ERISA | Protecting Your Rights
When it comes to saving for retirement, every penny counts. This is certainly one reason why workers seek out employment opportunities with pension plans and other retirement benefits. In such a position, contributions to a retirement plan can be made by the employee, the employer, or both, depending on the terms of the employment. And, under the Employee Retirement Income Security Act (ERISA), employers are required to follow regulations when it comes to offering and distributing retirement benefits.
In some cases, it is outlined in the employee benefits that they will earn additional retirement benefits once they have been with the company long enough to become vested. Being vested in a company can be partial or complete and is tied to the number of years a person has worked for a company. For example, the company policy may say that an employee is 20% vested in the company after a year of service, at three years this may be 50%, followed by 70% at five years, and 100% after 10 years.
Some of an employer’s contributions are made independently of vested contributions. For example, an employer might offer a matching contribution up to 3% on a 401K retirement plan that goes into the employees account as long as they make the same contribution themselves. There may be a separate account that includes vested funds or, in some cases, shares of company stock. The vested funds are kept separate from others. Employees are often shown how the value of this money is growing as incentive to stay loyal to the company. However, if an employee leaves the company before being vested for any reason, including being fired, they will not see any of the contribution.
In most cases, whether a fired employee can lose their retirement funds depends largely on whether or not that money was spelled out in the original contact as being conditional based on the person’s time at the company. Since many people figure that they are hired “at will,” or for “any reason or no reason” they don’t have any recourse if they are fired. They must simply deal with the situation and move on.
But why does matter, and so does when. This is especially true for workers over 40 years old, who are protected under the Age Discrimination in Employment Act. Technically, an employer isn’t supposed to terminate for “any reason.” Firings or even layoffs need to be for legal reasons and should be legally documented. One of the protections that ERISA offers is that a person should not be let go from their job just because they are approaching the point in their service where they are about to become vested.
Burden of Proof
If a person is fired when they are in their 40s or 50s, or when they are only a few months away from being vested , it does not mean that they are necessarily the victim of discrimination. It is entirely possible that they were not doing their job. If their age or the timing in relation to being vested was a factor in their termination, though, that is not a legal reason to be let go.
The problem is that the burden of proof is on the employee to show that they were wrongfully terminated and entitled to receive the vested benefits outlined in their original contract. An employee who has been fired should be sure to ask for a copy of their summary plan description (SPD) as well as an individual benefit statement. Employees are entitled to this information based on the Consolidated Omnibus Budget Reconciliation Act of 1985. Having these agreements can help support your case and help assure that you get the benefits you’ve earned. It’s also a good idea to present performance reviews to your attorney to help prove your competency and help show that you were let go for the wrong reasons.
At May Potenza Baran & Gillepsie, we are experienced in many areas of labor and employment law, including ERISA issues. If you believe you may be a victim of an ERISA violation, contact us for a consultation.