Lawsuit Alleges Hyatt’s Tip Policy Causes ERISA Violation

An employee has sued the company for not being able to defer a percentage of his tip wages into the retirement plan.

A participant in Hyatt Corp.’s defined contribution retirement plan has sued the company saying the company breached its fiduciary duties by not applying his deferral election for the plan to all his pay.

According to the complaint, the plan document defines compensation as “the amount reported for a participant on IRS Form W-2, Box 1 for the plan year.” The complaint notes that “wages” in Form W-2, Box 1 includes tips received by an employee during the course of his employment.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

However, Hyatt has a policy of requiring tipped employees to be paid all charged tips in cash rather than through payroll, interfering with their ability to defer income under the terms of the plan, the lawsuit alleges. “Because Hyatt mandates that credit card tips, which make up a significant portion of certain employees’ compensation, be paid out to employees at the end of the shift rather than through payroll, there are frequently insufficient amounts paid through payroll to cover the entirety of the employees’ deferral election for the plan,” the complaint states. “In these instances, the affected employees are only able to make after-tax contributions to the plan to make up for the shortfall.”

The plaintiff alleges that Hyatt’s mandatory tips policy “has the effect of discriminating against employees who receive tips as part of their income when compared to employees who do not receive tipped income.”

According to the complaint, in 2018, the plaintiff elected to defer 5% of his compensation, but due to the tip policy, the amount taken from his paycheck to contribute to the plan was 4.93%. In 2019, he increased his deferral election to 10% of pay, but the amount taken from his paycheck was 8.99%. On June 2, 2020, he updated his deferral percentage to 50% of his compensation, and on August 14 of that year, he changed his deferral election to 8% of compensation. However, only 6.96% of his gross pay for all of 2020 was deferred to the plan.

The lawsuit says Hyatt breached its fiduciary duties under the Employee Retirement Income Security Act by failing to follow the terms of the plan and failing to comply with the plaintiff’s deferral elections.

Hyatt Corp. has not yet responded to a request for comment about the lawsuit.

How Financial Services Employees Feel about Cybersecurity

A new study shows that most people working in regulatorily sensitive industries such as financial services are aware of the importance of cybersecurity and privacy policies, but employers should still shape their communications to include more practical tips.


As more employers invest in cybersecurity initiatives and the workforce becomes increasingly autonomous in a post-pandemic world, Mobile Mentor, a company that provides security and support for remote workers, has released a study that explores how employees perceive privacy, security, productivity and personal well-being in the modern workforce.

Mobile Mentor says the goal of its inaugural report, “The Endpoint Ecosystem 2022 National Study,” is to educate and inform employers in regulatorily sensitive industries how to prevent security breaches—and then how to attract and retain motivated employees.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The pandemic forced many people to work remotely and to utilize both work and personal devices, the study notes. In part due to the growth of remote-first work during the pandemic, there has been a 500% increase in cybercrime, which in turn increases the focus on cybersecurity training in industries such as health care and financial services.

In the U.S., 61% of financial industry employees see a security policy every time they log on to their computer. However, survey evidence suggests many employees don’t actually read security policies, and instead just click to agree. The study suggests a more effective reminder would be using short practical tips or a thought-provoking question on security.

The study finds there is a healthy and appropriate fear of data breaches, both from an organizational and personal standpoint. Some 63% of employees believe they will get fired for a data breach, while 59% believe their executives should be fired for a breach. A whopping 33% know someone who caused a breach. The study authors say these numbers show workers in the financial services industry are more aware of the gravity and cost of a security breach relative to other sectors.

Passwords present a major vulnerability, according to the study. The responses show government workers have the least number of passwords and often the least sophisticated, while those in finance have a greater number of strong passwords. According to the study, 18% of people in the finance industry use the password reset feature daily, while younger employees use “forgot password” or “reset password” features at work much more than older workers. Across all industries, only 31% of people manage their passwords with a password management tool, while 29% write work passwords in a personal journal and 24% store work passwords using notes on their phone.

Another security risk highlighted in the survey relates to the use of personal devices. While 64% of people use personal devices at work, only 31% of employers have a secure “bring your own device” program. Unsecure personal devices can put companies at significant risk when company data is exposed on an unmanaged app on an unmanaged device with no security controls.

Health care workers feel the strongest of any industry about protecting their personal information, while Baby Boomers feel the strongest about protecting their personal information, the study says. Generation Z showed an extreme bias for privacy over security, with 82% saying their personal privacy is more important than company security.

According to the study, younger workers (Gen Z and young Millennials) don’t see a clear line between their work and personal lives. The study shows that 57% of younger employees use their work devices for personal use, while 71% use a personal device for work and 46% allow family members to use their work devices.

The study also looked at where employees felt the most productive and satisfied, with workers across all industries and generations feeling more productive working in an office than at home. Other findings show financial workers care the most about job satisfaction and government workers the least. Additionally, 71% of remote workers report better job satisfaction now than they did two years ago, while only 53% of office workers say the same.

«