Severance Pay

[Guidance Overview] Third Circuit Upholds Lower Court Decision Granting Benefits Under a Program Providing Separation Benefits
Excerpt:"The Business Exception to coverage under the Displacement Program has two primary requirements: (1) the contract of sale must provide for employment of the employee by another employer, and (2) MFC must determine that the position to be provided to the affected employee is comparable to the position the employee held before the sale, and in particular, that it'initially'provides base salary and incentive compensation opportunities which, in the aggregate, are reasonably similar to those that were provided by the MFC subsidiary."(Stanley D. Baum of Fellheimer&Eichen LLP)

[Opinion] Last Chance to Correct for 409A
Excerpt:"I cannot overemphasize how important it is for every employer in America with non-qualified deferred compensation plans or employment, severance or change in control agreements that are subject to Code Sec. 409A (which includes just about all of them) to review its compliance with 409A one more time before December 31, 2010. This is because the IRS has given us one last chance to correct drafting issues in compensation plan documents and agreements that are subject to 409A, without penalty, under Notice 2010-6."(Michael Melbinger via Winston&Strawn LLP)

[Guidance Overview] Court Affirms Rulling that Denial of Severance Benefits Was Abuse of Discretion: Employee Was Constructively Terminated
Excerpt:"The court also rejected the administrator's contention that the employee was required to waive all claims against the company and sign a confidentiality agreement before he could even be considered for severance benefits. Again, that's a misreading of the plan, the district court explained. Signing the waiver of claims and confidentiality agreement are conditions precedent only to the receipt of benefits, not eligibility for benefits."(Wolters Kluwer)

Court Rules Terminated Employee to Receive $3M in Benefits After Company Refused Him Severance
Excerpt:"[The former employee] will get benefits he should have received since 2005, like early retirement, which includes a pension and lifelong health benefits. That's over $3 million in damages, including attorney's fees."(New Jersey On-Line LLC)

Former Employees of New United Motor Manufacturing Co. Sued It and Toyota Motor Corp. Over Severance Packages
Excerpt:"They seek a revised severance agreement, restitution, lost compensation, other employee benefits and monetary damages in the suit filed in U.S. District Court in Oakland."(San Jose Business Journal)

U.S. Supreme Court to Consider Remedy for Deficient SPD
Excerpt:"To recover benefits based on an inconsistency between an ERISA plan document and summary plan description (SPD), must participants show reliance on the SPD? Is it sufficient to show'likely harm'? Or can participants prevail without any showing of harm? The US Supreme Court will tackle these questions . . . ."(Mercer)

[Official Guidance] IRS Publishes Interim Report on Colleges and Universities Compliance Project; Useful Compensation Data (PDF)
79 pages. Part VI of the report contains charts showing the distribution of specific types of benefits provided to one or more of the organization's 6 highest-paid officers, directors, trustees or key employees, including life, disability, long-term care contributions; split-dollar life insurance; loans/credit extension (forgiveness of debt/interest); severance or change of control payments; personal use of organization vehicles; and expense reimbursement (non-accountable plan). Also shows participation in specific types of deferred compensation plans, and describes general compensation policies. (Internal Revenue Service)

[Guidance Overview] Past Layoffs Could Provide Tax Refund for Companies
Excerpt:"A recent court ruling suggests that companies may be able to recover FICA taxes linked to severance pay. But to take full advantage of the first refund year, they'll have to file before April 15."(CFO.com)

[Guidance Overview] Quality Stores Puts FICA Refund Opportunity for Severance Pay Back on the Table
Excerpt:"Quality Stores presents an opportunity to claim refunds for FICA taxes previously paid as well as for reevaluating tax positions going forward. Employers who have made severance payments to employees in calendar year 2006 or later may wish to file protective claims for refund of the employer's and the employees'portion of the FICA tax, based on the rationale of Quality Stores. The deadline for filing a claim for refund with respect to payments made in 2006 is April 15, 2010, so taxpayers must move quickly if they want to take advantage of this opportunity."(Jones Day)

