Sheila Aiken October 13th, 2008
Most employers are aware of the common “discrimination” claims brought by employees or former employees like gender, race, disability, and age. However, there is another not so well-known anti-discrimination/retaliation claim under the Employee Retirement Income Security Act (ERISA) that is becoming more and more prevalent.
ERISA §510 states that “It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan”. This provision provides protection to employees from adverse action by an employer in order to interfere with the attainment of rights under ERISA or in order to stop a participant from availing himself/herself of rights under ERISA.
Historically, ERISA §510 claims have been most often asserted in relation to retirement/pension plans. However, recent cases have been brought under ERISA §510 in relation to health and welfare plans. Claims for ERISA §510 violations occur most often when an employer has terminated an employee, and the employee claims that the termination was in anticipation of the employee making a claim under a benefit plan or becoming eligible for benefits under a benefits plan.
A recent case, Rodrigues v. The Scotts Co., LLC., involved an employer who had a company policy that prohibited its employees from smoking at any time. One employee was terminated shortly after being hired after he tested positive for nicotine. The employee brought several causes of action against the employer, one of which was a claim of an ERISA §510 violation. The employer moved to dismiss the claim, but the district court denied the motion and allowed the case to proceed, stating that the key inquiry is whether the employment action was taken with the specific intent of interference with the right to a benefit.
In order for an employee to prevail under a claim of an ERISA §510 violation, he/she must prove that the employer’s adverse employment action was taken with the specific intent to interfere with the employee’s rights or benefits under an ERISA plan. This means that the loss of benefits was the motivating factor behind the adverse employment action, not merely a consequence of the action. As with other employment discrimination causes of action, if the employee can make an initial showing of a prima facie case for intentional interference, then the employer must prove that there was a legitimate, non-discriminatory basis for their action. If the employer succeeds, then the employee is then required to offer proof that the employer’s legitimate, non-discriminatory reason is a mere pretext. Because the requirements to maintain an ERISA §510 action mirror many other employment discrimination causes of action, they are often brought in conjunction with other causes of action.
As companies continue to explore ways to decrease their operational expenses, benefit costs may seem to be an easy area in which to realize cost savings. However, employers need to be cautious in the criteria used for making benefit reduction decisions. ERISA § 510 claims seem to go hand-in-hand with employment discrimination claims such as age discrimination. Before making any decisions about reducing benefits costs, employer should consult with benefits counsel to ensure that any actions taken aren’t in violation of ERISA.