Do Your Employee Benefits Make The Grade?

Leave Is the Benefit Employees Feel Every Week

Mployer rates employer benefit plans across four pillars: Medical, Ancillary, Leave, and Retirement. Of the four, leave carries the lowest direct cash cost to the employer outside of the opportunity cost of time away from work. And yet leave is consistently among the highest-valued benefits employees cite, particularly among workers entering the workforce in the past two decades. For younger employees who grew up with greater flexibility as an expectation rather than a perk, PTO policies, remote work options, and holiday calendars are not peripheral considerations. They are factors that influence job acceptance decisions, day-to-day job satisfaction, and the calculus of whether to stay or leave.

This is Part 1 of a two-part series on leave benefits. This post covers the foundational elements: vacation, paid holidays, sick leave, consolidated vs. non-consolidated leave structures, workplace flexibility, and the legal framework that governs when leave is required vs. when it is discretionary. Part 2 will go deep on maternity and parental leave, including benefit duration, disability payment interaction, top-off provisions, and how this rapidly evolving category varies by industry and employer size.

The Legal Framework: What Is Required and What Is a Choice

Before reviewing the benchmarks, it is important to understand the distinction between leave that employers are legally required to provide and leave that is entirely discretionary. Many employers conflate these, either overclaiming legal mandates that do not apply to them or unknowingly underdelivering on ones that do.

FMLA: The Federal Floor

The Family and Medical Leave Act of 1993 (FMLA) is the primary federal law governing employee leave. It requires covered employers to provide eligible employees with up to 12 weeks of unpaid, job-protected leave per year for qualifying reasons, including the birth or adoption of a child, a serious health condition of the employee or a close family member, or qualifying military exigencies. A critical word in that sentence is unpaid. FMLA guarantees job protection and continuation of health insurance during leave. It does not require the employer to pay the employee during that time.

FMLA applies to employers with 50 or more employees within 75 miles. Eligible employees must have worked for the employer for at least 12 months and logged at least 1,250 hours in the prior year. Employers below 50 employees are not covered by federal FMLA, which is a meaningful distinction for the substantial share of small employers in the national workforce.

State Leave Laws: A Patchwork Expanding Rapidly

State leave laws have multiplied significantly over the past decade and frequently go beyond FMLA in scope, coverage thresholds, or paid leave requirements. Several categories are worth understanding:

• State FMLA equivalents. Many states have their own family and medical leave laws that cover smaller employers than federal FMLA. California, New Jersey, New York, Washington, Massachusetts, Connecticut, Oregon, Colorado, and others have state-level laws with their own thresholds, durations, and coverage rules. An employer with 15 employees in California faces leave obligations that a similarly sized employer in a state without equivalent law does not.

• Paid family and medical leave programs. A growing number of states have established state-run paid leave insurance programs, funded through payroll contributions from employees, employers, or both. These programs pay a wage replacement benefit to employees on qualifying leave. Employers in these states do not necessarily pay the leave benefit directly, but they are responsible for administering the program, managing payroll deductions, and coordinating the state benefit with any employer-provided leave.

• Paid sick leave mandates. More than a dozen states and many municipalities now require employers to provide a minimum number of paid sick leave days, regardless of size. The minimums vary by jurisdiction, typically ranging from 3 to 5 days per year for smaller employers to more generous amounts for larger ones. Employers operating in multiple states must manage a patchwork of minimum requirements.

The practical implication for any multi-state employer: your leave compliance obligation is not a single federal standard. It is the most protective standard that applies in each jurisdiction where you have employees. Staying current requires active monitoring as state laws continue to evolve.

Paid Holidays: No Federal Requirement for Private Employers

Here is a fact that surprises many employees and even some HR professionals: private sector employers in the United States have no federal legal obligation to provide any paid holidays. The list of federal holidays, which includes New Year’s Day, Independence Day, Thanksgiving, Christmas, and others, applies to federal government employees. Private employers are entirely free to choose which holidays to observe, how many to provide, and whether they are paid.

In practice, the market has established strong norms around holiday calendars. Employers who observe fewer than the common major federal holidays face a competitive disadvantage in recruiting. But the specific holidays offered, the total number, and whether floating holidays or personal days supplement the calendar are all employer-determined choices with real variation in the market.