[Guidance Overview] Another Court Rules That Severance Pay is Not FICA Wages (PDF)
2 pages. Excerpt:"The IRS has the stronger position to treat severance payments as FICA wages, and at this point employers should continue to withhold applicable FICA taxes. However, to preserve a future refund claim, an employer can file protective claims based on the court's decision."(Groom Law Group)

[Guidance Overview] Employers Should Consider Filing Protective FICA Refund Claims Related to Certain 2006 Severance Payments
Excerpt:"Consider whether to file protective refund claims by April 15, 2010. As an initial step, employers should determine if any FICA taxes have been paid on SUB pay during open tax years (generally 2006 or later) and whether to file a protective refund claim. Refund claims for FICA payments made on SUB pay during the 2006 calendar year are generally due by April 15, 2010."(Perkins Coie LLP)

[Guidance Overview] Employers Should Be Cautious of New Decision Holding that Severance is Not'Wages'Subject to FICA
Excerpt:"In United States v. Quality Stores, Inc.,1 a federal district court in Michigan held that severance payments were not wages subject to Social Security and Medicare taxes ('FICA'taxes). This decision appears to conflict with a decision of the Court of Appeals for the Federal Circuit. It also is likely to be challenged by the Internal Revenue Service (IRS)."(Littler Mendelson P.C.)

[Guidance Overview] New Case Revives Hopes for Refunds of FICA Tax on RIF Severance Pay
Excerpt:"Employers who have made involuntary termination severance payments pursuant to a plan should consider filing protective refund claims. Time is of the essence for refunds of FICA taxes paid in 2006 because, in general, such claims must be filed no later than April 15, 2010. It should be noted, however, that the decision to file a claim may not be as clear cut as it was following the CSX trial court decision."(Faegre&Benson)

[Guidance Overview] Some Severance Held Exempt from FICA Again: Consider Filing Protective Refund Claims (PDF)
1 page. Excerpt:"A Federal District Court in Michigan, in a case involving the bankruptcy of the Quality Stores discount chain, has held that some types of severance pay are exempt from social security taxation under the Federal Insurance Contributions Act (FICA), and that the employer was entitled to a refund of FICA tax that it had previously paid on the severance. While the decision is certain to be appealed by the IRS, employers who have made significant severance payments in open tax years (generally 2006 or later) may want to consider filing protective claims for refund of FICA payments until the matter is resolved."(Seyfarth Shaw LLP)

[Guidance Overview] One-Time Severance Payment Was Not Subject to ERISA, According to Court
Excerpt:"EBIA Comment: The'ongoing administrative program'standard for determining whether a severance benefit is subject to ERISA is easier to state than to apply. The simplicity of the arrangement in this case appears to have made the trial court's determination easy. However, small variations in the facts can affect the outcome, so employers should tread carefully in this area."(Employee Benefits Institute of America)

[Guidance Overview] FICA Tax on Severance Payments Questioned
Excerpt:"Certain severance benefits may not be subject to taxation under the Federal Insurance Contributions Act (FICA), according to a recent district court decision. In United States v. Quality Stores, Inc., No. 1:09-cv-44 (W.D. Mich. Feb. 23, 2010), a decision affirming a bankruptcy court decision, the U.S. District Court for the Western District of Michigan highlighted the historical uncertainty regarding whether certain severance payments made to employees are subject to taxation under FICA. In this episode, the court held that such payments were not subject to FICA, as they did not constitute'wages.'"(McGuireWoods LLP)

[Guidance Overview] IRS Section 409A Notice Requires Review of Compensation Agreements That Condition Payments Upon Signing Releases
Excerpt:"Not all severance or employee payment plans are subject to Section 409A. If all payments under an agreement are made by March 15 of the calendar year following the year in which the right to the payment vests, then the payment is considered a'short-term deferral'and exempt from Section 409A. For example, many separation agreements that are created at the time of separation with a prompt lump sum payout may not present a problem."(Nixon Peabody LLP)

