pro-ESOP legislation—including Pennsylvania, Iowa, New Jersey, Virginia, and Nebraska—the states of Colorado, Texas, and Missouri are now moving forward with pro-ESOP initiatives.

Colorado House Passes Pro-ESOP Legislation

In April 2017, the Colorado state legislature passed a pro-employee ownership bill (HB17-1214). The bill creates a revolving-loan program to be operated by the Colorado Office of Economic Development and International Trade (OEDIT) and to be funded by gifts and donations. The bill, which now goes to Colorado Governor John Hickenlooper for signature, also requires that the OEDIT train its employees to be sufficiently knowledgeable about employee ownership to be able to recommend it when appropriate and to promote it in OEDIT materials. The bill was sponsored by Colorado State Representative James Coleman (D-Aurora) as well as Rep. Jack Tate (R-Centennial), who said of the bill, "Anything we can do to encourage ownership helping facilitate getting folks on the path of wealth creation, I think is a good thing."

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Join Morgan Lewis in June for these upcoming programs on a variety of employee benefits and executive compensation topics:

Hot Topics in Employee Benefits: What We’re Seeing | June 7 | Webinar presented by Andy Anderson, Brian Dougherty, Brian Hector, and Julie Stapel

2017 Morgan Lewis Advanced Topics in Hedge Fund Practices Conference: Manager and Investor Perspectives| June 13 | All Day Live Event, including session on ERISA and Tax Update by Craig Bitman, Jeanie Cogill, and Richard Zarin   

2017 Managing the Global Workforce Webinar Series – Top Workforce Considerations in Global Corporate Transactions | June 29 | Webinar presented by Walter Ahrens, Felipe Alice, Matthew Howse, Bela Pelman, Zaitun Poonja, and Michael Schlemmer

Visit our events page for more of our latest programs.