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\nJoin us on Wednesday\, January 28th\, for a NAPEO webinar presented with Groom Law Group focused on what recent class actions mean for PEOs when it comes to \;ERISA fiduciary risk an d voluntary benefits. \;\n\n\n
On December 23\, 2025\, a pla
intiffs&rsquo\; firm filed four putative class action lawsuits asserting v
iolations of the Employee Retirement Income Security Act of 1974 (ERISA) i
n connection with accident\, critical illness\, and hospital indemnity ins
urance offered to employees. Although the complaints name benefits consult
ing and brokerage firms as defendants\, they also assert direct fiduciary
duty and prohibited transaction claims against certain employer defendants
\, raising issues of consequence for the PEO community&mdash\;especially w
here a PEO sponsors one or more ERISA plans and receives compensation tied
to voluntary insurance.
\n
\nThe lawsuits allege the employer d
efendants acted as ERISA fiduciaries and breached their duties of loyalty
and prudence by approving or permitting voluntary insurance arrangements t
hat allegedly charged employees excessive premiums and generated commissio
ns for intermediaries. \; Plaintiffs further allege that the employers
caused or participated in prohibited transactions under ERISA by permitti
ng employee premium payments to be used\, in part\, to pay commissions to
brokers and consultants.
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\nThese cases are significant for PE
Os\, because they frequently act as ERISA plan sponsors and named fiduciar
ies over their ERISA-governed plans while also offering the types of volun
tary insurance benefits that are at issue in the litigation. \; A PEO&
rsquo\;s active endorsement of the insurance and/or receipt of commissions
or other remuneration\, directly or indirectly\, in connection with its o
ffering of the voluntary insurance benefits\, could give rise to a claim t
hat the safe harbor does not apply. \; In addition\, the arguments rai
sed in these complaints\, if embraced by a court\, could theoretically ext
end to ERISA-governed benefits\, which would materially increase a PEO&rsq
uo\;s potential legal exposure in connection with how it administers its b
enefit plans.
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\nOur panelists will review the cases\, the und
erlying legal arguments\, and steps PEOs should be taking to protect thems
elves and their plans from similar litigation.
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