[Guidance Overview] Quality Stores Decision Muddies the Waters on the FICA Tax Treatment of Severance Pay
Excerpt:"After nearly two years of believing the issue was settled, on February 23, 2010, taxpayers were startled to learn that the U.S. District Court for the Western District of Michigan [affirmed a bankruptcy court decision that had ruled] that severance payments made to employees pursuant to an involuntary reduction in force were not'wages'for FICA tax purposes. . . . The U.S. District Court's decision . . . will cause many employers to consider once again whether refund claims should be filed as a protective measure."(Miller&Chevalier)

IRS Set To Begin Comprehensive Employment Tax Audits
Excerpt:"This month, the IRS will launch a new employment tax National Research Program . . . . [T]he IRS will randomly select 6,000 taxpayers (2,000 taxpayers in 2010 for the 2008 tax year and 2,000 taxpayers each in 2011 and 2012 for the 2009 and 2010 tax years, respectively) and conduct in-depth audits of those taxpayers'employment tax issues . . . . In addition to identifying organizations that fail to file employment tax returns at all, the comprehensive audits will focus on at least four major employment tax issues: * Classification of workers as employees or independent contractors; * Reasonableness of executive compensation; * Tax treatment and reporting of fringe benefits as tax-free or as taxable compensation; and * Tax treatment and reporting of employee reimbursements."(Ballard Spahr)

What To Expect from the IRS'NRP'Fringe Benefits Audit Initiative
Excerpt:"[A]s of December 2009, the IRS was targeting a much narrower (but still fairly broad) list of the more generic broad-based employee fringes including the following: * Employer-provided automobiles; * De minimis fringe awards such as gift cards; * Discounted property or services; * Education assistance offered as (1) educational assistance plans, (2) working condition fringes and (3) scholarships; * Meal reimbursements and travel per diem plans . . . ."(Employer's Guide to Fringe Benefit Rules, published by Thompson)

[Guidance Overview] Relief and New Concerns: Notice 2010-6 and Correcting Section 409A Document Failures
Excerpt:"Although the Notice provides guidance, its examples also give employers cause for concern. For example: . . . The phrase'termination of employment'may violate section 409A if it leads to payments in situations not permitted under section 409A (for example, where an employee reduces their hours or is re-hired as an independent contractor providing significant services after termination of employment). Previously, the IRS had informally indicated that the term was acceptable. . . . [Further, severance] payments contingent on a release of claims or the end of a rescission period may violate section 409A (if the compensation to be paid is subject to section 409A)."(Dorsey&Whitney)

[Guidance Overview] Time for Employers to Review Their Severance Agreements
Excerpt:"The United States Equal Employment Opportunity Commission (the'EEOC') recently issued guidance in question and answer format entitled'Understanding Waivers of Discrimination Claims in Employee Severance Agreements'. . . . While the Severance Agreement Guidance does not break much new ground, it provides a useful summary of the requirements for a legally enforceable severance agreement and the potential pitfalls into which an employer may stumble."(The Metropolitan Corporate Counsel, Inc.)

[Official Guidance] Text of IRS Notice 2010-6 Providing Voluntary Correction Program for 409A Document Failures; Revisions to 2008 Procedures for Certain Operational Failures (PDF)
86 pages. Excerpt:"This notice provides methods for taxpayers to voluntarily correct many types of failures to comply with the document requirements applicable under ? 409A of the Internal Revenue Code (Code) to nonqualified deferred compensation plans and thereby avoid or reduce the current income inclusion and additional taxes under ? 409A. This document correction program is intended to encourage taxpayers to review nonqualified deferred compensation plans to identify provisions that fail to comply with the requirements of ? 409A and ? 1.409A-1(c) of the Income Tax Regulations (a document failure), and to correct those plan provisions promptly, while also not providing an advantage to taxpayers participating in plans that initially fail to comply with ? 409A over taxpayers participating in plans drafted in compliance with ? 409A. . . . This notice also clarifies certain aspects of Notice 2008-113, which addresses certain failures of nonqualified deferred compensation plans to comply with ? 409A in operation (operational failures) . . . ."(Internal Revenue Service)

