Macy’s dropped its ERISA suit, but the voluntary benefits risk remains

Roughly 37 cents of every dollar Macy’s employees spent on supplemental insurance went to the broker, a proposed class action alleges. The plaintiff dropped the case without prejudice soon after filing it on October 3, 2026, in the US District Court for the Southern District of New York. The risk it flagged did not go with it.

The suit, Munson v. Macy’s, Inc., covers about $36.1 million in premiums paid by Macy’s workers from 2019 to 2024. Plaintiffs allege roughly $13.2 million of that, or 36.7 percent, went to broker commissions and fees. These are allegations, not findings. A commission percentage alone does not establish a breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA), and no court has tested the claims.

Why voluntary benefits may not sit outside ERISA

Supplemental policies such as accident, critical illness and hospital indemnity cover sell on a simple pitch, and healthcare employers told Transamerica’s 2026 survey that medical bills are workers’ top money worry. Employers have long assumed those products sit outside ERISA because employees pay the premiums, participation is optional and the employer only runs payroll deduction.

That assumption depends on a Department of Labor (DOL) safe harbor at 29 C.F.R. § 2510.3-1(j), which has four conditions: no employer contributions, completely voluntary participation, no employer endorsement and an employer role limited to payroll deduction. All four must hold. The DOL has applied the same test in an advisory opinion on whether a group insurance program meets the safe harbor. Plaintiffs in this litigation argue that employers step outside it when they allegedly endorse the programs, for instance by choosing the broker and carriers or folding the products into branded enrollment materials.

Form 5500 filings are another sticking point. Some complaints in the earlier wave pointed to employers’ own annual filings as an acknowledgment that the programs were ERISA plans, according to the original reporting. That detail should be confirmed against the complaints.

How plaintiffs pick their targets

Broker commissions on voluntary benefits appear on Schedule A of Form 5500, which employers filing these benefits as ERISA plans submit to the DOL each year. The data is public, and plaintiffs’ lawyers can benchmark it across employers.

The Munson complaint does exactly that. It alleges Macy’s paid 50.8 percent of premiums in broker commissions in 2019. It sets that against Target’s Schedule A, which reportedly showed about $214 in total commissions the same year for the same products, through the same broker, Aon, and the same carrier. The complaint also describes a “heaped” commission pattern, in which switching carriers triggers a large first-year payout and smaller renewals. Commissions in the Macy’s program allegedly reached 62.8 percent of premiums in 2022, when coverage moved from an Allstate subsidiary to an Aflac subsidiary. Whether that amounts to a breach is for the courts to decide.

A wave, not a one-off

A JD Supra analysis dated February 4, 2026, reported that on December 23, 2025, four large employers and several national benefits consulting firms were sued over employee-paid voluntary benefits, the first time plaintiffs tested ERISA fiduciary standards in this space. Law360 reported on July 31, 2026, that the trend appears to be gaining ground, according to experts it interviewed.

Duane Morris class action defense lawyer Maatman has warned that huge benefit cases can be certified as class actions, which raises the stakes for employers named in them. The common thread across the complaints is process. Did the employer investigate the broker’s compensation, compare alternatives and monitor the arrangement over time? Compliance confidence is low across benefits generally, with NFP finding only 26 percent of employers very confident in compliance as leave laws spread. In the Phia Group’s 2026 Broker Survey, which covered 124 benefits brokers and advisors, only 12 percent said they were very confident their clients had adequate fiduciary processes for voluntary benefits.

Three checks before the next renewal

First, audit the safe harbor. Review whether each voluntary product meets all four conditions, including who selected the products, whether the employer’s name appears in enrollment materials, what role the broker played in choosing carriers and whether the benefits are filed on Form 5500.

Second, ask the broker for full compensation disclosure. ERISA Section 408(b)(2) requires covered service providers to disclose direct and indirect compensation, which for voluntary benefits subject to ERISA should include commissions, fees and overrides, not just the base rate.

Third, document the process. ERISA fiduciary duty turns on process more than outcome. Records of how products were chosen, what alternatives were weighed and how compensation was reviewed matter if a plan is ever challenged.

Munson is gone. The Form 5500 data that fed it is still public.