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Six paid holidays is the single most common offering nationally, provided by one in five employers. But the distribution spans from five or fewer to thirteen or more, and the seven-day average is pulled upward by generous employers at the top of the range. The practical range of six to nine days covers 65% of employers. An employer offering five or fewer paid holidays is below market in a way that is visible to candidates who are comparing offers. An employer offering ten or more is offering a genuinely above-market benefit that is worth communicating explicitly in recruiting.

It is also worth noting the difference between public and private sector norms. Federal and state government employers typically observe all federal and state holidays, often reaching 11 or more paid days annually. Private employers who compete for talent against government roles, especially in certain regions or professional categories, face a visible gap if their holiday calendar is at the lower end of the private sector range.

Key Terms Every Benefits Decision Maker Should Know

• Consolidated (or PTO) leave. A consolidated leave plan pools vacation, sick, and personal days into a single paid-time-off bank that employees draw from as needed. Employees decide how to use the time without categorizing it. Employers gain administrative simplicity and eliminate the awkward dynamic of employees being required to call in sick when they are taking a mental health day or handling personal matters. 46% of employers nationally offer consolidated leave, according to Mployer’s 2026 data.

• Non-consolidated leave. A non-consolidated structure tracks vacation, sick, and personal days as separate buckets with their own balances, accrual rates, and rules. Employees must use the appropriate category for each absence. While more administratively complex, non-consolidated plans can provide more total time off since employees tend not to use all of their sick days in low-illness years.

• Carryover. Carryover provisions allow employees to roll unused leave from one year into the next. 65% of employers offer a carryover provision for sick days. 19% allow unlimited carryover. The alternative, use-it-or-lose-it policies, encourages employees to take time off but creates end-of-year pressure and can result in operational disruption.

• Unlimited PTO. An arrangement where no fixed cap is placed on paid time off. The employee takes what they need with manager approval. Only 9% of employers offer this nationally, despite its outsized visibility in recruiting. Research consistently shows that employees with unlimited PTO often take less time off than those with defined banks, because the absence of a defined balance creates ambiguity about what is truly acceptable.

• Accrual. Leave accrues over time, typically expressed as hours per pay period or days per month. New employees often have limited leave in their first year. Employers who front-load leave at the start of each year, rather than requiring it to accrue, offer a more employee-friendly structure.

• Top-off. In the context of disability-related leave, an employer may top off a short-term disability benefit by paying the difference between the disability wage replacement (typically 60% of salary) and the employee’s full salary. This is most relevant in parental leave design and will be covered in depth in Part 2.

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The chart above shows a consistent pattern across all tenure milestones: employees at employers with consolidated leave plans receive meaningfully more vacation days than those on non-consolidated plans. At one year of tenure, the gap is 4.3 days (13.5 consolidated vs. 9.2 non-consolidated). At 20 years, the gap is 4.2 days (22.3 vs. 18.1). This reflects the structural reality that consolidated plans typically set a total PTO balance that includes what would otherwise be split across vacation, sick, and personal categories. The total bank is larger because it is serving multiple purposes.

The tenure progression also matters for employers thinking about leave as a retention tool. An employee at year 5 in a consolidated plan has 17.6 days. Their counterpart at a non-consolidated employer has 13.2. That 4.4-day difference compounds over a career and becomes a meaningful factor in whether a tenured employee considers leaving. Employers who have not benchmarked their vacation accrual schedule by tenure against peers in their industry and size band may not realize how their program compares at the years of service where retention pressure is highest.

Workplace Flexibility: The Post-Pandemic Recalibration

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Workplace flexibility surged during the pandemic and became one of the most cited employee preferences in every post-2020 benefits survey. The 2026 data shows the market pulling back from its pandemic peak. Fully remote arrangements are now offered by 23% of employers, work-from-home options by 22%, and unlimited PTO by just 9%. These numbers are lower than what many employees experienced at the height of 2020 to 2022, and that gap between expectation and current market reality is one the most active sources of employee dissatisfaction in leave-related discussions.

For employers, the flexibility picture requires honest self-assessment. If your organization has pulled back from flexibility arrangements that were extended during the pandemic, the competitive context has shifted: the employers who maintained those arrangements are now differentiating on a dimension that is highly visible to candidates. If your business model genuinely requires in-person work, the relevant benchmark is not the fully remote employer but the other employers in your industry and region competing for the same workforce. That is exactly the kind of cohort comparison a custom benchmarking analysis provides.

