Disability Retirement and Definition of "Employment"

[Christine Roberts]

Can anyone weigh in on how the term or concept of "employment" is defined under ERISA? Specifically, that "employment" is always meant to exclusively refer to the employment relationship between the participant and the employer sponsoring the DB plan, and not some other employment relationship.

The reason is as follows: DB plan permits a disability retirement payout if a participant terminates "employment" on account of a disability. A former employee is requesting a disability retirement benefit but it appears that she terminated employment with the plan sponsor for reasons other than disabilty, but later became disability.

Presumably, the term "employment as used in this context means only "employment" between the plan sponsor and the participant. But what statute, regulation, or published opinion supports this assumption?

Any and all comments appreciated.

[david rigby]

Sidestepping your initial question, I have seen this several times. In all cases, it is handled by reference to the plan document, assuming the document includes language similar to what you suggest: "employment is terminated due to disability".

If disablement occurs at a date when the participant is no longer an employee, isn't it obvious that the plan provision is not met?

[Christine Roberts]

Well, the reason it bounces back is that plans don't usually define "employment" in this context as "employment with the plan sponsor." This allows the participant to claim that they indeed terminated "employment" in the abstract, due to the disability; i.e., they no longer work at the job they held at the time they were disabled.

What I am finding is that you can usually work your way through various defined terms (e.g., service, hour of service) in a way that eventually leads to a reference to the plan sponsor as the "employer" for these purposes. But it would be nice to have some external authority for this.