Workforce Bulletin

The Supreme Court’s January 24, 2022 decision in Hughes v. Northwestern University, has caused alarm in some corners, with panicked predictions of a proliferation of ERISA suits alleging that defined contribution plans provided imprudent investment options.  However, Hughes should be more properly understood as rejecting an attempt by the U.S. Court of Appeals for the Seventh Circuit to impose a novel limit on excessive fee suits.  The Supreme Court instead emphasized the application of its existing precedent in Tibble v. Edison International, 575 U.S. 523 (2015).

The Seventh Circuit had dismissed a class action complaint alleging the trustees of Northwestern Universities’ retirement plans breached their fiduciary duties by including imprudent investments among the investment options offered under the plans.  The trustees offered more than 400 various investment options, several of which the plaintiffs asserted were imprudent and many of which were not.  The Seventh Circuit held that the plaintiffs’ allegations failed as a matter of law (that is, could be dismissed without discovery or trial) because plaintiff’s preferred investment options were available under the plan (albeit alongside the allegedly imprudent options).  Therefore, the Seventh Circuit considered the trustees to be blameless for any fiduciary breaches because the plaintiffs simply could have avoided the allegedly imprudent investments and chosen the prudent ones.

Earlier this month, in Urnikis-Negro v. American Family Property Services, 616 F.3d 665 (7th Cir. 2010), Ms. Urnikis-Negro, a former clerical employee at a real estate appraisal firm, sought relief from the U.S. Supreme Court and requested that it clarify the "fluctuating workweek" method that employers can use in calculating overtime. Before the trial court, Ms. Urnikis-Negro contended that although she routinely worked more than 40 hours a week, she never received any overtime pay. American Family Property Services argued that she was exempt for overtime as an administrative employee. While the trial court rejected the employer's exemption classification, it concluded that it could pay her overtime based on the Department of Labor's ("DOL") "fluctuating workweek" method.