Sick Leave and Carryover: The Details That Matter

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Sick leave policy is one of the most administratively variable elements of a leave program. 65% of employers offer a carryover provision that allows unused sick days to roll into the following year. 19% allow unlimited carryover, placing no cap on the sick day balance an employee can accumulate over time. Use-it-or-lose-it sick policies, while simpler to administer, can create employee hardship in years with significant illness and may conflict with state-level sick leave mandates in jurisdictions that explicitly require carryover.

The interaction between sick leave and short-term disability coverage is also worth understanding. For many employers, sick leave effectively serves as the waiting period, or elimination period, before short-term disability benefits begin. An employee with 10 accrued sick days who experiences a two-week illness may use those sick days before STD coverage activates. Employees without sufficient sick leave balances, or in plans where sick leave and STD do not coordinate, face an income gap. How these two programs interact is a design decision that affects real employee financial security and is worth reviewing explicitly.

A Note on Maternity and Parental Leave

Nationally, 68% of employers offer dedicated maternity leave beyond what statutory short-term disability provides. 32% do not. That statistic is at the national level and covers all employer sizes and industries. The variation beneath that headline number is significant: duration of paid leave, how disability income is structured, whether employers top off the disability benefit to approach full salary replacement, bonding leave for non-birth parents, and adoption leave policies all vary widely. These dimensions are among the most actively discussed benefits in today’s candidate conversations and are closely tracked by employees considering family formation.

Part 2 of this series will go deep on maternity and parental leave. We will cover average paid leave duration by industry, how short-term disability interacts with maternity leave, what topping off disability means and how common it is, paternity and non-birth-parent bonding leave benchmarks, and adoption leave trends. If your organization is actively recruiting in competitive talent markets or is thinking through a parental leave update ahead of open enrollment, that post is worth reading closely.

Leave as a Competitive Differentiator: How to Use It, How to Talk About It

Leave benefits are one of the most emotionally resonant elements of an employee’s relationship with their employer. They represent how an organization actually treats its people when life happens: when someone is sick, when a child is born, when a family member needs care, or when an employee simply needs time to recharge. Employees who feel their leave program is generous are more likely to stay. Employees who feel it is stingy are more likely to leave, and more likely to say so in exit interviews and public reviews.

The challenge for most employers is that they do not know how their leave program actually compares. They know their own policy, but they do not know whether their vacation accrual schedule, their holiday count, their sick leave carryover rules, and their flexibility arrangements are above market, at market, or below market against the specific employers competing for the same candidates. Without that context, it is impossible to talk credibly about leave as a differentiator or to address an employee’s complaint about time off with anything more than a defensive response.

The next time an employee raises a concern about paid time off, or a candidate asks how your leave program compares, you should be able to answer with data. Not a general impression that your program is competitive, but a specific, benchmarked answer: our employees at five years of tenure receive 17.6 days of paid time off, which is above the national average for employers in our industry and size band. That answer requires knowing where you stand, and knowing where you stand requires a benchmark built from employers who actually look like you, not a national average that flattens the variation that matters.

Strong leave programs are also an underused marketing asset. Employers who score at Market Leading or above in the Mployer Leave pillar have a specific, documented, independently verified statement to make in offer letters, careers pages, and job postings: our leave program has been rated above market against employers in our industry, region, and size. That is a recruiting signal most employers are not making, because most employers have never taken the step of finding out whether they could make it.

See how your leave program compares to your custom cohort at MployerAdvisor.com. Part 2 on maternity and parental leave is coming soon.

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_Sources

_{Mployer Insights, 2026 Benefits State of the Union: Leave & Workplace Flexibility. Source: Mployer Insights analysis of 50,000+ employer benefit plans.}

_{Family and Medical Leave Act of 1993 (FMLA), 29 U.S.C. Section 2601 et seq. Applies to employers with 50+ employees within 75 miles.}

_{U.S. Department of Labor: Federal holidays apply to federal government employees; private employers have no federal obligation to provide paid holidays.}

_{State paid family and medical leave programs: California (CFRA/SDI), New York (NY PFL), New Jersey (NJFLA), Washington (WA PFML), Massachusetts (MAPFML), Oregon (OPFML), Colorado (FAMLI), Connecticut (CTFMLA), and others.}

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Mployer materially expands the AI and agentic capabilities across its product suite and expands access to its MCP Server and Claude Connectors, making Mployer's proprietary 2 billion data points across benefits and insurance accessible inside partners' own LLMs.

