During periods of economic downturn, employers, desperate to cut costs, may attempt to terminate their employees who have medical conditions or have family members who have medical conditions and are insured through the employer in order to cut back on insurance or pension costs. However, the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001-1461, offers retaliation protections to help encourage people with knowledge of potential ERISA violations to share information in order to prevent or remedy those violations. ERISA prohibits employers from discharging, fining, suspending, expelling, disciplining, or discriminating against plan participants or beneficiaries for exercising or attempting to exercise their rights under ERISA or ERISA plans, or for planning to testify or otherwise taking part in any ERISA-related inquiries or proceedings. 29 U.S.C. § 1140. ERISA § 510 provides a safeguard against employer manipulation of the employment relationship in order to interfere with rights to employee benefits.
A. Who Is Protected?
ERISA § 510 covers participants in or beneficiaries of employee benefits plans governed by ERISA. 29 U.S.C. § 1140. These participants and beneficiaries are typically employees, former employees, and members of unions or employee organizations who are eligible to receive benefits.
The benefits plan must be one that is governed by ERISA: other employee benefits programs that are not governed by ERISA cannot serve as the basis for an action under ERISA § 510, even if an employee is retaliated against for what the employee believes to be a violation of ERISA. For example, the Seventh Circuit held that a law partner who claimed that her law firm violated ERISA in several ways in connection with a program in which it did not provide dependent medical benefits but instead paid partners with dependents extra salary could not state a claim under ERISA §510 because the program was not an ERISA plan and “an ERISA plan is a condition precedent to an ERISA retaliation claim.” Bilow v. Much Shelist Freed Denenberg Ament & Rubenstein, 227 F.3d 882, 892 (7th Cir. 2001).
There are two types of employee benefit plans: employee welfare benefit plans, and employee pension benefit plans. Employee welfare benefit plans are plans established or maintained by an employer that provide welfare benefits, i.e., medical benefits, disability benefits, and death benefits. 29 U.S.C. § 1002(1). Employee pension benefit plans, often called retirement plans, are plans established or maintained by an employer that provide retirement income to employees, or which result in a deferral of income by employees for periods extending to the termination of employment or beyond. 29 U.S.C. § 1002(2). ERISA § 510 covers plan participants and beneficiaries of both kinds of benefit plans. Inter-Modal Rail Employees v. Atchison, Topeka & Santa Fe Ry. Co., 520 U.S. 510 (1997).
ERISA § 510 protects plaintiffs who have received already-accrued benefits. A plaintiff need only prove improper efforts to interfere with rights under ERISA, not actual interference, so the plaintiff’s receipt of ERISA benefits does not preclude an ERISA retaliation claim. See Majewski v. Automatic Data Processing, Inc., 274 F.3d 1106 (6th Cir. 2001) (although plaintiff failed to establish a prima facie case of interference, § 510 does protect the right to attain future entitlements to benefits and so a plaintiff’s receipt of all as-yet accrued benefits does not moot a § 510 claim).
B. Elements Of An ERISA § 510 Claim
A plaintiff must show that the alleged discrimination was intended either (1) to retaliate against the plaintiff for the exercise of a right, or (2) to interfere with the attainment of an entitled (i.e., vested) right. A plaintiff must show that the employer acted with the specific intent to violate the statute and to retaliate against the employee or interfere with an employee’s ERISA rights. See Kouvchinov v. Parametric Tech. Corp., 537 F.3d 62, 67 (1st Cir. 2008) (holding that specific intent is necessary whether the discrimination complained of is preemptive (i.e., interference) or retaliation);Bilow, 277 F.3d at 892. Thus motivation is an element of an ERISA § 510 claim. There is no cause of action where the loss of benefits was a “mere consequence of, but not a motivating factor behind, a termination of employment,” Dister v. Cont’l Group, Inc., 859 F.2d 1108, 1111 (2d Cir. 1988), or where there was merely an overlap –- possibly a coincidental one -– of an adverse job action and a recent claim for benefits. Kouvchinov, 537 F.3d at 67.
In order to state a claim, a plaintiff has two options. The first is to put forth direct evidence that the employer had the specific intent to violate § 510: that the employer’s action was at least partially motivated by the specific intent to engage in the prohibited retaliatory conduct. Since specific intent is critical to a § 510 case, but direct proof is extremely difficult to come by, courts analyze ERISA retaliation claims that lack direct proof using the same burden-shifting methodology used in employment discrimination cases. The plaintiff must establish a prima facie case by showing: (1) she was engaged in activity protected by ERISA; (2) she suffered an adverse employment action; and (3) a causal connection exists between her protected activity and the employer’s adverse action. See, e.g., Hamilton v. Starcom Mediavest Group, Inc., 522 F.3d 623, 628 (6th Cir. 2008); Csicsmann v. Sallada, 211 Fed.Appx. 163, 2006 WL 3611729, at 168 (4th Cir. 2006).
