Redcloud

Thank you for that real-world example!

Thank you, Luke Bailey. I'm looking forward to working on it. ESOP Guy, I wasn't sure if you were still reading, but I'm glad you jumped back on. I meant what I said about your point of "chump change," and I have given this some thought. At the end of the day, you're right: it certainly is chump change. My only rebuttal or push back would simply be that the entire point of back pay, per the Courts, is to make the employee whole. In that vein, three grand is three grand. Though it may pale in comparison to the hundred grand in wages (using your example), it's still part of the equation, and without it, the employee technically would not be whole.

Just to echo Professor Gulia, much thanks to everyone who took the time to contribute and help guide me in this endeavor. I am very humbled to have spoken amongst individuals of such high regard in this profession.

Luke Bailey, thank you for the explanation as I have not taken Trusts and Estates. So, if you will entertain me, I am going to attempt to put out there (at the expense of highlighting my ignorance even further) some additional thoughts to make sure I'm understanding (or not) what you're saying in conjunction with the "Maldonado letter." The "settlor" is the one who makes and contributes to the plan. Once the money is there, the fiduciary is the one who protects the plan, even from the "settlor" as you pointed out. (Definitely familiar with the "Fi" as I am a former Marine from 2002-2006...Semper Fi!). So, (in considering the "Maldonado letter"), is it possible that an employer's discriminatory practices or operations that resulted in unequal wages could make the employer responsible (as a "settlor" function) to "bear the cost in the normal course of such employer's [discriminatory] business or operations," and therefore the employer must contribute to the plan in the event of a discrimination award that resulted in the employer owing an employee unpaid benefits that were paid directly to the plan. But, if it was a matter of the employer paying the employee directly (not the plan) for monies owed due to discrimination award because of unequal wages, then this could raise an issue with the plan fiduciary and whether monies owed, which is paid from the plan (not the employer or "settlor"), are a "reasonable administrative expense under 403(c)(1) and 404(a)(1)(A) of ERISA." I suppose, just to follow through on this thought: on one hand, this would not be a reasonable administrative expense because it is a payment being made for the employer's benefit when the employer should be bearing the cost given they were the one to discriminate; on the other hand, this would be a reasonable administrative expense because the payment is being provided for the benefit of the participants and beneficiaries. Am I understanding the distinction between settlor and fiduciary duties and the different aspects that would be raised in those situations regarding a discrimination award/backpay scenario?

ESOP Guy, I greatly appreciate your viewpoint as an accountant. I am by no means an accountant, but your point of "chump change" is well taken, and that had crossed my mind. I appreciate someone with the accounting expertise chiming in on that. Luke Bailey, as Professor Gulia alluded to, I am not aware of the distinction between "settlor" and fiduciary decisions. Professor Gulia, I will be in touch. All, thank you so much for your thoughtful comments and contributions to this post. You all are incredibly smart, and I'm incredibly grateful.

Professor Gulia, I will be in touch very soon. Thank you!

I'm in law school writing a paper on ERISA, and I'm trying to work this out in my head. I'm thinking about the fiduciary duties of a plan administrator and how that coincides with possible discrimination backpay awards that may affect the plan. Possible scenario: hundreds or thousands of employees are discriminated against and part of being made whole again involves backpaying them, not only for their actual wages lost due to the discrimination, but monies lost from a benefit plan that they would of had if they were being paid the correct wage. Of course, this scenario is predicated on a plan that is funded based on the employee's salary. So, now the plan is possibly subject to backpay to make these employees whole again. Another possible scenario: what about a group of employees who've been working for years with a company only to find out they have been discriminated against. Not only have they not received their proper wage but they don't have as much money in their plan as they should because their contribution was based on their salary. Over the course of years, given interest, this adds up. How would a situation like this be handled when trying to make the employee whole again? How are premiums calculated in a retirement plan? Do most plans already account for any possible retroactive relief or harm to the plan? Possible Thesis: Under ERISA, a plan administrator should have a fiduciary duty to mitigate damages to the plan when an employee files an EEOC charge alleging discriminatory practices by the employer that could result in a retroactive relief being awarded to the employee. I'm not sure if I have anything here, or if any of this is plausible or relevant. Any advice/comments are more than welcome to help me narrow this down. Thanks, everyone!