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Nashville, TN, July 16, 2026 /PRNewswire-PRWeb/ --

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Mployer, the industry's leading employee benefits and insurance intelligence platform, today announced its Expanded AI Release powered by Anthropic. This release is a major expansion of the AI and agentic abilities already built across its products, and it includes the broad release of its MCP (Model Context Protocol) Server and Claude Connectors. This Expanded AI release allows our partners to access Mployer's 2 billion proprietary benefit and insurance data points both inside Mployer and inside their own LLM.
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This functionality is coupled with an expert benefit AI-agent trained on these 2 billion data points to provide superior strategic advice and support for our partners at every step in their workflow, across every Mployer solution - from market analytics to benchmarking, claims and compliance. It is similar to having a highly educated insurance expert with 30+ years of experience sitting side by side with every individual partner at every step.
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In addition, in line with the company's goal of better enabling all industry participants, Mployer is releasing a limited, free version of every product. There will be a national training on July 28 and August 5 that is for everyone in the industry. To sign up for limited free access and the national training on July 28th, or request access to the Mployer MCP, please see further details below.
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"This release raises the bar for what AI can do for our industry," said Brian Freeman, CEO of Mployer. "Applying this next level of AI
across our platform and the broker and carrier workflows gives insurance industry leaders powerful, proprietary market data to support their strategies and decisions. We are entering an awesome era for our industry, where the brokers and carriers using the best analytics will deliver differentiated outcomes for their employer partners. That will continue to drive collective, positive industry impact. We're excited for our partners and for Mployer to play a material role in this next era."
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Infusing AI into every step of the workflow:
Mployer's benefits and insurance AI Agent has been highly trained on Mployer's 2 billion unique benefits and insurance data points, and sits alongside leading producers across each step of their workflow, including:
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• Catalyst - Market Intelligence: See the market more clearly than others, with deeper research and AI recommendations on
  proprietary employer and employee market signals.
• Insights - Benefits Benchmarking: Run real-time benchmarks against localized, custom cohorts, paired with Mployer's expert
  benefit AI to guide custom strategies for each unique plan.
• Vista - Claims Analytics: Simplify manual client reporting across carrier, Rx, stop-loss, and more, down to just minutes, layering in
  expert-recommended strategies for your review and market trends.
• Pulse - HR & Compliance: Industry-leading compliance, HR support, and content for brokers and their employer partners have
  reached a next level of ease and engagement.
• Atlas - Employer Engagement: Extend benefits intelligence across compliance, benchmarking, and claims analytics to employer
  clients directly through an AI-first broker-branded portal.

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"Imagine being a producer today and starting your morning with updates from your expert benefits AI assistant: 'Your client's renewal is trending 14% above their cohort benchmark, attached are draft strategies for your review,' or 'An HR director from one of our partners is now the CHRO at a new company, attached is a draft congratulatory email,' or 'A new proposed Texas law impacts three of our groups, attached is a communication for your review.' That is the reality of what this release and the next era bring," said Anthony Waters, Chief Growth Officer of Mployer. "It is a great time to be a part of this industry."

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To receive limited, free access to every product, you need to attend one of the trainings:

• Tuesday, July 28 | 9:00–10:30 AM CT | Register Here
• Wednesday, August 5 | 12:00–1:30 PM CT | Register Here
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Each product training is 20 minutes. You can join only the specific solutions you would like to learn more about.

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To request access to Mployer's MCP Server and Claude Connectors, please reach out to [email protected].
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About Mployer
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Mployer is the industry's leading employee benefits and insurance intelligence platform, built for brokers, carriers, GAs, PEOs, and the employers they serve. Powered by more than 2 billion unique benefit data points and Anthropic, Mployer's suite of Catalyst, Insights, Vista, Pulse, and Atlas works for industry leaders benchmarking plans, analyzing claims, recommending growth strategies, and interpreting complex policies and legislation, in one platform. With its MCP Server and Claude Connectors, Mployer's data and AI are accessible across its products and directly within Claude. Learn more at MployerAdvisor.com.
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Media Contact: Anthony Waters Chief Growth Officer, Mployer [email protected]
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Media Contact
Anthony Waters, Mployer, 1 774 2879741, [email protected], https://MployerAdvisor.com

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What Every Benefits Decision Maker Needs to Know