Tulsa, Oklahoma, Public Schools'Early Retirement Plan
Excerpt:"One reason employees . . . say they're not enthusiastic about the plan- health insurance. [It is not being provided.] In addition to offering administrators and support staff the early retirement option, TPS also plans to offer teachers of retirement age a $5,000 stipend. The only difference with this plan, teachers would actually have to work until June."(Newport Television LLC)

Benefits for Departing Employees Impact Those Who Remain
Excerpt:"Severance pay, outplacement support and other continuing benefits for terminated employees impact the morale of remaining employees, even affecting the company's brand and public image, according to new research on separation benefits. The study of more than 1,200 business leaders from 45 countries, conducted by DBM, a global outplacement firm, and the Human Capital Institute, a research group, reveals that most organizations (85%) provide severance to at least some of their employees, with almost half (45%) offering severance to all of their employees, including part-timers."(Employee Benefit Adviser; free registration required)

[Guidance Overview] Pending Divorce Does Not Require Spousal Consent for SERP Payout, According to Ruling
Excerpt:"Although the SERP was presumably a defined benefit arrangement, the court concluded that ERISA's qualified joint and survivor annuity rules, which require a participant's spouse's consent to the election of a form of benefit other than a QJSA, did not apply. That was because the SERP was a top hat plan, and top hat plans are not subject to ERISA's survivor annuity rules. (The United Way actually denied that a SERP existed and maintained instead that the $2 million was paid pursuant to a separation agreement, but the court assumed for purposes of its ruling that a SERP did exist.)"(Utz, Miller&Eickman, LLC)

[Guidance Overview] Discrimination Claims or ERISA Benefit Claims? The ERISA Preemption Divide
Excerpt:"In this case, the plaintiff sued on state law theories of discrimination and retaliation but the facts she alleged were found tilted toward a claim for severance benefits which in turn warranted preemption."(Health Plan Law blog by Attorney Roy Harmon III)

Life on Severance Pay
Excerpt:"Overall, companies have been eliminating or trimming severance packages. For those who do receive severance, the median pay allotted is 12.5 weeks'salary, down from 21.8 weeks a decade ago, according to outplacement firm Challenger, Gray&Christmas. But this downtown has brought heavy layoffs to the financial and auto industries, two places where generous exit packages remain more common. The dramatic changes in such sectors mean that many of the eliminated jobs will never come back. Some workers may suffer a permanent hit to their standard of living. Those affected often have trouble accepting their diminished prospects. Hefty severance packages, while intended as a safety net, can lull the unemployed into a false sense of security. Some people continue spending as before."(The Wall Street Journal)

[Guidance Overview] Be Careful With Severance Plans; ERISA Reporting and Disclosure Rules Can Apply
Excerpt:"While most employers are well aware of ERISA's application to retirement plans and group health plans, many are surprised to learn that some severance arrangements are considered'welfare pans'under ERISA and, are therefore, subject to ERISA's reporting and disclosure requirements, as well as the rules for processing and determining claims. Because not every severance arrangement is covered by ERISA, many employers overlook its potential application when they are implementing or designing a severance plan."(Fisher&Phillips)

[Guidance Overview] Perform Year-End Review of Nonqualified Deferred Compensation Plans for 409A Operational Failures
Excerpt:"Employers that maintain nonqualified deferred compensation plans should strongly consider adding a review of operations for Section 409A non-compliance to their end-of-the-year to-do lists. If operational failures are identified and corrected before the year has run out, it may be possible to avoid some or all of the adverse consequences that would otherwise result under 409A by taking advantage of the relief provided under IRS Notice 2008-113."(Faegre&Benson)

[Guidance Overview] Last Chance to Fix Bonus Plans and Severance/Employment Agreements
Excerpt:"For those companies who have not yet revised their bonus plans or severance/employment agreements to comply with the IRS interpretation of Internal Revenue Code (Code) section 162(m) in Rev. Rul. 2008-13, 2008-10 IRB 518, now would be the time to do that in order to avoid a deduction disallowance for the 2010 annual bonus (and for long-term bonuses with a performance period beginning January 1, 2010)."(Miller&Chevalier)

