SCOTUS Mows Down Yard-Man Inference

welfare planBusinesses looking for areas to cut costs since the economic downturn have occasionally directed their gaze at employee benefits, either by requiring additional contributions from employees or by scaling back benefit levels. These businesses have just received some assistance from the Supreme Court, which recently clarified a longstanding circuit split regarding an employer’s right to alter welfare benefits provided to retired employees. In M&G Polymers USA, LLC v. Tackett, No. 13-1010 (2015), the Court held that the law does not presume that retiree benefits are guaranteed for life and ordinary principles of contract law determine whether any such guarantee exists.

The case stems from the Employee Retirement Income Security Act (“ERISA”), which creates two classes of employee retirement benefits: pension plans and welfare plans. Pension plans provide employees with income upon retirement, and are subject to significant legal requirements. Employee welfare plans, on the other hand, provide benefits other than income (such as medical insurance) and are exempt from many of the requirements imposed on pensions.

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Posted by Jason Palmer
Business Litigation
February 19, 2015

ERISA or Not, a Contract is Still a Contract, SCOTUS Holds

retireThe Supreme Court was recently presented the question of whether collective-bargaining agreements (“CBAs”) that provide for benefits governed by the Employee Retirement Income Security Act (“ERISA”) should be interpreted differently than other contracts. The Court’s response in M&G Polymers USA, LLC v. Tackett, 574 U.S. __, No. 13-1010, 2015 U.S. LEXIS 759 (Jan. 26, 2015), was an emphatic “no.”

The Tackett case arises from a 2000 Pension, Insurance, and Service Award Agreement (“P&I Agreement”) entered into between Petitioner M&G Polymers, USA, LLC (“M&G”) and Respondents’ (“Retirees”) union. Tackett, 2015 U.S. LEXIS, at *7-8. The P&I Agreement contained a provision by which M&G agreed to pay the health benefits of retirees and their dependents “‘for the duration of this Agreement,’” which “provided for renegotiation of its terms in three years.” Id. at *8. In December 2006, more than a year after M&G and the union reached a new agreement, “M&G announced that it would begin requiring retirees to contribute to the cost of their health care benefits.” Id. The Retirees sued, claiming that the 2000 P&I Agreement “had created a vested right” to employer-funded health care benefits that went beyond the expiration of the P&I Agreement. Id. at *8-9. The new contribution requirement, they argued, violated the Labor Management Relations Act, 29 U.S.C. § 185 (“LMRA”), and ERISA, 29 U.S.C. § 1132(a)(1)(B). Id.

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Posted by Jim Smerbeck
Business Litigation
February 10, 2015

WHEN CAN VOLUNTEERS BE CONSIDERED EMPLOYEES? SIXTH CIRCUIT CLARIFIES

volunteer_employeeAfter the Sixth Circuit held that a Plaintiff need not make a threshold showing that they were compensated to make a prima facie showing that he is an employee for purposes of Title VII of the Civil Rights Act of 1964 (“Title VII”), Bryson v. Middlefield Vol. Fire Dep’t, Inc., 656 F.3d 348, 353-54 (6th Cir. 2011), the question has remained: how broad are the conditions under which a volunteer be considered an employee, and thus have standing under Title VII? Last month, in Marie v. Am. Red Cross, No. 13-4052, slip op. (6th Cir. Nov. 14, 2014), the Court held that such conditions were very narrow indeed.

In Marie, two Plaintiff nuns had been long-term disaster relief volunteers with the First Capital District Chapter of the American Red Cross (“Red Cross”) and the Ross County (Ohio) Emergency Management Agency (“RCEMA”). Id., p. 2. They did not receive compensation or health insurance, but were eligible to receive workers compensation from both organizations and to participate in the Red Cross’s life insurance program. Id., pp. 3, 5. Despite receiving positive reviews, the nuns were denied promotions within the Red Cross which, while not entitling them to pay, would have given them increased responsibility. Id., pp. 3-4.    The nuns were also terminated as volunteers with RCEMA after expressing dissatisfaction with the Executive Director’s leadership. Id., p. 5. In their lawsuit, the nuns alleged religious discrimination, retaliation, and harassment. Id., p. 6.

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Posted by Jim Smerbeck
Business Litigation
December 4, 2014

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