If you sit on a benefits committee, approve vendor contracts, set plan design, or sign off on employee benefit programs, you are a fiduciary under ERISA. That responsibility comes with real legal exposure, and the litigation environment surrounding it has grown substantially over the past decade. The Consolidated Appropriations Act of 2021 added new teeth to this exposure by requiring health insurance brokers and consultants to disclose all direct and indirect compensation they receive in connection with employer health plans. That disclosure requirement has become a direct underpinning of a new and expanding wave of ERISA lawsuits, as plaintiff firms use disclosed compensation data to allege that employers failed to monitor whether their brokers were acting in the plan’s interest or their own, including in voluntary benefit programs where broker commissions are now under direct scrutiny. Understanding that environment is not a reason for alarm. It is a strong reason to ensure your process is documented, your decisions are benchmarked, and your programs are structured in a way that reflects the care the law requires.

The Employee Retirement Income Security Act of 1974, known as ERISA, was enacted to protect employees from the mismanagement of benefits promised to them. It does that by imposing fiduciary duties on anyone who exercises discretionary authority over a benefit plan or its assets, from benefits committee members and HR leaders to the brokers and consultants who advise them.

This post explains who is at risk, what the key legal theories are, and where this is heading.

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Defined contribution plans still drive the majority of ERISA class actions, representing 63% of the 155 cases filed in 2025, tracked by Encore Fiduciary in partnership with the Dorsey & Whitney law firm. But health plan cases are the fastest-growing category, accounting for 25% of all filings in 2025. That share reflects the direct impact of the CAA’s disclosure requirements and the growing sophistication of plaintiff firms in applying ERISA fiduciary standards to health plan administration. Annual excessive-fee and imprudent-investment filings remain elevated, with 2025 among the busiest years on record at 94 cases, and the trajectory since 2020 reflects a litigation environment that has become structurally elevated, not cyclical.

Who Bears Fiduciary Responsibility

ERISA fiduciary status is not limited to the HR department or the plan administrator on the plan document. Anyone who exercises discretionary authority over a benefit plan, controls plan assets, or provides investment advice for a fee can be a fiduciary under ERISA. In practice, that includes:

• Benefits committee members who review and approve plan design

• CFOs and finance leaders who approve vendor contracts and fee arrangements

• CHROs who set the parameters of health and welfare plans

• Brokers and consultants who exercise discretionary influence over plan decisions

• Investment committee members who select and monitor 401(k) investment options

The standard that applies is the prudent expert standard under ERISA Section 404(a)(1)(B): decisions must reflect the care, skill, and diligence of a person familiar with such matters, acting in the sole interest of plan participants. Courts do not evaluate fiduciary duty by asking whether the outcome was good. They ask whether the process was sound. Process is the protection.

How This Litigation Actually Works

Most benefits decision makers are surprised to learn how these cases get started. Plaintiff law firms do not wait for disgruntled employees to call. They use publicly available Form 5500 annual filings, which ERISA plans must submit to the Department of Labor, to screen for plan characteristics that have historically generated successful claims. Once a target is identified, the firm recruits a plan participant to serve as the named plaintiff in a class action, frequently through outreach to current or former employees. That participant’s role is to provide legal standing, not to describe a personal grievance. The firm files the complaint, and the employer is now in litigation that can cost millions to defend regardless of the merits.

This explains a pattern that otherwise seems contradictory. Recordkeeping fees and investment fees for large 401(k) plans have declined steadily for more than a decade, yet fiduciary litigation has accelerated over that same period. Plaintiff firms have found that surviving the early stage of litigation generates settlement leverage, and their business model does not require the underlying fees to actually be excessive. In our internal data, over the past five years there have been more than 200 settlements of excessive fee and imprudent investment lawsuits totaling more than $1.3 billion. Plaintiff firms typically receive approximately one-third of those settlements. Individual plan participants, by contrast, have received an average of $55 to $70 each per settlement according to analysis from the Davis & Harman law firm.

Excessive Vendor Fees Drive the Surge

Excessive-fee allegations jumped 64% in a single year, from 45 cases in 2024 to 74 in 2025, outpacing every other claim category. Forfeiture allegations rose from 29 to 48. Imprudent investment claims grew from 48 to 53. Across all three categories, the trend is consistently upward. The right panel of the chart below shows what that volume translates to in settlement dollars: total reported settlements peaked at $352.8 million in 2023 and have remained elevated, with $151.9 million settled in 2025 alone. Watchful, deliberate fee benchmarking is the plan sponsor’s strongest defense against all three of these claim types, because each ultimately turns on whether the fiduciary made a documented, reasonable, and informed decision about what the plan was paying and to whom.

