Washington, D.C., January 30, 2025 – The ERISA Industry Committee (ERIC) and coalition allies (the amici) filed an amicus brief in the U.S. Court of Appeals for the Second Circuit (the court) to vacate the judgement in Shafer v. Morgan Stanley (Shafer). In its brief, the amici asserted that the lower court incorrectly determined that bonus compensation programs can be “pension plans” regulated by the Employee Retirement Income Security Act (ERISA).
At issue in Shafer is whether the deferred compensation award programs offered by Morgan Stanley are “employee benefit pension plans” under ERISA. While the district court determined that they are, the defendants in Shafer argue that the district court should never have reached the ERISA-coverage issue, which the parties had agreed to resolve in arbitration. In their brief, the amici go further and explain that judicial precedent and Department of Labor guidance have determined that such programs are not ERISA pension plans.
“In Shafer, the court had a single duty – to determine whether arbitration was an appropriate means for the two parties to settle their dispute. Instead, the court went far beyond its core set of responsibilities, and, after taking that step, it turned the long-held rules governing compensation practices on their heads,” said Tom Christina, Executive Director of the ERIC Legal Center. “In addition to spawning a whole new type of employment lawsuit, the consequences of changing the treatment of these programs have real and direct consequences. Deferred compensation programs benefit employers and employees alike and are a tool to attract and retain talent. Changing the treatment of these plans threatens to upend the certainty that employers across industries have long relied upon to reward employees for meeting and exceeding performance goals. The court has a significant opportunity to protect both employers and employees from the harms created by this egregious overstep of authority.”
ERIC is a national advocacy organization exclusively representing the largest employers in the United States in their capacity as sponsors of employee benefit plans for their nationwide workforces. With member companies that are leaders in every economic sector, ERIC is the voice of large employer plan sponsors on federal, state, and local public policies impacting their ability to sponsor benefit plans. ERIC member companies offer benefits to tens of millions of employees and their families, located in every state and city across the country.
ERIC joined the U.S. Chamber of Commerce on the brief. Mayer Brown LLP prepared the amicus brief, which is available here.
