The U.S. Supreme Court today handed down a big blow to corporations, ruling individual workers can sue their employers for misrepresenting them on future health care and other benefits they had been led to expect. Under current federal law, participants cannot directly recover damages from fiduciaries; instead, the plan receives the benefits of any damages recovered.
In a 6-3 vote in Varity vs. Howe, the nation's high court ruled companies offering employee benefit programs cannot ``knowingly and significantly'' mislead workers in order to save money. The case, which has been watched closely by employers, could spawn numerous lawsuits with participants suing retirement plan sponsors for damages.
The dispute originated when Varity transferred a money-losing farm equipment business of its Massey-Ferguson subsidiary into a new company that went out of business shortly thereafter. Employees of the division lost their retiree health care benefits.