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One category deserves particular attention for employers running wellness programs: tobacco surcharge claims. Plans that impose premium surcharges on tobacco users must offer a reasonable alternative standard that allows employees to earn or recoup the full reward, typically a tobacco cessation program. Nearly 50 tobacco surcharge lawsuits were filed in 2024 and 2025, with multiple settlements reaching close to $5 million each. Courts have ruled in favor of plaintiffs in the large majority of motions to dismiss decided so far. This is one of the highest-frequency, most correctable compliance risks in health plan design today.

The Main Legal Theories: A Brief Overview

In defined contribution plans, the dominant allegations are excessive recordkeeping or investment fees, imprudent investment selection, and forfeiture allocation disputes. Health plan litigation has grown significantly since the CAA’s fee disclosure requirements took effect, with the most active categories now being prescription drug cost claims, tobacco surcharge violations, ghost network failures, and, most recently, voluntary benefit broker compensation arrangements where undisclosed or unreasonable commissions are now being scrutinized directly under ERISA Section 406.

Cases That Illustrate Where the Exposure Lives

These cases show the range of conduct generating ERISA fiduciary liability claims across both retirement and health plans, and why the risk is expanding well beyond the traditional 401(k) space.

• Kraft Heinz Co. v. Aetna Life Insurance Co. (filed June 2023). Kraft Heinz sued its TPA for breaching ERISA fiduciary duties in managing its self-funded health plan, alleging over $1.3 million in duplicate and improper claims paid, cross-plan offsetting using plan assets, and blocking Kraft Heinz from accessing its own claims data. The case established that employers bear fiduciary responsibility for monitoring their TPAs, not just their retirement plan recordkeepers.

• Lewandowski v. Johnson & Johnson (filed February 2024). A J&J employee filed a class action alleging the company and its Benefits Committee failed to monitor its PBM, Express Scripts, resulting in the plan paying nearly 500% more for certain drugs than pharmacies paid to acquire them. J&J allegedly never conducted a competitive RFP for PBM services. The case established PBM oversight as an active fiduciary obligation for self-funded health plan sponsors.

• Navarro v. Wells Fargo (filed July 2024). Similar PBM allegations added a prohibited transaction claim under Cunningham v. Cornell, alleging Wells Fargo paid over $25 million in administrative fees to Express Scripts that were unreasonable compared to fees paid by similarly sized plans. The parallel cases against J&J and Wells Fargo together define PBM benchmarking as a fiduciary requirement.

• Hecht v. Cigna (filed 2024, settled October 2025 for approximately $6 million). Cigna was sued for maintaining a ghost network, listing out-of-network providers as in-network. A court ruled in February 2025 that repeated and systematic failures to maintain accurate provider directories were sufficient to allege a breach of ERISA’s duties of loyalty and prudence, extending fiduciary obligations into network administration for the first time.

• Voluntary Benefit Class Actions (filed December 2025). Four class action lawsuits filed in December 2025 targeted voluntary benefit programs, naming both employers and their benefits consultants as defendants. The complaints alleged the consultants acted as fiduciaries and engaged in self-dealing through undisclosed commissions. All four complaints alleged the employers failed to comply with the DOL voluntary plan safe harbor, in part because they filed Form 5500s for the plans, directly citing the CAA’s compensation disclosure framework as the basis for the fiduciary theory.

• Singh v. Capital One Financial Corporation (settled 2025 for nearly $10 million). Capital One settled a forfeiture allocation case for one of the largest forfeiture-specific settlements on record, even after the DOL filed an amicus brief siding with the defendant. The settlement demonstrates that even legally contested theories can generate significant financial exposure before appellate courts reach a final resolution.

What Well-Prepared Employers Are Doing Differently

The employers best positioned in this litigation environment treat fiduciary process as an ongoing discipline. The specific practices courts and regulators look for are consistent across plan types.

• Document every significant benefits decision. The legal standard is evaluated based on process, not outcome. A documented record of how a decision was made, what alternatives were considered, and why the chosen approach was reasonable is the primary evidence that prudence was exercised.

• Benchmark regularly against a real comparator group. The duty of prudence and the cost reasonableness standard both require that fiduciary decisions be defensible relative to what was available in the market. A benchmark built from employers matching your size, industry, and region is direct evidence your costs fall within a reasonable range.

