7th Circuit Finds Informal Complaint Is Basis for ERISA Retaliation Claim
Author: Marta Moakley, XpertHR Legal Editor
A federal appeals court has held that employees who make informal complaints to management regarding deposits into their retirement accounts are covered under the anti-retaliation provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
In George v. Junior Achievement of Central Indiana, Inc., +2012 U.S. App. LEXIS 18571 (7th Cir. 2012), an employee nearing retirement discovered that wages withheld from his pay had not been deposited into his retirement and health savings accounts. The employee complained to the corporation's president and two board members. In addition, the employee contemplated filing a complaint with the Department of Labor, but ultimately declined to do so. Although the employee eventually received checks for the missed deposits from his employer, he was discharged within a few months of his informal complaint.
Under ERISA, employers owe a fiduciary duty to employees when withholding money from a paycheck in order to deposit that money into a retirement account. In addition, Section 510 of ERISA, +29 USCS § 1140, protects from retaliation any employee who "has given information or has testified or is about to testify in any inquiry or proceeding" relating to ERISA. The 7th Circuit Court of Appeals determined that if an employee asks questions of his or her employer regarding a practice reasonably believed to be a violation of ERISA, then that employee has participated in an "inquiry" under the law and is protected from retaliation by the employer.
It is worth noting that in this case the employer had argued that the employee's actions did not involve an "inquiry or proceeding" because the employer did not institute a formal proceeding. The 7th Circuit rejected this argument determining that an inquiry may be initiated by an employer or an employee. In addition, the court determined that an inquiry need not be formal in order to fall under Section 510's protections. Although a number of other circuits have concluded that the scope of anti-retaliation provisions should cover only formal actions or written complaints, the 7th Circuit has opted to follow the Supreme Court's reasoning in Kasten v. Saint Gobain Performance Plastics Corp., +131 S.Ct. 1325 (2011), in which an informal oral complaint was held to be within the Fair Labor Standards Act's anti-retaliation provisions.
The court did determine that oral complaints and informal questions must involve a significant grievance in order to fall under ERISA's anti-retaliation provisions and that "trivial bellyaches" or mere gripes will not form a basis for a retaliation claim under ERISA. Also, even if an oral complaint is considered to be an "inquiry" under ERISA, the court determined that the employee must still prove a causal connection between their activities and any adverse employment action.
Employers can expect additional enforcement activities and court claims as the various circuits decide on the level of formality required to trigger the anti-retaliation provisions of ERISA, including possible appeals to the Supreme Court.