Don’t Be Scared! Weaving Cybersecurity Awareness into Your Plan Fiduciaries’ Duties

Cybersecurity is the word, and fiduciaries of employee benefit plans governed by the Employee Retirement Income Security Act of 1974 should implement cybersecurity risk management strategies to mitigate the risks of liabilities that can result from cybersecurity attacks on ERISA employee benefit plans. With the Department of Labor (DOL) having issued initial guidance on the extent of a fiduciary’s cybersecurity responsibilities, plan fiduciaries continue to struggle to understand the extent of their responsibilities and the manner they might best be addressed. This practice note outlines some important risk management strategies they may consider when addressing these concerns.

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• Cybersecurity Considerations for ERISA Plan Fiduciaries
  Review this practice note to focus on what cybersecurity-related concerns ERISA fiduciaries should be focused. Plan fiduciaries should be involved in the protection of participants' plan assets, financial and personally identifiable information, protected health information, and other plan data. During a time when the global digital landscape is expanding exponentially and becoming increasingly vulnerable, ERISA plan fiduciaries should include these concerns in reviewing the health and data security of the information that plans and their vendors store and transmit. 
• Cybersecurity Best Practices in Retirement Plans Checklist
  Reference this checklist for action steps to recognize and address cybersecurity risks for an ERISA employee benefit plan, in protecting plan data, plan participant records, and confidential information, including account information.

Practical Guidance Updates 
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• Employee Benefits & Executive Compensation Key Legal Developments Tracker (Current)
  Stay informed on new developments.
  • ERISA. DOL’s EBSA division clarifies and updates its cybersecurity guidance indicating that the guidance applies to all types of ERISA plans, including health and welfare plans. EBSA, Compliance Assistance Release No. 2024-01.
  • ERISA. A Texas district court granted a stay on the effective date of the Department of Labor's Retirement Security Rule, expanding an earlier partial stay to now apply to all of the rule's exemptions. Fed'n of Ams. for Consumer Choice, Inc. v. United States DOL, No. 6:24-cv-163-JDK, 2024 U.S. Dist. LEXIS 131589 (E.D. Tex. July 25, 2024).
  • Retirement Plans. IRS issues guidance in the form of questions and answers for section 110 of the SECURE 2.0 Act of 2022, which section allows employers to match employees' qualified student loan payments (QSLPs) under section 401(k) plans, section 403(b) plans, SIMPLE IRA plans, and governmental section 457(b) plans. R.S. Notice 2024-63.
  • Health and Welfare Benefits. IRS, EBSA, HHS, and CMS issue final rules amending regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) and adding new regulations implementing the nonquantitative treatment limitations (NQTL) comparative analyses requirements under the MHPAEA, as amended by the Consolidated Appropriations Act, 2021. The new rules prohibit plans from using more restrictive prior authorization for mental health than for physical health conditions. They also close loopholes that exempted state and local government- insured plans from its requirements. 89 Fed. Reg.__ (prepublished version and CMS News).
  • Employment Agreements and Restrictive Covenants. The District Court for the Northern District of Texas issued a nationwide injunction on the FTC's noncompete clause rulemaking. The decision fell shortly before the September 4, 2024, effective date of the rule. Accordingly, employers are not required to provide notice regarding the lack of enforceability of any non-compete agreements as was required by the FTC's rule. Ryan LLC v. FTC, 2024 U.S. Dist. LEXIS 148488 (N.D. Tex. 2024); 89 Fed. Reg. 38342 (May 7, 2024).
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