Legal Options for Denied Benefits Case

[Guest slufoot2000]

Hello,

I submitted my resignation with my former employer in late October, 2003. In my resignation email, I stated my last day would be January 1, 2004. My former employer agreed to this resignation date (via email). During the month of December 2003, my former employer asked me several times to assist the company by working 2 weeks into January, 2004. I agreed to this extension and arranged my schedule to accommodate him.

On December 30, 2003 I was working my regular shift (3pm-midnight) and my employer arrived into the office around 7pm and told me he had decided to let me go tonight. I told him I wanted to work into January and he said this is the last night I will be working. He prepared a resignation letter for me and said the only way I would receive my paycheck would be to sign the letter.

When I contacted him around the middle of May 2004, he stated since I did not work through the last day of the plan year (December 31, 2003), I'm not entitled to the contribution. He stated a specific page in the SPD which has the last day rule clause. The only problem is the original SPD document which my employer gave me, just happened to be missing that page. Its skips from page 2 to 4 and does not contain the last day rule page.

I still have the original SPD and I also have a signed letter by an ex-employee stating he heard the employer say he was going to terminate me on the night of December 30, 2003. I also have copies of the so-called resignation letter, which the employer prepared, an email which I sent to the employer stating my documented resignation sent in late October. In my resignation email, I state I will be leaving the company on January 1, 2004. The employer also replied to the email confirming this date. I also have a company schedule from December 30, 2004 and it has me scheduled to work all the way through January 3, 2004.

I have already made my initial claim (denied) and have recently filed my claim appeal also. Since I have not been notified, I don't believe I will be receiving my contributions.

With all of this evidence, do you guys think I have a legitimate case to bring a wrongful termination suit against the employer? I also wanted to know the details about contacting the labor board and having them contact the employer regarding these issues. Is this possible?

My total employment was from 5-11-2000 to 12-30-2003.

Thanks,

Slufoot2000

[david rigby]

Is the amount significant enough to engage a lawyer? Would it be vested?

I'm no expert, but I thought that once you submit a resignation, it is the employer's decision whether to honor your request for a "last day of employment".

[Guest slufoot2000]

Pax-

The amount will be under $10K, so the legal fees would probably not justify it. What are my options for contacting the board of labor to investigate further and hopefully resolve this without going to court?

The main issue with the resignation is whether or not the employer specifically let me go to avoid paying me the benefits. Which in this case, I have pretty good evidence pointing in that direction.

Thanks,

Slufoot

[Guest FormsRmylife]

You should also ask for a copy of the full plan document. It will show whether the last day of the plan year has been a contribution allocation requirement all along or not. If the employer fails to provide for a number of months, the penalty fee an attorney could sue for might help pay for your lawsuit.

If the document is promptly provided, you loose nothing by contacting the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington D.C. 20210. Generally the DOL PWBA will just help obtain a copy of the SPD, but you might be able to convince them to write a letter of inquiry to your former employer based on your fact situation.

[david rigby]

...except that you should remember that the PWBA has a new name: Employee Benefits Security Administration.

http://www.dol.gov/ebsa/

[No Name]

Were you entitled to any vacation time that was unpaid? You may be able to argue that your last day was the last day of your unused vacation time.

[mbozek]

The terms of the plan determine whether you will be entitled to the benefit and the plan admin must provide you with the specific section of th plan that is the basis for denying your claim. While you can contact the EBSA, the govt does not usually get involved in matters which involve plan interpretation, e.g., whether the terms of the plan permit denial of the accrual. The employer can charge you 25 cents per page for the plan document you request.

[Guest slufoot2000]

The original SPD my employer gave me was incomplete and did not contain the 1 page which explained the last day rule details. That specific page stated, "You must be employed on the last day of the plan year", which was December 31, 2003. Unfortunately, I did not notice this missing page until after I was terminated and when I asked for the distribution from my employer. I then requested the complete SPD along with the annual summary report. I received the full copy of the SPD and I'm still waiting on the annual summary report, which will basically state how much the contribution actually will be. One of the biggest pieces of evidence of my case is the signed letter written by a formal employee who overheard the employer state on December 30th, that he would be terminating me that night and he had also suddenly changed the schedule. This witness is also willing to testify in any future litigation.