[Guidance Overview] Severance Plans as Regulated by the Internal Revenue Code and ERISA (PDF)
Pages 5- of 10 pages. Excerpt:"Many companies have implemented severanceplans due to the current economic situation. While companies typically consider the employment law implications of severance plans (such as the Age Discrimination in Employment Act), many have not considered how these plans are governed by the Internal Revenue Code of 1986, as amended (the'Code') and the Employee Retirement Income Security Act of 1974, as amended ('ERISA'). This article briefly summarizes how the Code and ERISA govern severance plans."(Trucker Huss)

[Guidance Overview] Employer Practice of Payments in Exchange for Releases Does Not Constitute ERISA Plan
Excerpt:"The Second Circuit recently addressed an important issue that can arise in the context of employment termination. In this case, the plaintiff, on behalf of herself and similarly situated employees, alleged that her employer had an ongoing practice of offering payments in exchange for a release of claims. The key issue: was this practice, in effect, an employee welfare benefit plan? This is a issue frequently overlooked. While an ERISA plan is required to be described in a written document, an ERISA plan can be created through pattern and practice even though not described in a written document. This fact creates substantial risk that a course of payments on termination of employment may give rise to a severance pay plan. That is essentially what the plaintiff alleged in Kawski."(Roy Harmon III via Health Plan Law)

[Official Guidance] DOL Begins to Approve EFAST2 Software Vendors for 2009 Form 5500
ftwilliam.com is the first vendor to obtain EFAST2 approval, for the 2009 Form 5500. Excerpt:"EBSA will list on this Web site the private sector companies who have developed software that has been approved for use in transmitting and/or completing the Form 5500 and Form 5500-SF under the EFAST2 system. . . . Information on these products and their vendors'is provided for the convenience of filers. The U.S. Department of Labor does not endorse or warrant these companies, their products, or their services."(Employee Benefits Security Administration, U.S. Department of Labor)

[Guidance Overview] EEOC's Guidance on Discrimination Waivers and Releases
Excerpt:"Given the recent economy and resultant'rightsizing'of workforces, many employers are asking employees to sign releases in exchange for severance pay. Various statutes and cases regulate the enforceability of those release agreements. Consequently, employers should take care to assure that their separation agreements comply with the applicable legal requirements."(Briggs and Morgan P.A.)

[Guidance Overview] EEOC's Guidance on Discrimination Waivers and Releases
Excerpt:"Given the recent economy and resultant'rightsizing'of workforces, many employers are asking employees to sign releases in exchange for severance pay. Various statutes and cases regulate the enforceability of those release agreements. Consequently, employers should take care to assure that their separation agreements comply with the applicable legal requirements."(Briggs and Morgan P.A.)

[Guidance Overview] EEOC Technical Assistance Regarding Waivers and Releases of Discrimination Claims in Severance Agreements (PDF)
Pages 3-4 of 6 pages. Excerpt:"Can an employer validly require an employee to sign an agreement waiving his or her right to sue the employer under federal employment discrimination laws in exchange for severance benefits? Technical guidance issued by the Equal Employment Opportunity Commission ('EEOC') on July 15, 2009 timely answers this question -- with a qualified'yes'-- and discusses the legal requirements governing release agreements for terminated employees. Laid out in an employee-friendly question and answer format and containing a checklist and a sample release, the technical guidance highlights essential elements of valid waivers while clarifying for employees their rights under federal employment law."(Trucker Huss)

Buyouts Lure 9,000 State Workers into Retirement in Six States
Excerpt:"Looking to shield their work forces from tumultuous cutbacks, at least six cash-strapped states have decided this year to spend millions on incentives to encourage government employees to retire. As the job security traditionally associated with state employment becomes increasingly uncertain in the face of large-scale layoffs and furloughs, these buyouts give states the chance to tighten their belts without fracturing morale."(StateLine.org)

