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I was just handed a Reduction in Force notification with a

Severance Agreement and General Release...
I was just handed a Reduction in Force notification with a Severance Agreement and General Release. May I ask for added benefits since the severance does not equal the policy. As well, I was bridged back to my date of hire when I left the company and do meet the requirements for retiree health and welfare benefit plans; however, the Company is not offering this option to me. My Hire Date and bridging date ERISA is March 21, 1999. The requirement is that I be 55 years of age with ten years of vesting service at the or 62 with 5 years of vested service. I am 61.5 years of age with 14 years of service dated back to hire date. The Company is stating that I am not eligible because in January 1, 2011, they changed the vesting rule to "consecutive years of service" with only less than a one year break in service. I had a break in service in 2004 when I left the company for 1 year and 2 months. Upon return to employment at the Company, my ERISA date retried back to Original Date of Hire thus making me eligible prior to the change in policy (in other words - grandfathered). The Company attorneys told the HR department that they must "notify" in writing all employees regarding the new vesting rules "continuous years of service" but the Company did not. However, the Company did update their plan document to reflect these rules. What is your opinion of severance eligibility and vesting rules and can I ask them for consideration in re-writing the severance policy based upon the facts presented here? Thanks
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Answered in 2 hours by:
9/5/2013
socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 39,498
Experience: Retired
Verified
Hello,

An employee cannot be divested of a prior vested right under a qualified ERISA retirement plan. Such an action would be conversion (civil theft) by the plan administrator, and a breach of fiduciary.

These types of issues are horribly complex to litigate. More than likely, if you hire a lawyer to send a demand letter to the plan administrator threatening legal action for a violation of the plan administrator's ERISA fiduciary obligations, the administrator may just decide to grandfather you into the plan, rather than risk a lawsuit.

You could also complain to the U.S. Department of Labor -- Employee Benefits Security Adminitration (EBSA), and request an investigation. However, EBSA frequently "bails out," unless a violation is very obvious -- so, I can't say that EBSA will follow through and force the retirement plan to accept your position.

But, if you don't want to spend money on your own lawyer, then the EBSA complaint is the only other option (n.b., the IRS has the authority to investigate -- but, the service has never created any regulations that permits it to represent taxpayers. Instead, EBSA handles all complaints by current and former employees.

In short, I think you have a good claim against the employer, regardless of any notice provided during your employment concerning a change in vesting rights. But, you may have to put up a fight to get what you deserve.

If you need the link to the EBSA complaint webpage or to a lawyer referral service, please let me know and I will be happy to provide.

Hope this helps.
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Customer reply replied 4 years ago

Also if you can provide me with a statement that I might make to my employer in response to the Severance and General Release statement that would be great.


 


Yes, of course, I could use the EBSA complaint webpage and if you could provide a lawyer referral service, that would be great. I appreciate it very much.


 


Thanks for your help!


 


P. S. May I ask you about ADEA as I do believe I am the only one that was let go based upon the elimination of my job category. However, we do have one temporary persona and one part-time person in the department who were not laid off and continue to work. Is this discrimination as well? The Company just finished with a Voluntary Retirement Enhancement Program effective 9.1.2013 and I do believe they used the "continuous service" rules and I am quite certain they did not apply the "vesting" rule for those folks who had been employed for 30 years or more as well as not providing a notice to employees about the change to "continuous service" albeit you did indicated above that the notice was not contingent upon the vesting rights.


 


Thanks for your reply in advance.

Also if you can provide me with a statement that I might make to my employer in response to the Severance and General Release statement that would be great.

 

A: You would have to write something directly onto the "Severance and General Release:" e.g.,

 

  • Notwithstanding any other terms and conditions of this agreement, or any other agreement which I may have entered into with [name of employer] or said employer's ERISA-qualified retirement plan(s), nothing in this agreement shall affect my right, title and interest in and to any employee ERISA-qualified retirement benefits, nor my right to seek legal redress of any dispute over such benefits.

