Skip to main content

Nixon Peabody LLP

  • People
  • Capabilities
  • Insights
  • About
Trending Topics
    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    Practices

    View All

    • Affordable Housing
    • Community Development Finance
    • Corporate & Finance
    • Cybersecurity & Privacy
    • Entertainment & Media
    • Environmental
    • Franchising & Distribution
    • Government Investigations & White Collar Defense
    • Healthcare
    • Intellectual Property
    • International Services
    • Labor, Employment, and Benefits
    • Litigation
    • Private Wealth & Advisory
    • Project Finance
    • Public Finance
    • Real Estate
    • Regulatory & Government Relations
    Industries

    View All

    • Aviation
    • Cannabis
    • Consumer
    • Energy
    • Financial Services
    • Healthcare
    • Higher Education
    • Infrastructure
    • Manufacturing
    • Nonprofit Organizations
    • Real Estate
    • Sports & Stadiums
    • Technology
    Value-Added Services

    View All

    • Alternative Fee Arrangements

      Developing innovative pricing structures and alternative fee agreement models that deliver additional value for our clients.

    • Continuing Education

      Advancing professional knowledge and offering credits for attorneys, staff and other professionals.

    • Crisis Advisory

      Helping clients respond correctly when a crisis occurs.

    • DEI Strategic Services

      Providing our clients with legal, strategic, and practical advice to make transformational changes in their organizations.

    • eDiscovery

      Leveraging law and technology to deliver sound solutions.

    • Environmental, Social, and Governance (ESG)

      We help clients create positive return on investments in people, products, and the planet.

    • Global Services

      Delivering seamless service through partnerships across the globe.

    • Innovation

      Leveraging leading-edge technology to guide change and create seamless, collaborative experiences for clients and attorneys.

    • IPED

      Industry-leading conferences focused on affordable housing, tax credits, and more.

    • Legal Project Management

      Providing actionable information to support strategic decision-making.

    • Legally Green

      Teaming with clients to advance sustainable projects, mitigate the effects of climate change, and protect our planet.

    • Nixon Peabody Trust Company

      Offering a range of investment management and fiduciary services.

    • NP Capital Connector

      Bringing together companies and investors for tomorrow’s new deals.

    • NP Second Opinion

      Offering fresh insights on cases that are delayed, over budget, or off-target from the desired resolution.

    • NP Trial

      Courtroom-ready lawyers who can resolve disputes early on clients’ terms or prevail at trial before a judge or jury.

    • Social Impact

      Creating positive impact in our communities through increasing equity, access, and opportunity.

    • Women in Dealmaking

      We provide strategic counsel on complex corporate transactions and unite dynamic women in the dealmaking arena.

    1. Home
    2. Insights
    3. Articles
    4. Employee Benefits Briefing

      Articles

    Article

    Employee Benefits Briefing

    May 27, 2025

    LinkedInX (Twitter)EmailCopy URL

    By Charles Dyke, Christian Hancey, Damian Myers, Eric Paley, Lena Gionnette, Emily Morrison, Christina Porras and Annie Zhang

    Stay informed on the latest in employee benefits law with insights from Nixon Peabody. Explore developments in mental health parity compliance, fiduciary litigation, SECURE 2.0 implementation, and more.

    The Spring 2025 Employee Benefits Briefing brought together Nixon Peabody attorneys and industry professionals to explore the latest developments in employee benefits law. The session reflected the growing complexity of the regulatory landscape and the increasing scrutiny facing plan sponsors and fiduciaries.

    Below is a summary of the most significant insights from the session, organized by topic and designed to help plan administrators and fiduciaries stay informed and prepared.

    Watch the Employee Benefits Briefing (Spring 2025)

    Mental health parity: Compliance obligations remain despite regulatory pause

    Although the Department of Labor has announced a non-enforcement policy for certain 2024 mental health parity regulations provisions, many core requirements remain in effect. Plan sponsors should not interpret the pause as a blanket exemption. 

    Key points include:

    • Still enforceable:
      • Quantitative and non-quantitative treatment limitation (NQTL) compliance
      • Comparative analyses under the Consolidated Appropriations Act
      • Documentation obligations for agency review and participant requests
    • Temporarily suspended:
      • Fiduciary certification requirements
      • The “meaningful benefit” standard
      • Outcomes data review thresholds

    Plan sponsors should continue to maintain robust documentation and compliance processes, as enforcement may resume retroactively.

    Executive orders and their impact on employee benefits

    Recent executive orders issued by the Trump administration signal a shift in federal benefits policy, with implications for prescription drug pricing, wellness programs, and reproductive health benefits. 

