Arbitration Clause in Deferred Comp Plan

[Guest sjb]

I am surprised to see an arbitration clause for participants in the NQDC plan I'm reviewing.

As a ERISA Part 5 jurisdiction plan I would think DCP participants could file directly into federal court after the 503 procedures and ignore the arbitration language entirely.

Anyone use similar clauses and what's the result you think you'll get? Thanks.

[mbozek]

Not true. A few years ago in the Circuit City case the US Supreme Ct upheld the right of an employer to require mandatory arbitration as a condition of employment to resolve disputes arising under federal employment laws under the theory that the Federal Arbitration Act encourages the use of arbitration to resolve disputes. Since ERISA does not preempt other fed laws an employer can require mandatory arb to resolve a claim under ERISA. The only question is whether the insertion of the arb clause in the plan is sufficient to foreclose the employees rights. In the CC case the employee had to sign a form agreeing in advance to arbitration. In employment contracts with arb clauses the employee signs on to the terms.

[Guest sjb]

In looking at the history of cases, particluarly CHAPPEL in the 9th circuit, it seems Courts see the distinction between participant claims arising from terms of the agreement - as arbitrable, vs. alleged statutory violations of ERISA, non-arbitrable.

CHAPPEL has a fairly good discussion of the special notice issue.

mbozek, thanks for the post.

[Guest svatty]

Also remember that some nonqual plans are subject to the ERISA claims procedure regulations. The new regulations do NOT permit binding arbitration (although arbitration can be one of the 2 steps in claim adjudication).