• Monitor your TPAs, PBMs, and carriers, not just your recordkeeper. The Kraft Heinz and J&J cases make clear that health plan fiduciary oversight extends to the vendors administering your plan. Conduct periodic RFPs, review service agreements, and confirm you have access to your own claims data.

• Review broker and consultant compensation under the CAA. The compensation disclosure requirements of the CAA are now being used directly in litigation. Review what your brokers earn on every line of coverage, confirm those arrangements are reasonable and disclosed, and document that review.

• Review your voluntary programs against the DOL safe harbor. Test each voluntary benefit program against all four conditions: no employer contribution, fully voluntary participation, limited employer administrative involvement, and no employer compensation beyond reasonable reimbursement.

• Check your tobacco surcharge program. If your wellness program imposes a premium surcharge on tobacco users, confirm it offers a reasonable alternative standard employees can realistically use. Non-compliance has proven expensive across nearly every case that has reached a ruling.

How Mployer Insights+ Supports Your Fiduciary Process

One of the most direct steps a benefits decision maker can take to strengthen their fiduciary position is to run an independent, third-party benchmarking review of their plan on a regular basis. This is what Mployer Insights+ is built to produce.

Completing an Insights+ review generates documentation that speaks to three of the core ERISA fiduciary obligations. On the prudent expert standard under Section 404(a)(1)(B), the report demonstrates that an independent, structured benchmarking analysis was conducted across all plan components. On cost reasonableness under Section 404(a)(1)(A), the cohort comparison against employers matched by size, region, and industry creates a data-driven, documented basis for evaluating whether plan costs fall within a reasonable market range. On the duty to monitor under Section 404(a)(1), running the review annually establishes a consistent cadence of evaluation with a written output each cycle.

Because Mployer has no carrier relationship, broker relationship, or financial arrangement with the plan being evaluated, the report reflects an objective assessment free of commercial bias. That independence speaks directly to the implicit requirement in the prudent expert standard that fiduciary analysis be conducted free of conflicts of interest, and it distinguishes the Insights+ review from a benchmark produced by a broker from their own book of business.

None of this is a substitute for legal advice, and employers should work with qualified ERISA counsel to confirm all applicable obligations are identified and satisfied. But in a litigation environment where 155 fiduciary class action lawsuits were filed in a single year and the scope is actively expanding into health plans and voluntary benefits, a documented annual benchmark is one of the most practical and defensible steps a benefits team can take.

See how your benefits package compares to your custom cohort at MployerAdvisor.com.

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_Sources

_{Encore Fiduciary / Dorsey & Whitney LLP: ERISA Fiduciary Litigation in 2025. 155 class lawsuits filed in 2025. Justin Bove, Chief Revenue Officer, Encore Fiduciary.}

_{Mployer Insights analysis of public ERISA class-action filings and settlements, 2016-2025.}

_{Davis & Harman LLP: 2025 Underperformance and Excessive Fee Settlement Survey. Average individual participant recovery $55-$70.}

_{Consolidated Appropriations Act of 2021 (CAA), Section 202, broker/consultant compensation disclosure requirements for group health plans.}

_{Kraft Heinz Co. Employee Benefits Administration Bd. v. Aetna Life Ins. Co., No. 2:23-cv-00317 (E.D. Tex., filed June 30, 2023).}

_{Lewandowski v. Johnson & Johnson, No. 3:24-cv-00671 (D.N.J., filed February 5, 2024).}

_{Navarro v. Wells Fargo & Co., No. 0:24-cv-3043 (D. Minn., filed July 30, 2024).}

_{Hecht v. Cigna, filed 2024; fiduciary duty claim survived motion to dismiss February 2025; settled approximately $6 million October 2025.}

_{Singh v. Capital One Financial Corporation, PACER Docket 1:24-cv-08538; settled approximately $10 million 2025.}

_{Cunningham v. Cornell University, 604 U.S. 693 (2025).}

_{Hughes v. Northwestern University, 595 U.S. ___ (2022).}

_{ERISA Section 404, 29 U.S.C. Section 1104. DOL Voluntary Plan Safe Harbor, 29 C.F.R. Section 2510.3-1(j).}

_{HIPAA Nondiscrimination Rules for Wellness Programs, 26 C.F.R. Section 54.9802-1.}

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