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1. Statutory Requirements. Cases investigated under Program 43
are based on allegations that ERISA section 510 has been
violated. Section 510 provides for civil proceedings to be
brought by the Secretary of Labor, or a participant or
beneficiary under the provisions of section 502 of ERISA.
2. Elements. The following are basic elements necessary to
establish that a violation has occurred:
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The plan is an employee benefit plan within the meaning
of either section 3(1) or 3(2) of ERISA and meets the coverage
requirements of section 4 of ERISA.
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The complainant is a participant or beneficiary of the
plan within the meaning of section 3(7) or 3(8) or is a person
who has given information, testified, or is about to give
testimony relating to ERISA.
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The complainant was discharged, fined, suspended,
expelled, disciplined, or discriminated against for exercising
any right to which the complainant is entitled under the
provisions of an employee benefit plan, Title I of ERISA, or
section 3001 of ERISA, or for the purpose of interfering with
the attainment of any right to which the complainant may
become entitled under the plan, or Title I of ERISA; or
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The complainant was discharged, fined, expelled, or
discriminated against because the complainant has given
information or has testified or is about to testify in any
inquiry or proceeding relating to ERISA.
3. Source of Case Opening Data. A case may be opened upon a
written or oral complaint. However, it is preferable to obtain
a written statement of the allegations from the complainant
prior to case opening.
The written complaint should be as complete and specific as
possible, setting forth the date of the complainant's
termination or other disciplinary action and identifying what
the complainant believes to be the reason for the action. If
there has been any correspondence between the complainant and
the employer, union, plan, etc., it should be attached by the
complainant to the complaint.
4. Preliminary Steps Prior to Opening a Case.
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The
complainant should be advised that his/her name might be used
during the investigation. Since the complainant is usually
alleging that the reason for the termination or disciplinary
action was to prevent him/her from obtaining a benefit or a
right to a benefit, he/she should furnish details identifying
the benefit or the benefit right he/she has been deprived of
by the adverse action. The fact that the complainant is not
familiar with plan provisions does not necessarily mean that
he/she has no valid complaint. His/Her lack of knowledge may
be due to a failure by the plan administrator to provide
proper disclosure.
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The Investigator/Auditor should be aware of the possibility
that age discrimination or other equal opportunity employment
case may exist; if so, the complaint should be directed to the
Equal Employment Opportunity Commission. After review of the
complaint, if no case is opened, this should be communicated
to the complainant.
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Because ERISA Section
413 governs limitations on actions brought under part 4 of
Title I, its 3- and 6-year limitations are inapplicable to
Section 510 violations. Therefore, the statute analysis
should use the most analogous state law cause of action to
determine the limitations period. Among the circuit
courts, the analogous state laws appear to be “wrongful
termination” or “retaliatory discharge.” In light of
this, the investigative analysis of the state statute of
limitations in ERISA Section 510 cases should be initially
done in consultation with the SOL/RSOL. The statute of
limitations matrix (Figure 8) should be used as a guide.
5. Written Plan. At the discretion of the RD, a written
investigative plan, in the form of a memorandum to the
supervisor, may be prepared. See Figure 1 for the format to
use in preparing the investigative plan. Figure 2 should be
used as a guide in determining the elements to cover in the
investigation. The supervisor will, in accordance with EBSA
policy, review the investigative plan and, after making any
changes deemed necessary, will initial and date the plan. The
plan will become part of the case file.
6. Initial Contact With Plan. Except in unusual
circumstances, the investigation should begin with a letter to
the plan sponsor, sent by certified mail, return receipt
requested, stating that the RO/DO has received a complaint
from a participant or beneficiary and requesting an
explanation for the actions taken against the complainant. The
provisions of section 510 should be explained and the nature
of the alleged violation should be discussed. The letter
should request a written reply from the addressee within 14
days of receipt of the letter. A sample letter is set forth as
Figure 3. In all contacts with the parties, the
Investigator/Auditor should convey the Department's intention
to resolve the matter fairly and in accordance with the
provisions of ERISA.
7. Scope of Investigation. The extent of the investigation
depends upon the answer received from the plan administrator
after the initial contact. ERISA gives the Secretary the
authority to conduct an investigation, interview witnesses and
examine records to the extent necessary to determine whether
ERISA has been violated. Records reviewed should be those
reasonably expected to reveal information pertaining to the
subject area of inquiry or those that leads have indicated
need reviewing.
