Recent Legal Decisions Affect You

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Underfunded Pension Plan Developments

The Pension Benefit Guaranty Corporation (PBGC) has issued final regulations for underfunded pension plans requiring an annual easy-toread explanation of a plan's status to be sent to all participating employees and retirees. The rules detail the specific information that must be in the notice, including the fact that PBGC may not guarantee full replacement of monthly pension amounts if the plan should fail.

The notice must be provided within two months of the deadline for filing summary annual reports, which means this fall for large-plan employers. Smaller plans will have until 1996 to comply.

Failure to issue the notices on time may result in penalties up to $1,000 per day (Federal Register 6/30/95).

In a related development, PBGC proposes new reporting requirements for employers with underfunded pension plans. Pension-plan sponsors and all members of their control groups must submit audited financial statements and other financial and actuarial information to the PBGC when the total underfunding exceeds $50 million at year end; or a pension contribution exceeding $1 million in any of the corporate group's pension plans has been missed; or a minimum funding waiver in excess of $1 million granted to any of the corporate group pension plans has not been repaid (Federal Register 7/6/95). IMPACT: Pension plan administrators should promptly review these new requirements to avoid fines by ensuring prompt compliance and reporting.

Harassment Policy Immunizes Employer Coramae Gary, an employee for the Washington Metropolitan Area Transit Authority (WMATA) claimed that in 1988 her supervisor, James Long, allegedly harassed her by telling her that if she had sex with him he could "make her job easier." Gary also claimed that Long later drove her to a secluded storage facility and raped her.

In her lawsuit, Gary charged that WMATA was liable for sexual harassment because its supervisors had created a sexually hostile work environment. The U.S. Court of Appeals for the District of Columbia concluded Gary failed to establish a claim for sexual harassment against the employer due to the employer's well-defined and publicized policy against sexual harassment.

An employer may not be held liable for a supervisor's hostile work environment harassment if the employer shows that it adopted policies and implemented measures such that the victimized employee either knew or should have known that the employer did not tolerate such conduct, and that the victim could report it to the employer without fear of adverse consequences. …