[Guidance Overview] Focus on Employee Benefits Newsletter, August 5, 2009 (PDF)
6 pages. This edition covers the following issues: Play or Pay Proposals in Health Reform Legislation, Maintaining Plan Administrative Documents, Tax Treatment of Employment Settlements, and Discounted Options and Section 162(m). (Miller&Chevalier Chartered)

After 6,000 Take Buyouts, G.M. to Lay Off Thousands
Excerpt:"Workers who agreed to leave their job received cash payments of $20,000 to $115,000, with the largest amount going to those who gave up retirement benefits other than their pensions. Departing workers also received a voucher worth $25,000 toward a new-vehicle purchase."(The New York Times; free registration required)

Making the Best of Your Severance Package
Excerpt:"The intricacies linked with parting packages vary from the financially significant (CEOs have sued former firms for hefty unpaid bonuses) to the more common (laid-off friends and family berate themselves for not asking for more money, a reference -- or even that e-mail contact list -- before signing off on a termination agreement). Like estate planning, severance is a topic few want to think about. But layoffs and buyouts abound these days, so it's vitally important to devise severance-talk tactics."(USA Today)

[Guidance Overview] EEOC's New Guidance on Severance Agreements
Excerpt:"This policy document is not an EEOC regulation or even an enforcement guidance, but it summarizes, from the EEOC's perspective, existing legal requirements for severance agreements under the Americans with Disabilities Act (ADA), Title VII, the Equal Pay Act (EPA), and, in particular, the Age Discrimination in Employment Act (ADEA). The publication does not appear to be intended to change existing regulations, but employers should anticipate that the EEOC will refer to the document when investigating charges or pursuing lawsuits that involve releases."(Littler Mendelson P.C.)

[Guidance Overview] EEOC's Guidance on Waivers of Discrimination Claims
Excerpt:"The technical assistance document is directed primarily toward employees and includes a checklist of steps employees should take when they are offered severance benefits in exchange for a waiver of claims. It states that in order for a waiver of discrimination claims to be valid, it must: Be knowingly and voluntarily signed by the employee; Provide consideration, such as additional compensation, in exchange for the waiver; Not require the employee to waive rights that may arise after the date the waiver is signed; Not require the employee to waive other claims that may not be waived as a matter of law, such as claims for unemployment compensation, workers'compensation benefits, claims for health insurance benefits under COBRA, or claims with regard to vested benefits under a retirement plan governed by ERISA; Otherwise comply with applicable state and federal laws[.]"(Faegre&Benson)

[Guidance Overview] EEOC's Employee-Friendly Guidance on Separation Agreements
Excerpt:"Most U.S. employers continue to offer downsized employees severance benefits in exchange for a release of claims. Recognizing this, the U.S. Equal Employment Opportunity Commission (EEOC) issued new guidance on July 15, 2009 titled Understanding Waivers of Discrimination Claims in Employee Severance Agreements. In form, EEOC's new Severance Agreement guidance is unusual in that it is directed to employees in a Q&A format."(Seyfarth Shaw LLP)

[Guidance Overview] EEOC's New Guidance on Discrimination Waivers and Releases
Excerpt:"On July 15, the Equal Employment Opportunity Commission (EEOC) issued a new guidance document concerning discrimination waivers and releases contained in employee severance agreements. The full text of the guidance, titled'Understanding Waivers of Discrimination Claims in Employee Severance Agreements'(EEOC Guidance), is available online at www.eeoc.gov/policy/docs/qanda_severance-agreements.html. The EEOC Guidance does not dramatically change the EEOC's detailed regulations concerning age discrimination waivers and releases, which center around the complex requirements imposed under the Older Workers Benefit Protection Act of 1990 (OWBPA). However, the new EEOC Guidance is important in several respects . . . ."(Morgan, Lewis&Bockius LLP)

