By George, it must be formal — informal complaints may not be protected by ERISA’s anti-retaliation provision

Section 510 of the Employee Retirement Income Security Act of 1974 (ERISA) protects an employee who “has given information or has testified or is about to testify in any inquiry or proceeding relating to” ERISA from retaliation by that person’s employer. 29 U.S.C. § 1140. It is clear that, if an employee testifies regarding an alleged ERISA violation in a case pending in court or talks to the Department of Labor (DOL) as part of an active DOL investigation of potential ERISA violations, this section prohibits the employer from discharging, fining, suspending, expelling or otherwise discriminating against the employee. But what if an employee informally volunteers information to the DOL when no litigation or investigation is pending and no formal complaint is filed?

So far, five federal circuit courts have ruled on this question, with two (the Fifth and Ninth Circuits) holding that such informal complaints do trigger the anti-retaliation protections of ERISA Section 510 and the other three (the Second, Third, and Fourth Circuits) holding that this provision does not apply to informal complaints. In George v. Junior Achievement of Central Indiana, Inc. (S.D. Ind. Sept. 28, 2011), the Southern District of Indiana faced this question and had to predict how the Seventh Circuit would answer it. In George, the executive vice president of Junior Achievement was concerned that funds withheld from his paychecks were not being deposited into his 401(k) account by Junior Achievement. He contacted the DOL and informed the DOL that Junior Achievement was removing funds from his paycheck but not depositing them into his retirement account. However, he never filed a written complaint and declined the DOL’s invitation to open a case file. While Mr. George complained about the issue internally to Junior Achievement’s president and board members, he never told Junior Achievement that he had contacted the DOL. However, when Junior Achievement terminated Mr. George a few months later, he claimed that the firing was related to his accusations of improper 401(k) account funding and filed suit alleging, among various state law claims, a violation by Junior Achievement of ERISA Section 510.

The court examined the reasoning of the other federal courts that had ruled on this question and concluded that the Seventh Circuit would agree with those that have held that ERISA Section 510 does not apply to informal complaints, such as those Mr. George made to the DOL. The court focused on the language of the section and reasoned that the word “inquiry” indicates a request for information so that the unsolicited provision of information, such as Mr. George made, would not be covered by the statute. Similarly, the court reasoned the term “proceeding” means a formal action. Reaching this conclusion, the court granted judgment in favor of Junior Achievement on Mr. George’s ERISA Section 510 retaliation claim because he never filed a complaint and the DOL never initiated an investigation.

Care must be taken in terminating any employee who has made even an informal complaint under this ERISA provision. Until the United States Supreme Court rules on this issue, the answer to this question varies depending on which federal appeals court covers the area in which the employee worked.