The U. S. Court of Appeals for the Seventh Circuit revived a former employee’s retaliation lawsuit against his employer even though his claim was based on an informal, unwritten inquiry about his retirement benefits.  In George v. Junior Achievement of Central Indiana, Inc., No. 11-3291 (7th Cir. Sep. 4, 2012), the court addressed the scope of retaliation claims under ERISA Section 510 and held that such claims could proceed even though there was no formal proceeding or dispute involving the plaintiff’s benefits.  The case shows that employers should take special care to avoid even the appearance of retaliation against an employee who makes informal inquiries about his rights to ERISA-regulated employee benefits.

The plaintiff was Victor George, a vice president employed by Junior Achievement of Central Indiana, Inc. (“Junior Achievement”).  He contended that income withheld from his paycheck was not being deposited into his retirement account and health savings account, and lodged several informal complaints about the matter, including one with Junior Achievement’s president.  George later withdrew funds from an account containing his deferred compensation, which Junior Achievement contended was premature and unauthorized.  Junior Achievement subsequently terminated George’s employment at the end of 2009 and demanded that he restore the withdrawn funds to his account.  Junior Achievement later conceded that George was entitled to withdraw the deferred compensation funds at issue but did not rescind his termination. 

George filed suit under ERISA, alleging that Junior Achievement breached its fiduciary duty to deposit money withheld from his paycheck and unlawfully retaliated against him by terminating his employment when he asked about the failure to deposit his money. 

ERISA Section 510 prohibits retaliation “against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to [ERISA].” The federal district court held that George’s informal complaints did not constitute an “inquiry or proceeding relating to [ERISA],” that Section 510 did not protect employees making unsolicited complaints not within a formal inquiry or proceeding, and that George could not pursue a retaliation claim under Section 510.  The district court granted summary judgment for Junior Achievement and dismissed George’s case.

On appeal, the Seventh Circuit vacated that decision and remanded the case to the district court for further proceedings.  The appellate court held that the term “inquiry” in Section 510 was not limited to a formal proceeding or to inquiries initiated by an employer or government agency.  Rather, an informal inquiry by an employee regarding the employee’s employee benefits was sufficient for purposes of determining whether he fell within the ambit of Section 510’s protection and could pursue a retaliation claim relating to such inquiry.

George demonstrates that even informal disputes and inquiries about employees’ covered benefits may come within the scope of ERISA’s anti-retaliation provision.  Employers should therefore be careful when considering any adverse employment decisions that may relate to an employee’s exercise of his rights, including his rights to make inquiries, under an ERISA-regulated employee benefits plan.