I spoke with the EBSA earlier regarding these issues and it really does not sound like they want to get into contact with the employer at all. They basically said they are there to give the procedural advice for filing claims and appeals. Once it goes past this, they basically hinted at the last resort would be a lawsuit. I really don't understand why the EBSA can't simply review the evidence of the case and decide to take action if they see an issue. Do they ever step in and contact the employer?

Its been about 2 weeks since I have filed my claim appeal and I have not received a response from the employer. Since this case deals with a California company, should I contact a state ERISA attorney or a federal one? Does anyone have any recommendations on a good attorney?

Thanks,

Slufoot

[david rigby]

By now means exhaustive, this website contains some listings of professionals:

http://benefitslink.com/yellowpages/attorney.html

You may also benefit by contacting a local or state lawyer referral service.

[Guest Pensions in Paradise]

You stated that the amount in question is less than $10,000. How sure are you of that amount? Also, based on your period of service, and assuming the plan has a "standard" 6-year graded vesting schedule, you would be 60% vested in your account. Even if your allocation for 2003 would have been $10,000 (which I seriously doubt), you're only vested in $6,000. Not to say that that is not a lot of money, but attorney fees would be much more than that if you were to file a suit and lose.

Sad life lesson - never give your employer advance notice of your resignation if it can impact any type of benefit/entitlement.

[Jon Chambers]

While pax's list includes some very good law firms, the firms I recognize in California do primarily defense work. You are probably more interested in plaintiff oriented firms. You may want to try Lewis & Feinberg in Oakland, or Ron Dean in Los Angeles. But as the others note, this claim is quite small, so legal fees may not be worth it.

[401 Chaos]

Slufoot2000, Afraid I do not have much new to add to the others' advice except to say that it may be worth pursuing with a plaintiff's attorney whether they would be willing to follow up on your denial (assuming your appeal is denied) by writing a letter on law firm letterhead requesting copies of the plan document, the SPD version distributed to you, the corrected or current SPD language, and other relevant information generally available to participants of ERISA plans. The law firm would not have to stake itself out to any particular argument or theory at that point, just send a letter showing the employer that you are still willing to pursue this issue. Crafting such a letter shouldn't require that much in legal fees or copying expenses and may get more attention than if you requested the documents or made follow up inquiries. I do not know much about California wage and hour law either but the threat of not providing a paycheck without signing the resignation letter sounds like something your lawyer might want to ask about as well or throw in as a possible California Department of Labor complaint. I would think that might be particularly true if all the facts are as you indicated and somebody higher up in the company or their counsel reviews these issues. If you cannot find a lawyer to do this for you at a reasonable rate, it may still be worth your time following up directly with somebody else and raising various of these issues including threats of going to the California Dept. of Labor and the EBSA even if they are not likely to take up your cause. Sounds like you don't have much to lose at this point. You may even want to suggest that you would be willing to drop this if they make you whole for the amounts outside the plan so you don't get tied up on the last day of the year requirement.

[Guest slufoot2000]

Hey Guys,

Thanks for all of the info.

I have already requested and received all of the information about the profit sharing plan (Plan Document, SPD, etc). I contacted an attorney which has already cost me about $500 to meet and review the case. Unfortunately, the attorney I spoke to ended up not wanting to take the case merely because of the small amount of money the case involved. I had already asked this attorney to file our claim appeal on their company letter as a "scare" tactic to the employer. The attorney denied this request since they did not see a future in representing me. I ended up sending the claim appeal about 2 weeks ago and included all the evidence (employee letter, etc.).

