By: WISCONSIN LAW JOURNAL STAFF//August 10, 2011//
Employment
ERISA
Where an employer reserved the right to amend its health-care plan, it did not violate ERISA for the employer to cancel retirees’ unused sick-leave accounts.
“The retirees had an expectation, to be sure: Many a day they may have struggled in to work, despite ailments that could have justified taking time off, in order to preserve their sick-leave balances and thus earn credit toward medical care in retirement. But although expectation interests may lead employers to refrain from reducing retirees’ benefits—employees would be more likely to call in sick, or demand higher wages or vested pension benefits, if arrangements such as CUNA Mutual’s pre-2008 policy prove to be unstable—equitable considerations do not reduce employers’ legal entitlement to change welfare-benefit plans. Hughes Aircraft and Lockheed hold that employers are entitled to disregard employees’ interests when amending ERISA plans. If silence in election forms and summary plan descriptions cannot override the express terms of the formal plan, silence in the long years before retirement (the decades when employees had to decide 200 days a year whether to work or call in sick) cannot override a plan’s express terms.”
“Reliance interests are universal. The terms of the pension or welfare plan in force when a given worker is 30, 40, or 50 affect how much that worker saves privately and how long the person continues to work. Yet those interests do not prevent employers from changing their plans once the worker reaches 60, 70, or 80. ERISA forbids any reduction in vested pension benefits but gives employers discretion over other benefits. If reliance interests block a reduction in welfare benefits, then the distinction between pension and welfare plans would be abolished, and Hughes Aircraft and Lockheed would be effectively reversed.”
Affirmed.
10-1558 Sullivan v. CUNA Mutual Ins. Society
Appeal from the United States District Court for the Western District of Wisconsin, Crabb, J., Easterbrook, J.