1. Protected Activity
Activity protected by ERISA includes: (a) an employee’s exercise of her rights under an ERISA-governed benefit plan; and (b) an employee’s planning to testify or otherwise taking part in any ERISA-related inquiries or proceedings (sometimes referred to as “the whistleblower provision”). 29 U.S.C. § 1140. This means that an employer may not terminate an employee for past use of company health care benefits, for example, or to avoid paying additional benefits to which the employee would be entitled if she continued in the job. See, e.g., Conkwright v. Westinghouse Elec. Corp., 933 F.2d 231-37 (4th Cir. 1991).Circuits have come to different conclusions about what activity is covered by this provision. At least one circuit has held that the planning to testify provision of ERISA extends protection to an employee’s participation in anyinquiry relating to ERISA: internal inquiries within the company as well as external inquiries. Nicolaou v. Horizon Media, Inc., 402 F.3d 335 (2d Cir. 2005). The Second Circuit observed that ERISA extends protection against retaliation in connection with “any inquiry or proceeding relating to “ERISA, and that while “proceeding” refers to the progression of a lawsuit or similar proceeding before a court, agency, or other official body, “inquiry” refers broadly to any request for information. Id. at 328-29. Therefore if the plaintiff in Nicolaou, who informed the president of the company that the company’s ERISA-governed 401(k) plan was chronically underfunded, could demonstrate that she was contacted to meet with the president in order to give information about the alleged underfunding, then the court found she would have engaged in protected activity. Id. at 330. However, the Fourth Circuit read the phrase “inquiry or proceeding” as extending only to “the legal or administrative, or at least . . . something more formal than written or oral complaints made to a supervisor.” The plaintiff’s actions in Nicolaou would probably not be covered under this standard. King v. Marriott Int’l, Inc., 337 F.3d 421 (4th Cir. 2003).
2. Adverse Employment Action
Adverse employment actions enumerated in ERISA § 501 are discharge, fine, suspension, expulsion (termination), discipline, or discrimination. 29 U.S.C. § 1140. Discharge is by far the most common form of adverse action in ERISA retaliation cases, but other types of discrimination are also considered adverse actions.“Discrimination” is not defined by the statute. The circuits have come to different conclusions about whether to interpret “discrimination” the same way under ERISA as under other employment discrimination statutes, with some circuits considering “discrimination” to mean any adverse action, and others declining to extend “discrimination” to failure to hire (which is adverse action under statutes like Title VII and the ADEA). The Sixth Circuit has chosen to interpret “discrimination” to “have the same basic meaning” as discrimination under statutes like Title VII and the ADEA and thus to include “any adverse action.” Mattei v. Mattei, 126 F.3d 794, 806 (6th Cir. 1997). Similarly, the Seventh Circuit has recognized that the purpose of § 510 is, in part, to prevent employers from “harassing” their employees to intimidate them and thereby prevent them from exercising their rights under ERISA. Dewitt v. Proctor Hosp., 517 F.3d 944, 949 (2008) (citing Lindemann v. Mobil Oil Corp., 141 F.3d 290, 295 (7th Cir. 1998)).See also Heimann v. Nat’l Elevator Ind. Pension Fund, 187 F.3d 493, 505 (5th Cir. 1999) (interpreting ERISA § 510 in the same way as other anti-discrimination statutes), overruled on other grounds by Arana v. Ochser Health Plan, 338 F.3d 433 (5th Cir. 2003). However, the Third Circuit refused to extend ERISA discrimination to include an employer’s failure to rehire previously laid-off workers who had no right or expectation of rehire. Becker v. Mack Trucks, 281 F.3d 372, 380 (3d Cir. 2002). The court in Becker, while recognizing that ERISA discrimination covers conduct short of termination that makes an employee’s life difficult, held that ERISA discrimination does not extend to any actions against a “potential employee” and thus does not include failure to hire or rehire. Id. at 382 (emphasis original). The Ninth Circuit has similarly declined to extend ERISA discrimination to failure to hire in a situation where a business terminated employment under the provisions of a collective bargaining agreement and the purchaser of the business refused to hire any of the employees because they refused to accept a reduction of unaccrued employee benefits. West v. Greyhound Corp., 813 F.2d 951, 955 (9th Cir. 1987).
