Against a backdrop of increasing lawsuits challenging employee benefits plans, employers should take greater oversight of their vendors and shore up the processes that guide execution of their fiduciary responsibilities, one attorney told HR Dive.
One sign of the litigation trend can be seen in the number of class-action lawsuits alleging violations of the Employee Retirement Income Security Act, or ERISA. A Bloomberg Law analysis published last month found that nearly 70 such claims had been filed during 2026’s first quarter, a figure almost double the rate observed during the same time frame in 2025 and 2024.
ERISA compliance can be a complicated function even without an uptick in lawsuits to worry about, especially given the role that vendors and third-party administrators play in benefits operations, said Anne Greene, partner at Saul Ewing. As plan fiduciaries, employers have several responsibilities under ERISA, and vendor oversight is a key component of fulfilling these duties.
Much of that work involves constant communication between the employer and the vendor or service provider, Greene said, and employers should enlist vendors with whom they are comfortable having discussions about investment decisions and similar areas.
“It’s a fiduciary issue if they’re making regular errors,” Greene said of vendors. “That’s when we start to look at replacing them.”
ERISA class actions can challenge plans on a variety of bases. For instance, plaintiffs may challenge scenarios in which employers use plan forfeitures to offset their contributions despite continuing to charge participants in the plan administrative expenses. In such lawsuits, plaintiffs often argue that employers should use those forfeitures to pay the administrative expenses and thereby lower participants’ fees. “Plaintiffs frame the claims as breaches of fiduciary duty of loyalty and prudence, among other things,” Greene said.
Another example concerns voluntary benefits plans, which Greene said are generally given less attention by plan sponsors due to ERISA’s safe harbor provision for certain forms of voluntary benefits. Litigation may nonetheless allege that the vendors administering these plans have unjustly enriched themselves in some way — such as by charging excessive commissions — thereby constituting a failure of the employer to carry out its fiduciary obligations.
Process failures also are a common precursor to ERISA litigation, Greene noted, and employers should be wary of common missteps, such as using a “set-and-forget” approach to plan investments or failing to regularly review investment decisions. Fiduciary governance is an ongoing practice, and employers should view their plan documents as living documents, she said.
Regarding the forfeiture-based litigation trend specifically, Greene said employers can review their plan documents to confirm how the plan dictates forfeitures to be used as well as any ordering for such use.
“Ensuring plan operations align with the plan document and documenting the fiduciary decision-making process around forfeitures can help put sponsors in a stronger position, considering this litigation trend,” she continued.
Procedural work also extends to plan committees. Committee charters typically outline the groups’ communication procedures, but Greene said that a common mistake is that committees may neglect to document their operations. Proper documentation can establish an “operational history” of the plan, she added, and it can demonstrate that the committee has followed its charter appropriately.
“Build a better process internally and document it,” Greene said. “It’s just a matter of following that process, understanding the allocation of fiduciary responsibilities, documenting what you can and remembering that this is an ongoing responsibility.”
That guidance is timely given an April field assistance bulletin issued by the U.S. Department of Labor’s Employee Benefits Security Administration. According to the bulletin, EBSA said it would seek to address the “most significant” harm, including improper administration of plan benefits and assets.
The EBSA bulletin shows that employers must be diligent and prudent when acting as plan sponsors, Greene said, and employers also may use the agency’s enforcement releases as an indication of areas they should check to ensure vendor compliance.
“ERISA is not as much about the outcome as it is a process,” Greene said. “We want to be thoughtful about how we document that. We have to be able to demonstrate that reasonable and prudent process.”