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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
from Spencer’s Benefits Reports: In the most recent case involving whether or not the anti-retaliation provisions of ERISA Sec. 510 protect an employee’s unsolicited internal complaints to management, the Third Circuit U.S. Court of Appeals ruled that unsolicited internal complaints are not protected activities.
The five appellate courts that have ruled on this issue have reached split decisions. The Fifth and Ninth Circuit courts have ruled that the employee is protected while the Second and Fourth Circuit courts now have been joined by the third circuit in ruling that Sec. 510 does not protect the employee from retaliation.
In the most recent case, Shirley Edwards v. A.H. Cornell and Sons, Inc., et al. (No. 09-3198), the employee alleged that she “objected to and/or complained to” A.H. Cornell’s management about ERISA violations that she had discovered. According to Ms. Edwards, the company allegedly administered its group health plan on a discriminatory basis by misrepresenting to some employees the cost of group health coverage in an effort to dissuade employees from opting into the benefits plan. In addition, she alleged that the company was enrolling non-citizens in its ERISA plans by providing false Social Security numbers and other fraudulent information to insurance carriers.
Several weeks after making her complaint, she was terminated.
About a month later, Ms. Edwards filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania asserting an anti-retaliation claim under ERISA Sec. 510 and common law wrongful discharge. The district court dismissed her complaint, and the appellate court upheld the district court in a split decision. The U.S. Department of Labor had filed an amicus curiae brief in favor of Ms. Edwards.
Unsolicited Internal Complaints
The Third Circuit noted that the courts are split on whether or not ERISA Sec. 510 encompasses unsolicited internal complaints. It cited the following sentence in Sec. 510 in its discussion:
“It shall be unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to this chapter or the Welfare and Pension Plans Disclosure Act.”
The majority opinion hinged on the definition of “inquiry” and found that “the provision’s plain meaning to be clear.” According to Black’s Law Dictionary, an “inquiry” is generally defined as a “request for information.” The court said that “Here, Edwards does not allege that anyone approached her requesting information regarding a potential ERISA violation. Rather, she made her complaint voluntarily, of her own accord. Under these circumstances, the information that Edwards relayed to management was not part of an inquiry under the term’s plain meaning.”
The court stated that “Edward’s complaints were statements regarding potential ERISA violations, not questions seeking information. Furthermore, because [Sec. 510] protects employees that have ‘given information,’ not employees that have ‘received information,’ a plain reading of the provision indicates that ‘inquiry’ includes inquiries made of an employee, not inquiries made by an employee. The fact that Edwards’s complaints may have eventually ‘culminated’ in an inquiry…, underscores the fact that the complaints themselves, without more, do not constitute an inquiry.”
Citing the Second Circuit’s decision in Nicolaou v. Horizon Media, Inc. (402 F.3rd 325, 2nd cir. 2005), that “unsolicited internal complaints are not protected activities,” the Third Circuit ruled found that “the employee’s complaint would need to have been solicited.”
Dissenting Opinion
The dissenting opinion indicated “that the statutory language used in this anti-retaliation provision is ambiguous….This anti-retaliation provision plays a very important and even essential role in the proper implementation of the whole ERISA scheme because it actually ‘helps to make (ERISA’s) promises credible.’”
The dissent posed the following scenario: “Suppose an employee like Edwards complains to her superior, the superior asks some follow-up questions, and the employee responds to those questions. Are the informal responses to some impromptu questions to be regarded as protected because they evidently were made as part of an ‘inquiry?’ In turn, why should such responses be protected while, at the same time, an employer is essentially permitted (and perhaps, in essence, encouraged) to fire an employee immediately after she makes an informal complaint instead of conducting an investigation of some sort?”
The dissent continued: “Like the Ninth Circuit [Hashimoto v. Bank of Hawaii, 999 F.2nd 408, 9th cir.1993], I find it difficult to believe that Congress could have ever intended to exclude from the protection of its remedial anti-retaliation provision employees who are terminated because they bring an ERISA-related problem to the attention of their superiors.”
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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