The Wagner Law Group
Wagner Law Group, A Professional Corporation, is a nationally
recognized ERISA & employee benefits, estate planning,
employment, labor & human resources practice.
in 1996, The Wagner Law Group has 25 attorneys engaged
exclusively in employee benefits, estate planning and
employment law. Six of our attorneys are AV rated by
Martindale-Hubbell as having very high to preeminent legal abilities
and ethical standards. The firm is among the largest ERISA boutiques
in the country. Our practice is national in scope, with clients in
more than 40 states and several foreign countries.
Wagner Law Group
Fax: (561) 293-3591
7108 Fairway Drive
Palm Beach Gardens, FL 33418
East Kennedy Boulevard
Tampa, FL 33602
Francisco, CA 94104
100 South 4th Street, Suite 550
St. Louis, MO 63102
October 27, 2016
Health and Welfare Law
Employer's Severance Plan is Subject to ERISA
Fifth Circuit Court of Appeals determined, in Gomez v. Ericsson,
Inc., that an employer's severance plan was governed by ERISA
because it required ongoing administration and allowed the employer
to make discretionary decisions on eligibility and benefit amounts.
Background. In Gomez, the plaintiff was employed by
the defendant for approximately three years before being terminated
as a result of a reduction-in-force. In connection with this
termination and reduction-in-force, the employer presented the
employee with a severance agreement that required him to return all
of the employer's property and execute a waiver and release in
exchange for receiving severance pay under the terms of the
employer's two severance plans.
terms of both severance plans required that the plan administrators
calculate benefits and make initial determinations of eligibility,
including whether the employee was terminated because of a layoff or
reduction-in-force. The plan administrators were further required to
determine whether an employee was eligible to participate in one or
both of the plans. Finally, eligibility under both plans was
conditioned on an employee executing a valid waiver and release of
plaintiff executed and returned the severance agreement to the
employer. However, before returning the employer's laptop computer,
he proceeded to delete all information from its hard drive, including
work-related files. According to the employer, the deleted files were
the only source of raw data gleaned during the plaintiff's final
project. Therefore, the employer refused to pay the plaintiff
severance benefits on the basis that he failed to return company
Court Decision. Following the
exhaustion of the plans' administrative appeal processes, the
plaintiff sued the employer in federal court, claiming that the plans
were not governed by ERISA, which would allow him to file a contract
claim in state court.
trial, the district court ruled against the plaintiff, finding that
the plans were governed by ERISA. In turn, the plaintiff appealed the
decision to the Fifth Circuit Court of Appeals.
Circuit. In addressing the issue
of whether the severance plans at issue were covered by ERISA, the
Fifth Circuit explained that some severance plans are covered by
ERISA. Under Supreme Court precedent, the primary determinant is
whether a severance plan requires an ongoing administrative program
that might give rise to employer abuse or conflicting regulation of
the plan. Thus, a severance plan that requires an ongoing
administrative program is covered by ERISA.
reviewing the facts, the Fifth Circuit found that, due to the large
size of the plans (i.e., covering more than 10,000 employees),
ongoing administrative activity was required by the employer.
Moreover, the Fifth Circuit found that eligibility determinations and
benefit calculations (involving detailed formulas and offsets) under
the plans required ongoing administrative activity by the employer.
As a result, the Fifth Circuit upheld the lower court's
determination that ERISA governed the plans and the plaintiff's