3. Causal Connection
The classic example to illustrate when an employee may draw the necessary causal connection to prove intent would be where an employer terminates an employee because the employer was concerned about the possibility of rising health insurance premiums and that it believed that the employee’s health condition might drive up costs. See, e.g., Clark v. Coats & Clark, Inc., 990 F.2d 1217, 1223 (11th Cir. 1992) (the resulting cost savings to a defendant by terminating plaintiff raises an inference of retaliation under ERISA); Hirsch v. National Mall & Serv., Inc., 989 F. Supp. 977 (N.D. Ill. 1997) (denying summary judgment where “defendants were aware of and concerned about their rising health insurance premiums”). This can be a fairly tricky issue, as whether an employee’s health condition will actually affect the employer’s health insurance premiums will depend on precisely which kind of benefits plan the employer has. For example, if the employer has a self-funded benefits plan, an employee’s high medical costs may significantly affect the employer’s costs, but if the plan is not self-funded, the employer costs may not be affected.A plaintiff may also demonstrate a close temporal proximity between the relevant conduct and the adverse action taken against the employee. See Hildebrandt v. W.R. Grace & Co.-Conn., 492 F. Supp. 2d 516, 524 (D. Md. 2007) (denying summary judgment where employee was terminated one month before he became eligible ERISA-governed benefits); O’Donnell v. Biolife Plasma Services, L.P., 384 F. Supp. 2d 971, 973 (S.D. W. Va. 2005) (denying motion to dismiss where employee was terminated soon after her application for use of ERISA-governed benefits). However, as the plaintiff will need to demonstrate specific intent, it is advisable to allege more than just temporal proximity to demonstrate causal connection. An employee can further make out a retaliation claim under ERISA by demonstrating that the employer’s stated justification for her termination is false or unworthy of credence. See Reeves v. Sanderson Plumbing, 530 U.S. 133, 148 (2000) (plaintiff may prevail by showing that employer’s justification was pretextual, without independent evidence of discrimination); Salus v. GTE Directories Service Corp., 104 F.3d 131, 136 (7th 1997) (affirming judgment for plaintiff in ERISA retaliation claim where he raised circumstantial evidence that employer’s proffered explanation was not believable).An employee must also explicitly establish that she was qualified for her job and able to perform it with or without reasonable accommodation. E.g., Holtzclaw v. DSC Commc’ns Corp., 253 F.3d 254, 258-59 (5th Cir. 2001).
ERISA’s anti-retaliation provision may be enforced through private civil suits, for which a plaintiff can receive equitable relief, including reinstatement, and attorneys’ fees and costs. See 29 U.S.C. § 1132; See, e.g., Metropolitan Life Ins. Co. v. Pettit, 164 F.3d 857, 865-66 (4th Cir. 1998) (attorneys’ fees and costs); Adams v. Brink’s Co., 2008 WL 142771, at *10 (4th Cir. 2008) (reinstatement).
Back pay, unless awarded as part of a reinstatement, is no longer available as a remedy. SeeGreat-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 218 n. 4 (2002) (ruling that Congress intended back pay to be equitable for purposes of ERISA § 510 only insofar as it was awarded with reinstatement; a free-standing remedy of money damages is not an available remedy). See also Millsap v. McDonnell Douglas Corp., 368 F.3d 1246, 1254-55 (10th Cir. 2004) (reversing district court’s award of back pay because back pay was essentially compensatory damages, which are not equitable relief). Interpreting Great-West, courts have also held that front pay is not an available remedy. E.g., Hicks-Wagner v. Qwest, Inc., 462 F. Supp. 2d 1163, 1170-71 (D.N.M. 2006). Compensatory, punitive, or other monetary damages are not available. Mertens v. Hewitt Assocs., 508 U.S. 248, 254-56 (1993).
In addition to naming the corporation as a defendant, ERISA further permits plaintiffs to name corporate officers who engaged in unlawful retaliation against them as defendants in their personal capacities. See 29 U.S.C.A. § 1002(5) (defining “employer” as “any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan”); accordKayes v. Pacific Lumber Co., 51 F.3d 1449, 1460 (9th Cir. 1995) (corporate officers can be sued under ERISA in their personal capacities even if they were not named fiduciaries); Briscoe v. Fine, 444 F.3d 478, 487 (6th Cir. 2006) (same).
Jury trials are generally not available in ERISA retaliation cases. However, a jury trial may be available where an ERISA claim is combined with a common law or statutory claim for which the plaintiff has a right to a jury.
ERISA does not provide a statute of limitations for suits under § 510, which means that courts select the most analogous state law limitations period. This is typically the state law limitations period corresponding to wrongful termination or retaliatory discharge, which are state law causes of action where an employee alleges she was discharged in violation of public policy. In some cases, benefits plan sponsors include a limitations period in their benefit plan documents and summary plan descriptions. Some courts have recognized these plan-imposed limitations periods as valid and enforceable. SeeMorrison v. Marsh & McLennan Cos., Inc., 439 F.3d 295, 302 (6th Cir. 2006). Employees should therefore read their plan documents carefully.