The House Subcommittee on Health, Employment, Labor, and Pensions held a hearing Dec. 2 to examine the rise of class-action lawsuits targeting employer-sponsored retirement plans under the Employee Retirement Income Security Act (ERISA). Lawmakers said aggressive “sue-and-settle” tactics are putting these plans — and ultimately workers — at risk.
“Employer-sponsored retirement plans are the backbone of American retirement,” said Subcommittee Chair Rick Allen (R-Ga.). A large pool of assets like this naturally attracts predatory lawyers seeking “easy, quick-money, sue-and-settle lawsuits.”
Witnesses described cases designed to extract settlements rather than remedy actual harm. Andrew Salek-Raham, principal at the Groom Law Group, recounted a lawsuit in which plaintiffs sued more than a dozen defendants, including an infant, and even sent a process server to the child’s home — a step he called “wholly unnecessary” and intended solely to increase settlement pressure. In another case, plaintiffs named dozens of defendants, represented by multiple law firms, forcing the plan sponsor to cover defense and settlement costs over several years.
These lawsuits impose significant financial and administrative burdens on plan sponsors, which can reduce the willingness or ability of employers to offer robust retirement benefits. Lynn Dudley, senior vice president at the American Benefits Council, cited an informal survey showing nearly nine out of ten plan sponsors said litigation risk influences their decisions on services and investment options for participants. Roughly one-quarter of sponsors declined to offer additional participant services, 43% opted not to provide lifetime-income options, and nearly 29% avoided certain investment offerings entirely.
To address these concerns, Rep. Randy Fine (R-Fla.) introduced the ERISA Litigation Reform Act (H.R. 6084), which would raise pleading standards and limit early-stage discovery until courts verify the legal sufficiency of claims. Fine said the legislation aims to protect retirement savings from unscrupulous lawyers while preserving participants’ ability to pursue legitimate claims. Proponents argue the reforms would preserve plan integrity and reduce the chilling effect litigation is already having on plan design and services.
In 2024, 62 ERISA class-action lawsuits were filed, generating roughly $174 million in settlements, according to Goodwin Law. The rise in filings reflects new legal theories concerning the handling of forfeited employer contributions to 401(k) and 403(b) plans.
Democrats on the subcommittee criticized the focus on corporate interests. Ranking Member Rep. Mark DeSaulnier (D-Calif.) said the hearing prioritized corporations over American workers’ retirement security.
Both the American Retirement Association (ARA) and the Insured Retirement Institute (IRI) submitted statements for the record warning that formulaic ERISA lawsuits are discouraging plan innovation and diverting resources away from participant benefits. The ARA cited the Supreme Court’s Cunningham v. Cornell decision, which it said makes it easier for plaintiffs to bring prohibited-transaction claims without showing statutory exemptions apply, heightening costly litigation risk for compliant fiduciaries. The statement urged Congress to tighten pleading standards and limit premature discovery, warning that current trends threaten plan innovation, employer participation, and overall retirement security.
IRI emphasized the effect on individual retirement savers, noting that legal uncertainty has caused plan providers to restrict investment options and avoid innovative features, jeopardizing participants’ financial futures. Representatives from IRI said Congress should advance legislation, such as the General Accounts Product Clarifications Act, to ensure participants maintain access to stable value and guaranteed-income investments.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.