 

Yes, of course, I could use the EBSA complaint webpage and if you could provide a lawyer referral service, that would be great. I appreciate it very much.

A: EBSA Complaints; Lawyer Referral Services.

 

Thanks for your help!

P. S. May I ask you about ADEA as I do believe I am the only one that was let go based upon the elimination of my job category. However, we do have one temporary persona and one part-time person in the department who were not laid off and continue to work. Is this discrimination as well? The Company just finished with a Voluntary Retirement Enhancement Program effective 9.1.2013 and I do believe they used the "continuous service" rules and I am quite certain they did not apply the "vesting" rule for those folks who had been employed for 30 years or more as well as not providing a notice to employees about the change to "continuous service" albeit you did indicated above that the notice was not contingent upon the vesting rights.

 

A: If the employer is forcing persons age 40 or older to retire, then that is age discrimination. If the employer is forcing you to retire because you are age 40 or older, then that is age discrimination. If you believe that there is a pure age component to the reduction in force, then you would file a complaint with the Department of Fair Employment and Housing (DFEH). This is in addition to any other complaint that you might make, though an employment rights attorney could handle all of these complaints in one basket.

 

Note that if you sign a general release, then you will be waiving your rights re age discrimination under the ADEA or California Fair Employment and Housing Act (FEHA).

 

Hope this helps.

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Customer reply replied 4 years ago

Thank you so much for the helpful information along with the statement regarding ERISA. I will use this in my response to the GRA; however, maybe I should try my own terms first before doing so. They may say "no" to my request in my own words but then I could use this language to relay to them the fact that I could take another avenue such as your statement. Although, it may make them realize that an attorney was sought. If I feel that I should receive more than the Severance amount, what should I say in this regard please? Also, the Voluntary Retirement Enhancement Program was voluntary but they used the incorrect vesting rules to apply to those the group of folks they offered the program too. This would then have allowed others to voluntarily retire rather than leave them out completely thus these folks (such as me) were not given that chance. As far as ADEA is concerned, perhaps if I was singled out, and in the department there is a part-time person and a temporary who still remain employed, how would this affect me having been laid off....is this discriminatory? Shouldn't those with less seniority have been laid off and lessor title been laid off if they work in the same capacity as me? Titles vary of course but they are temp and part-time and I was full-time. Thanks for your reply once again. I appreciate it.

If I feel that I should receive more than the Severance amount, what should I say in this regard please?

A: The employer has no legal obligation to pay any severance. The employer's interest is in avoiding liability. You will have to show the employer that what you are requesting is in the employer's interest, because it is at risk with respect to you in a manner that could expand to other employees similarly affected by the employer's previous decisions. That's about all I can provide in this area.

Also, the Voluntary Retirement Enhancement Program was voluntary but they used the incorrect vesting rules to apply to those the group of folks they offered the program too. This would then have allowed others to voluntarily retire rather than leave them out completely thus these folks (such as me) were not given that chance. As far as ADEA is concerned, perhaps if I was singled out, and in the department there is a part-time person and a temporary who still remain employed, how would this affect me having been laid off....is this discriminatory?

A: Age discrimination occurs where an employer takes an adverse employment action against an employee who is at least 40 years of age, and the adverse action is based in some part upon the employee's age. The typical trigger is that an older employee is replaced by someone substantially younger (the younger the better -- but there is no bright line). Employers try to avoid this result by creating an reduction in force algorithm which is based "reasonable factors other than age" (RFOA). The plaintiff must show that the impact on older workers is substantially greater than on under-40 workers.

There's no way to analyze this in advance. Plaintiff's attorney and/or DFEH must review the reduction in force algorithm and see if it disparately impacts 40+ age workers.

Shouldn't those with less seniority have been laid off and lessor title been laid off if they work in the same capacity as me?

A: Not necessarily. See above.

Titles vary of course but they are temp and part-time and I was full-time. Thanks for your reply once again. I appreciate it.

