Can a company fire you before retirement?
What better way for companies to entice people to long-term employment than by offering stellar retirement benefits? After all, “a stitch in time saves nine.” In other words, if you sort out a problem immediately it may save a lot of extra work later. Some companies offer the benefits initially but then fire the employee just before they qualify to avoid paying for those benefits. But, can companies do that? A recent case illustrates that very question: “Can a company fire you before retirement?”
Facts of the Case:
Ms. Minton had been employed by Little River Electric Co-Op since July 1991 and was enrolled in its group health insurance plan.
The health insurance plan provided the following:
Long-term post-retirement benefits for employees who retired at age 62 or later
100% of a retired employee's health insurance costs which continued until the retiree qualified for Medicare at age 65 and even then
Paid Medicare premiums and Medicare Part D coverage for the rest of the retiree’s life
That is a very good benefit that no doubt attracted many good employees and induced them to stay with the company through age 62.
In September 2021, Ms. Minton was only about 15 months away from reaching age 62.
At that same time, everyone in the company received a 2% raise and up to 10% for some. However, Ms. Minton did not receive a raise and later realized she was the only person in the company who didn’t receive a raise.
She emailed the Board of Directors for the company to find out why she was excluded. She decided not to email her supervisor or plant manager, as she felt they were involved in passing her over for the raise.
After sending the email, Ms. Minton was terminated after 30 years of service.
Ms. Minton filed a lawsuit in federal court, asserting claims under ERISA (Section 510 claim) and a South Carolina wage claim for interference with her right to a benefit that was soon to come. Minton v. Little River Elec. Coop., No. 8:22-cv-00161-DCC, 2022 WL 2819627 (D.S.C. Jul. 19, 2022) (Judge Donald C. Coggins, Jr.).
The Defendant moved to dismiss the case, contending that she was terminated because she circumvented management by going directly to the Board of Directors.
Ms. Minton countered that the defendant’s reason for firing her was really to save the company money to oust her from receiving the age 62 retirement benefits.
The court denied the Motion to Dismiss, finding that the complaint was well-pled and if taken as accurate, plausibly alleged a claim for violations under ERISA as well as state wage law. The court however cautioned that this was not intended to be taken as an indication of how the court might rule in the future on a motion for summary judgment.
Employers must be careful with following that old saying since § 510 (29 U.S.C. § 1140) provides in part:
“It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary [(1)] for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . or [(2)] for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan…