Supreme Court Rules Employees Can Sue Over 401(k) Misconduct

Gies added that DeWolff Boberg expected to be "vindicated on the merits" of the case when it returned to the lower courts.

Employment law experts said the decision leaves unanswered important questions about other steps that workers must take before they enter the courthouse over retirement savings disputes.

Chief Justice John G. Roberts Jr. agreed that reasoning by the U.S. Court of Appeals for the 4th Circuit was "flawed." But in a concurring opinion, he and Justice Anthony M. Kennedy questioned whether LaRue and other employees could recoup their losses if they do not first follow set procedures, such as an appeal to the plan administrator.

In past cases, the Supreme Court gave administrators wide latitude to develop standards for eligibility and other terms, judgments that courts can review only for an abuse of discretion, Roberts wrote.

Such a hurdle could be difficult for employees to surmount, said Karla Grossenbacher, an employment lawyer at Seyfarth Shaw in the District who has no connection to this case.

Alden Bianchi, an employment lawyer at Mintz Levin in Boston, said business executives greeted the ruling with disappointment rather than surprise.

"What it will do is punish dumb mistakes," Bianchi said, while more lawsuits could clarify the scope of the court's decision. "When the Supreme Court takes on an ERISA question, inevitably the law of unintended consequences starts to work over time."

The case is LaRue v. DeWolff, Boberg & Associates Inc.