Benefits July 13, 2023

Nava Benefits Acquires Consulting Firm to Improve Employee Experience

Nava and Nielsen Benefits Group plan to make cost-effective health care more accessible for small and midsize employers.

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Benefits brokerage firm Nava Benefits announced it has acquired Nielsen Benefits Group Inc.—a company known for designing benefits solutions that lower health care costs for small and midsize employers.  

This acquisition is intended to “revolutionize the benefits service delivery model for employers and improve their member experience,” according to Nava. 

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In April 2022, Nava launched its Benefits Search Engine, which includes more than 600 benefits offerings and allows employers to browse a wide range of modern, digital-friendly health and wellness benefits offerings across 28 benefits categories, including telehealth, fertility, addiction, wellness coaching, direct primary care, tuition assistance and mental health. 

As employer health care costs have grown by 20% since 2017, Nava stated that this disproportionately impacts small to midsize employers. For example, new research conducted by the National Federation of Independent Business found that 98% of small businesses are concerned that health care costs will become “unsustainable” for them in the next five to 10 years.    

Nava argued that with its expertise and technology, the firm has helped employers reduce their health care costs, simplify their offerings and make it easier for employees to understand and use their benefits. By joining forces, Nava and NBG expect to combine “deep consulting expertise with cutting-edge technology” to bring a “modern benefits approach” to more midsize employers, according to a press release. 

Nava’s technology includes the firm’s Nava Benefits App, which can provide clients’ participants access to health care and carrier information. 

“In getting to know the NBG team, three things were crystal clear: They share our belief that benefits brokers have an outsized ability to fix healthcare; they care deeply about leveling up the member experience and supporting employees throughout each stage of their healthcare journey; and they actually deliver on the promise of lowering costs,” said Brandon Weber, CEO and co-founder of Nava Benefits, in a press release. “We’re excited to come together to make cost-effective healthcare more accessible for employers and employees alike.” 

NBG is recognized for its focus on customized plan design and employee benefits education targeted toward midsize employers who have been “historically underserved in the market.” 

“After three decades of building Nielsen Benefits Group into an award-winning employee benefits brokerage, I wanted to find a partner who could take our client and market impact to new highs,” said Craig Nielsen, president and CEO of NBG. “Nava emerged as the clear choice versus traditional brokerages, offering a compelling partnership that brings cutting-edge innovation to our clients and a deeply mission-driven culture to my team.” 

 

Compliance July 12, 2023

Terminated Employee Alleges Twitter Didn’t Pay Promised Severance

The proposed class action brought by Twitter’s former head of people experience alleges Elon Musk and X Corp. violated ERISA fiduciary obligations.

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Twitter was hit Wednesday by a complaint seeking $500 million in damages for allegedly not making promised severance payments to terminated employees, according to a court filing in U.S. District Court for the District of Northern California.

The complaint, brought by the firm’s former head of people experience on behalf of a putative class of fellow former employees, alleges that Elon Musk and X Corp., the parent company of Twitter, violated the Employee Retirement Income Security Act by not delivering on severance payments promised in an employee benefit plan.

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The complaint alleges that Twitter’s benefit plan entitled many senior employees to severance of six months’ base play, plus one week’s pay for each full year of service, and employees with less time at the company to two months’ base pay, plus one week’s pay for each full year of service. The suit alleges that Musk and his leadership team told employees the benefit plan remained in place, then instituted mass layoffs in which employees were offered “at most three months of compensation.”

“Musk initially [upon buying Twitter] represented to employees that under his leadership Twitter would continue to abide by the severance plan,” Kate Mueting, the firm administrative partner in Sanford Heisler Sharp LLP, said in a statement. “He apparently made these promises knowing that they were necessary to prevent mass resignations that would have threatened the viability of the merger and the vitality of Twitter itself.”

The complaint, McMillian v. X Corp. et al., was filed by Sanford Heisler Sharp on behalf of Twitter’s former human resources executive, Courtney McMillian, and the class of participants and beneficiaries in Twitter’s severance plan.

According to the complaint, Musk and X Corp. are the fiduciaries on the plan, as ERISA law considers the employer the plan administrator in the “absence” of a designated fiduciary. The suit also claims Musk’s communication to employees about the plan and severance payments makes them responsible under ERISA.

“These violations of fiduciary duties caused substantial harm to the Plan and its participants, by causing the Plan to be deprived of the funds necessary to make full payments to Plan participants,” the complaint states.

Twitter did not immediately respond to request for comment on the complaint.

Andrew Oringer, general counsel and partner in the Wagner Law Group, which is not involved with the case, says employee seeking allegedly promised severance benefits may face multiple questions about the binding nature of the payouts. He notes that provisions possibly may provide the employer the ability to change the plan or “interpret the words of the plan and related documentation.”

“Where there’s reliance on a transaction document (like the Merger Agreement here), there will also be questions about whether anyone other than the parties to the transaction can enforce the provisions of the transaction document,” Oringer notes. “And where oral assurances are alleged, it may be hard to enforce alleged oral promises.”

Musk bought Twitter in October 2022 in a $44 billion deal, after which he took over the company as CEO, dubbing himself “Chief Twit,” and laid off more than half the workforce, in part to cut costs.

The complaint cites Musk’s own Twitter account as evidence, alleging that he wrote on November 4, 2022, that terminated staffers were getting “50% more than legally required,” with “legally” referring to Department of Labor guidelines around worker layoffs, not to the plan in question. According to the complaint, “some laid-off employees have yet to receive anything,” and the three months’ severance others received is “a fraction of what employees are entitled to as plan participants.”

The complaint goes on to allege that the defendants attempted to “hide the existence” of the severance plan from employees and refused to make payments “so those funds could be used to prop up the company,” according to the complaint and a statement from Sanford Heisler Sharp.

Oringer notes that there could be hurdles regarding class certification in the case, particularly if “there is perceived to be a wide range of relevant factual scenarios. An inability to get class certification could easily be as damaging to the case’s prospects as any substantive hurdle faced by a plaintiff.”

Twitter, however, could also face challenges, Oringer says.

“For example, there are cases indicating that a fiduciary’s dissemination of inaccurate information, and particularly intentionally inaccurate information as is alleged here, could amount to an actionable fiduciary breach,” he says. “Such a claim requires the establishment of fiduciary status and would be bolstered by successfully establishing intentionality.”

 

 

 

 

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