In 2002, the profit sharing plan distribution totaled $8,500, which I received 60% of. I would imagine the 2003 distribution being around $10-12K, since the company had a little better year. Since the time and money involved to fight in court would not justify capturing only $6-7K in distribution, its not looking very good for taking the litigation route. I would like to write directly into the Dept. of Labor and EBSA regarding this issue. I want to send them all of the evidence I have collected, since its pretty easy to see how deliberate the termination was and the true intentions on behalf of the employer to keep me from receiving my benefits. Does anyone have experience in contacting them on an issue like this? Is it even worth looking into?

Thanks,

Slufoot2000

[Guest Pensions in Paradise]

I personally don't think you should waste any more time on this issue, but if you insist on proceeding, you may want to verify your vesting under the plan. You mentioned that you received 60% of the 2002 contribution. Sounds to me like a really small company then. If that is the case, your termination of employment might have triggered a partial plan termination which would entitle you to 100% vesting. The ballpark for a partial plan termination is about 20%, so if your plan covers five or fewer people, you might have a case for being fully vested in your prior benefits.

[Jon Chambers]

PIP--it will be hard to argue that layoffs triggered a partial termination, when slufoot2000 resigned. Nice idea, but don't think it would work. I'd considered suggesting an argument that the termination was intended to prevent the accrual of an ERISA protected benefit, but believe this argument also doesn't fly due to the resignation. This all goes to remind EVERYONE that when benefits are in doubt, an early resignation is a bad idea.

[401 Chaos]

Jon, I know the initial notice of resignation here (in October) was early but if Slu was professional about this and gave only a 2-week notice, Slu could have still been forced to resign on the 30th. Other than giving the boss more time to line up a replacement, there does not really seem to be anything about the "early" nature of the resignation that caused the problem. The problem here was that the boss was a jerk. In hindsight I suppose Slu should have waited until Jan 1 to give notice and then could have stayed only the bare minimum that seemed absolutely necessary.

Slu, Given that you've already had a California lawyer review this, I'll admit that the case does not sound promising. I seriously doubt the email correspondence you have regarding your January 1 resignation date (or agreements to extend that) could give rise to an argument that somehow you were employed in anything other than an at-will status. In such cases, an employer can fire you pretty much any time for pretty much any reason. Although the motivation for the timing here may seem pretty obvious, you just ran into a real jerk of a boss. If you haven't gotten anywhere on the ERISA front so far, I doubt you will find anybody at EBSA or other federal governmental groups willing to take up your cause. The only other thing I can think of might be to push more at the state level regarding the threat to withhold your final paycheck if you did not sign the resignation. Did your witness hear that part as well? I feel certain the actual withholding or reduction of final paychecks for certain amounts is illegal, particularly in California, and that the Dept. of Labor would frown on any employer threat to withhold a final paycheck. Since you received the check, however, it is unclear what if anything the California Department of Labor might do in response to a complaint about this. Were there any other potentially problematic practices that you noticed with your former employer (e.g., wage and hour / overtime compliance issues, etc.)? If so, perhaps you could use some of these as another shot at leveraging some additional amounts albeit not under the Plan. It's a long shot I think but if you've got the time and are already burning bridges it may be worthwhile.

[KJohnson]

Don't rule out 510. If he actually "constructively discharged" you the day before you would have been entitled to a contribution solely for the purpose of avoiding that obligation then it sounds "510-ish" to me, but I haven't gone back and looked at any cases.

[Kirk Maldonado]

I haven't researched it either, but I don't think you need constructive discharge. All you need to show is interference intended to thwart attainment of a right that the person may become entitled to under the plan.

[KJohnson]

I think the language of the Act is "discharge, fine, suspend, expel, discipline, or discriminate...for the purpose of interfering with the attainment of a right" under the Plan.

[Guest slufoot2000]

Hey Guys,

After researching section 510 , it states:

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"According to section 510 of ERISA, it is unlawful to "discharge, fine, suspend, expel, discipline or discriminate" against any person for the purpose of interfering with collection of benefits."

"In order to prevail in a claim under Section 510, the plaintiff must demonstrate that an employer made a knowing decision to interfere with the employee’s attainment of benefits. A plaintiff may use direct or circumstantial evidence to show such specific intent."