[Guidance Overview] EEOC Issues Employee Guidance on Waivers in Severence Agreements
Excerpt:"[M]ost important for the EEOC and for employers, the guidance explains in several parts that these waivers do not bind the EEOC, that they cannot be used to limit employees from filing charges even if the waivers are enforceable against the employees in court proceedings, and that any effort to do so or recover the consideration (usually severence) could be considered retaliation, which the waiver won't cover."(Workplace Prof Blog)

[Guidance Overview] Understanding Waivers of Discrimination Claims in Employee Severance Agreements
Excerpt:"To minimize the risk of potential litigation, many employers offer departing employees money or benefits in exchange for a release (or'waiver') of liability for all claims connected with the employment relationship, including discrimination claims under the civil rights laws enforced by the Equal Employment Opportunity Commission (EEOC) -- the Age Discrimination in Employment Act (ADEA), Title VII, the Americans with Disabilities Act (ADA), and the Equal Pay Act (EPA).[2] While it is common for senior-level executives to negotiate severance provisions when initially hired, other employees typically are offered severance agreements and asked to sign a waiver at the time of termination. When presented with a severance agreement, many employees wonder: Is this legal? Should I sign it? This document answers questions that you may have if you are offered a severance agreement in exchange for a waiver of your actual or potential discrimination claims."(U.S. Equal Employment Opportunity Commission)

[Guidance Overview] Severance Plan Is Subject to ERISA When Employer Discretion and Ongoing Demands on Employer's Assets Are Present
Excerpt:"EBIA Comment: Depending on the nature of plan administration, a severance plan may or may not qualify as an ERISA welfare benefit plan. However, the state of the law is not clear, and the many court cases on this issue have created a range of fine distinctions on which the determination turns. In general, courts will determine that a severance plan is subject to ERISA where the plan requires both an administrative scheme and sufficient employer discretion (e.g., to determine when severance benefits are payable or in identifying eligible employees)."(Employee Benefits Institute of America)

A Review of Judge Sotomayor's Second Circuit ERISA Cases
Excerpt:"Five of the Second Circuit opinions authored by Judge Sonia Sotomayor deal with the Employee Retirement Income Security Act (ERISA). ERISA cases aren't considered as sexy as a lot of employment law cases, but the number of such cases is growing. The U.S. Supreme Court is occasionally asked to consider a case filed under this complicated statute. Getting a sense for how Sotomayor approaches ERISA is, therefore, useful."(M.Lee Smith Publishers)

[Guidance Overview] Court Rejects ERISA Section 510 Interference Claim Because Employee Was Not Entitled to Plan Benefits
Excerpt:"EBIA Comment: The three-stage'burden shifting'framework that courts often use in analyzing ERISA Section 510 claims requires an employee to first establish a right to benefits. . . . If, as in this case, the plan documents clearly demonstrate that the employee simply wasn't entitled to plan benefits, then the claim will fail at the very first stage. Whether the employee was entitled to benefits under the plan being litigated is, therefore, one of the first things an employer should consider in defending an ERISA Section 510 claim."(Employee Benefits Institute of America)

Los Angeles Weighing Retirement Option for Reducing City's Workforce
Excerpt:"Looking to avoid the need for layoffs and furloughs, Los Angeles Mayor Antonio Villaraigosa and the City Council are weighing a plan to offer early retirement to thousands of city workers, some of whom would receive an incentive of at least $15,000 to leave. As it attempts to close a $530 million budget gap, themayor's bargaining team hopes to reduce the workforce by 2,400 while giving no pay increases for most civilian employees in the next two years, according to several sources familiar with the confidential salary talks"(Los Angeles Times)

[Guidance Overview] Court Denies Penalties for Document-Request Failure When Participant Not Harmed
Excerpt:"EBIA Comment: It should be noted that courts disagree on whether a participant or beneficiary must show harm from a failure to provide documents in order to be awarded ERISA penalties. Most courts appear to consider the presence of prejudice or bad faith as only one factor in determining whether penalties should be imposed for a failure to produce documents. Although this court emphasized the employee's failure to take follow-up efforts to obtain the requested documents, other courts have reached the opposite conclusion, reasoning that the purpose of these penalties is to punish plan administrators who do not comply with requests for documents."(Employee Benefits Institute of America)