    Highlights include:

    • Prescription drug pricing:
      • Introduction of “Most Favored Nation” pricing to align US drug costs with international benchmarks
      • Direct-to-consumer purchasing initiatives and increased PBM transparency
    • Wellness and IVF:
      • A task force has been established to explore expanded wellness benefits and reduce IVF costs.
      • Potential regulatory flexibility for employer-sponsored wellness programs
    • Gender-affirming care:
      • Executive orders aim to restrict coverage for individuals under 19, though implementation would require further rulemaking.

    These directives are not yet enforceable regulations, but they provide insight into the administration’s policy priorities.

    Fiduciary litigation: Prescription drug benefits under the microscope

    Litigation targeting health and welfare plan fiduciary governance, with a particular focus on oversight of prescription drug benefits, is gaining momentum. Recent class actions allege fiduciary failures in PBM selection, contract negotiation, and ongoing cost and performance monitoring. 

    Key takeaways for plan sponsors:

    • Include defensive provisions in your health and welfare plan documents. 
    • Establish a formal health and welfare fiduciary committee to evaluate PBM performance, fees, and guarantees.
    • Conduct regular RFPs and engage independent consultants, auditors, and legal counsel.
    • Negotiate appropriate fee arrangements and contractual provisions.
    • Document fiduciary decisions and oversight activities.
    • Evaluate current oversight activities against issues that litigations have and will target. 

    Although early motions to dismiss have been granted in a couple cases (with re-hearings pending), plaintiffs are refining their strategies. A successful challenge will lead to a wave of similar lawsuits.

    Retirement plan administration: Preparing for SECURE 2.0 and beyond

    Plan sponsors should prepare for several administrative updates in 2025 and 2026, particularly those stemming from SECURE 2.0 and the Cycle 4 restatement period. 

    Key developments include:

    • Cycle 4 restatements: Required for prototype defined contribution and 403(b) plans by December 31, 2026
    • SECURE 2.0 Implementation:
      • Mandatory Roth catch-up contributions for high earners (>$145,000) beginning in 2026
      • Optional Roth treatment of employer contributions
      • “Super catch-up” contributions for participants aged 60–63
      • New overpayment recovery rules, including a three-year limitation and participant protections

    Plan sponsors should coordinate with payroll and recordkeeping vendors to ensure systems are updated and compliant.

    Litigation update: Excessive fees and pension risk transfers

    The Supreme Court’s decision in the Cunningham case is concerning because it may preclude defendants from being able to bring motions to dismiss in response to recordkeeping “prohibited transaction” claims. This in turn may effectively enable plaintiffs to circumvent the “meaningful benchmark” standard that applies to prudence claims alleging excessive recordkeeping fees. This could increase ERISA class litigation expense for plan sponsors.

    In addition, pension risk transfer transactions are being challenged in court over annuity provider selection. In the first two decisions, the courts have split on whether plaintiffs have standing to sue.

    Plan sponsors should:

    • Consult with counsel about opportunities to add information to Form 5500 filings that makes them a less attractive target to class action lawyers.
    •  Monitor litigation trends and developments closely.

    Financial wellness programs: Growing demand, evolving risks

    Financial wellness programs are becoming a key component of employer benefit strategies. Offerings range from budgeting tools and one-on-one coaching to student loan support and earned wage access.

    Legal considerations include:

    • Most programs are not subject to ERISA, but tax and discrimination risks remain.
    • Benefits may be taxable unless they qualify as de minimis or no-additional-cost fringe benefits.
    • Employers should include appropriate disclaimers and indemnification provisions in vendor contracts.

    Employers are encouraged to evaluate the structure and delivery of these programs to ensure compliance and mitigate risk.

    Conclusion

    The Spring 2025 Employee Benefits Briefing underscored the dynamic nature of employee benefits law and the importance of proactive governance. Plan sponsors and fiduciaries should continue to monitor regulatory developments, review internal processes, and engage with legal counsel to ensure compliance and mitigate risk.

    For more information or to discuss how these developments may affect your organization, please contact your Nixon Peabody Employee Benefits attorney.

    Practices

    Employee Benefits & ERISALabor, Employment & BenefitsLabor & Employment LitigationLitigationHealth & Welfare Fiduciary Governance

    Insights And Happenings

    • Article

      Best Practices for Health & Welfare Plan Fiduciaries

      May 23, 2025
    • Alert

      Mental health parity non-enforcement—What plan sponsors need to know

      May 19, 2025
    • Alert

      Substituting Paid Time Off during FMLA Leave: What are the options?

      March 27, 2025
    The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

    Subscribe to stay informed of the latest legal news, alerts, and business trends.Subscribe

    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    • Cookie Preferences
    • Privacy Policy
    • Terms of Use
    • Accessibility Statement
    • Statement of Client Rights
    • Purchase Order Terms & Conditions
    • Nixon Peabody International LLC
    • PAL
    © 2025 Nixon Peabody. All rights reserved