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Once of the biggest demonstrations of this discrimination is my witness (ex-employee) who is willing to testify to everything he heard the employer say on the day of the termination. Although this is great evidence, the point of taking it to court is the time and money involved in relation to the distribution to be recaptured. Other than this 60% pension distribution, does anyone see any punitive damages which could be awarded in this case?

PS- Did anyone read the Wall Street Journal article "Fund Fights" in the July 19th issue? Very good 401K article.

Laura- I left you a message with my contact details.

Thanks,

Slufoot2000

[mbozek]

In order to prevail under 510 the employee must prove that the employer action was taken with the intent to prevent the employee from getting a benefit. The fact that the employee is denied a benefit because of the employer action (e.g. termination one day before the benefit accrues) is not sufficient to prevail under 510. Otherwise every employee who is terminated before accruing full retirement benfits could claim a violation under 510.

[KJohnson]

Agreed, but the factual scenario of an employer that first agrees to a resignation date of January 1 and then "fires" an employee on December 30th with the 31st being the key date for accruing a benefit would, I think, make a plaintiff's lawyer smile, if the damages were large enough. I think you also may have the makings of a prima facie case. If so, the burden would switch to the employer to show a non-discriminatory reason. Of course the damages issue in a 510 claim post-Great West is going to be the interesting debate.

[david rigby]

Interesting discussion. From this non-lawyer, it seems the case has promising circumstantial evidence, but not very strong actual evidence. The "witness" may not be credible, and/or may be shown to have a "grudge".

[Guest slufoot2000]

Pax- Although the defense could say the ex-employee has a grudge against the employer, the ex-employee actually resigned from the job a few months ago and was not terminated. Along with this testimony, I have a copy of the letter which the employer wrote himself on the night of my termination. The employer wrote it himself, in his own words as an attempt to make it look like my resignation letter. If I would have actually decided to resign that night, I would have most likely written my own letter of resignation in my own words. Since the employer wrote this letter himself, I believe this shows direct intent by the employer to deny benefits.

Along with this letter is a schedule from the company website on December 30, which shows me working all of the way through January 3, 2004. This shows the employer new of the agreed extension into early January and modified the schedule accordingly. One of the most interesting pieces of evidence is the missing page from the original SPD which the employer gave to me. Its missing page 3 which just "happened" to be the "last day rule" page stating that I needed to work through the last day of the plan year (Dec 31) in order to receive the distribution. I would assume by not providing me with all of the SPD pages at the time of employment, this may go against his fiduciary obligations as the plan administrator.

The Fiduciary Obligations Under ERISA state:

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ERISA contains general fiduciary standards that apply to all fiduciary actions. Fiduciaries are required to discharge their duties:

1. solely in the interests of participants and beneficiaries (the exclusive benefit rule);

2. with the care, skill, prudence and diligence under the circumstances that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aim (the prudent man rule);

3. by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so (the diversification rule); and

4. in accordance with the documents and instruments governing the plan.

If such a duty is breached, a fiduciary may be held personally liable for, among other things, any plan losses resulting from the breach.

If such a duty is breached, a fiduciary may be held personally liable for, among other things, any plan losses resulting from the breach.

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Thanks,

Slufoot2000

[Guest smhjr]

In my opinion you just need to move on. Maybe you can try and get one of the local news consumer advocacy teams to go pester the employer with cameras so that he pays you.

[RCK]

In my experience, the DOL/PWBA/EBSA is a lot more interested if they get the same or similar complaint from more than one person. If you could find someone else in a similar situation (a long shot I'm sure), they might be much more interested.

We had a situation several years back where the plan of an acquisition had some administrative problems, and I was on a first name basis for quite a while with people in the regional PWBA office until we got it fixed. With the right person at the right time, I'm sure that they will be an advocate for you. I do see the resignation letter as a problem though.

RCK

[Guest slufoot2000]

Have anyone personall used the legal service called "Pre-Paid Legal Services"? Their website is located here:

www.prepaidlegal.com

I spoke with one of their reps and would like some feedback from anyone who has experience with them.

Thanks,

Slufoot2000