A: You're welcome and good luck.
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Customer reply replied 4 years ago

Also, the Voluntary Retirement Enhancement Program was voluntary but they used the incorrect vesting rules to apply to those the group of folks they offered the program too. This would then have allowed others to voluntarily retire rather than leave them out completely thus these folks (such as me) were not given that chance. As far as ADEA is concerned, perhaps if I was singled out, and in the department there is a part-time person and a temporary who still remain employed, how would this affect me having been laid off....is this discriminatory?

A: Age discrimination occurs where an employer takes an adverse employment action against an employee who is at least 40 years of age, and the adverse action is based in some part upon the employee's age. The typical trigger is that an older employee is replaced by someone substantially younger (the younger the better -- but there is no bright line). Employers try to avoid this result by creating an reduction in force algorithm which is based "reasonable factors other than age" (RFOA). The plaintiff must show that the impact on older workers is substantially greater than on under-40 workers.

There's no way to analyze this in advance. Plaintiff's attorney and/or DFEH must review the reduction in force algorithm and see if it disparately impacts 40+ age workers.


 


May I incorporate a statement into the GRA that would reflect a potential lawsuit so that I might receive the $50 K that they gave the other recipients of this "voluntary" retirement enhancement program?


I do believe that they did not use the correct parameters in determining the group of people who were given this option. As well, this program was used to promote younger folks as the Company does not have a career path for folks as the older folks stay for many reasons as well as the economics of today. Anyway, the ages were 55 with 10 years and 62 with 5 years. I am certain they will not promote until six months or a year has gone by; however, plan was voluntary so I may not have any recourse in touching the $50k but could possibly (with a statement you can perhaps provide) give them the option that the correct general population was not given the opportunity to apply voluntarily. Again, you are great and I thank you in advance for your reply.

May I incorporate a statement into the GRA that would reflect a potential lawsuit so that I might receive the $50 K that they gave the other recipients of this "voluntary" retirement enhancement program?

A: You can incorporate whatever you want. However, in my experience, unless the employer first believes it is at risk, it will simply reject any attempt by you to incorporate anything into the release language. The person who will be asking you to sign will not be a lawyer -- it will be an HR rep who has received instructions about how to handle any dispute. And, the standard instruction is to dismiss out of hand any attempt by an employee to negotiate anything. That's how employers operate. They don't submit to employee control under any circumstances, unless or until they perceive a substantial risk.

I'm not suggesting that your position is weak. I'm merely reinforcing what we all know to be true: employers are control freaks and they do not negotiate terms and conditions with an employee over any issue without a clear risk. And, as you are neither the government nor a lawyer, your employer is going to ignore everything you propose, and instead, the HR rep will keep pushing that release in front of you and say, "I'm not authorized to negotiate this release. Take it or leave it."

In my view, the only way that you will get the employer's attention is to either complain to government or hire a lawyer to contact the employer and attempt to negotiate. Otherwise, the employer will view your negotiating positions as uninformed and of no consequence, and you will be ignored.

I realize that you want to "do-it-yourself" this matter. You're entitled to try, but don't be surprised that your "best laid plans" are wasted on a "bean counter" who will simply plead ignorance, and wait for you to surrender and sign the release as offered.

Hope this helps.
Ask Your Own California Employment Law Question
Customer reply replied 4 years ago

Thank you for your response. I used the referral service to obtain an attorney. Actually having talked with an attorney, the attorney feels that I have a great lawsuit under wrongful termination as there are greater damages in which to file and obtain. I will be making a request to my employer for retiree benefits as well as how the severance was calculated. If my request is denied, I will follow the appeals approach and then obtain the attorney as noted by you. I thank you very much for your help in this matter as I can always go the ERISA route in the future outside of signing the GRA. This makes me feel so much better. I have also requested my employee file for further reference. Again, thank you for your excellent help - consideration and timeliness in reply. Patricia

You're welcome. I think your employer will probably buckle and pay you in the manner to which you originally were entitled.

Best wishes.
socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 39,498
Experience: Retired
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