[Guidance Overview] Pfizer Dealt Setback in Severance Benefit Court Battle
Excerpt:"A federal judge in New Jersey ruled against Pfizer in a dispute over severance benefits arising out of the deal for it to acquire rival Pharmacia. U.S. District Judge Stanley R. Chesler of the U.S. District Court for the District of New Jersey asserted that Pfizer improperly denied $158,250 in benefits to former Pharmacia Corp. Director Vasantha Nair when Nair was stripped of her job responsibilities. Chesler rejected Pfizer's argument that Nair maintained the same job title and compensation and did not suffer a demotion as a result of the deal; a demotion is often a triggering event to pay benefits."(PLANSPONSOR.com; free registration required)

Delta Pilots Union OKs Buyout Plan
Excerpt:"Delta Air Lines Inc. and its pilots union have come to a tentative agreement on an early retirement program to eliminate an unspecified number positions. In a Wednesday memo to pilots, Delta pilots union chairman Lee Moak said eligible pilots who elect to retire could receive up to nine month pay and benefits as part of an early-exit program."(Atlanta Business Chronicle via bizjournals.com; free registration required)

Getting it Right in Reductions in Force: How to Minimize Legal Risks (PDF)
8 pages. (Employee Benefit Plan Review via Jones Day)

Chrysler Expands Worker Retirement and Separation Plan
Excerpt:"Chrysler LLC will expand its retirement and separation program for employees at seven facilities it is set to close before December 2010 as part of its restructuring plan. . . . The company will close eight facilities, but employees at its Detroit Axle plant won't get the expanded separation program because they are being transferred to a Marysville, Mich., facility scheduled to open next year. The retirement and separation program window has been extended until May 26, and job cuts will take place a day later."(The Wall Street Journal)

[Guidance Overview] Two More Circuits Change Their Standard of Review Analysis Based on Supreme Court's Glenn Decision
Excerpt:"EBIA Comment: The circuit courts continue to adjust their standard of review analysis in response to the Glenn decision. It may be difficult to predict whether the Glenn analysis would change the outcome in a particular case, but it clearly seems to have that potential."(Employee Benefits Institute of America)

Delta Proposes Retirement Incentive Plan to Cut Pilot Staffing
Excerpt:"Delta Air Lines has proposed to cut pilot staffing by offering incentives for pilot retirements, according to a Delta pilots union memo. Delta management proposed the retirement incentive program to the Air Line Pilots Association at Delta to address'what management perceives to be a pilot staffing overage,'according to the Friday memo. . . . Delta said it is trying to avoid involuntary job cuts resulting from economic conditions and working with the pilots union'to ensure we have any flexibility needed'while cutting flight capacity to adjust to demand. Under the terms of the proposal, pilots who are eligible would get a severance payment, retiree travel benefits and medical and dental benefits for a limited time. Eligibility would depend on age and length of service."(The Atlanta Journal-Constitution)

[Guidance Overview] Section 510 Claims Defeated by Causation Defense
Excerpt:"Giordano v. Thomson, 2009 U.S. App. LEXIS 8887 (2d Cir. Apr. 27, 2009), which I reviewed today on erisaboard.com, reveals a few interesting points about executive severance compensation disputes. The facts are colorful and the rather short opinion is worth the time it takes to read."(Roy Harmon III via Health Plan Law)

[Guidance Overview] Summary of Recent Federal Employment Discrimination Law Cases Involving Employee Benefit Plans
21 pages, by attorney Andrew Stumpff. Prepared April 2009. Includes cases on age, gender, pregnancy and disability discrimination. Excerpt:"This represents a survey of recent court decisions involving the intersection of employment discrimination law and employee benefit law. Cash balance plan litigation is omitted, as are cases involving only ERISA Section 510. Case summaries are limited to only those parts of the decisions that relate to the interplay of employee benefits and employment discrimination law."(Stevenson Keppelman Associates)