8. Development of the Case. Some matters to consider in the
development of section 510 cases are listed below:
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Discrimination can often successfully be proven by
establishing patterns of actions taken against employees in
certain groups. If several plan participants are terminated,
all of whom are at an age nearing full vesting, while younger
persons, less experienced and less productive, are kept on the
payroll, discrimination to prevent attainment of a benefit
right may be indicated. If the persons terminated include both
those nearing a fully vested age and younger employees who
have many years to go until full-vesting,
discrimination may not be so apparent. However, establishing
such a pattern may not be necessary in order to show a
violation of section 510 if other evidence is available.
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In many situations, it may be necessary for the
Investigator/Auditor to prove, through personnel and other
records, that there was no valid reason for the complainant's
termination other than the 510 violation. Normally, an
employer will deny the allegation that the employee was
terminated to prevent him/her from attaining a benefit. The
company should be willing and able to prove, through records
and/or testimony, that the complainant's work record or
actions, or some other proper reason(s), were the basis for
the discharge.
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If the stated reason for termination was that the
employee's work record was poor, the Investigator/Auditor
should question why the employee was retained on the job for a
number of years before he/she was terminated. If he/she was
sufficiently capable to be retained on the job until he/she
was nearly vested, determine why his/her work suddenly
deteriorated if, in fact, it did.
9. Allegations Involving Other Case
Types
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If, during the course of the investigation, information
is received or developed which indicates possible violations
of ERISA which are unrelated to this case type, a separate
case will be opened, as appropriate, under the applicable
program number.
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If an investigation under this program develops evidence
sufficient to make a preliminary determination that matters
being investigated may also constitute violations of Title 18
or ERISA section 511, the investigation of the criminal
aspects will be discontinued and a referral will be made
pursuant to Chapter 52 of this Manual.
10. Violations. When the investigation does not uncover any
violations the Investigator/Auditor will prepare a closed
report. If the RD concurs that the case will be closed, a
pattern closing letter will be sent (Figure
4). The
complainant will also be advised of the final decision. The
format in Figure 5 will be used in preparing closed ROIs.
11. Compliance Achieved
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When there are apparent violations the RO will, when
appropriate, attempt to obtain voluntary compliance from the
plan officials.
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In cases where discrimination is apparent and the plan
sponsor acknowledges that it may have acted improperly and is
willing to correct the situation, the Investigator/Auditor
must carefully consider whether the proposed correction is in
compliance with ERISA. For example, the plan administrator may
not grant a right, such as a vested interest, to a terminated
participant unless that right has been earned. If the plan
administrator were to do that, that action would violate the
fiduciary requirement that a plan administrator must operate
the plan strictly in accordance with the plan provisions.
The corrective action in this type of case can become
extremely complex, especially when a plan sponsor is willing
to voluntarily take some steps necessary to correct a
discrimination situation, but is not willing to take all the
necessary steps.
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If voluntary compliance is achieved, the
Investigator/Auditor will prepare a Closed ROI including
documentation of the manner in which the plan has corrected
the violation.
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Although participant's rights cases may be resolved
through voluntary compliance, neither the RO nor EBSA is bound
to seek voluntary compliance in all such cases.
12. Noncompliance - Legal Action Not Warranted. In
those cases where a settlement offer is made which is either
not acceptable to the complainant(s) or would not result in
full compliance with ERISA, advice will be sought from OE/DFO.
If legal action does not appear warranted, the
Investigator/Auditor will prepare a Closed ROI and, after
approval by the RD, the RO will advise the complainant of the
final decision in the matter.
13. Noncompliance - Legal Action
Warranted. In those
cases where a settlement offer is made which is either not
acceptable to the complainant(s) or would not result in full
compliance with ERISA, and legal action is believed to be
warranted, the Investigator/Auditor will prepare an Action ROI.
The format in Figure 6 will be used in preparing Action ROIs.
The Action ROI together with a cover memorandum from the RD (Figure
7) will be sent to the RSOL. A copy of the cover
memorandum and narrative portion of the ROI sent directly to
the RSOL shall be sent simultaneously to OE/DFO.
14. SBREFA Notice. In accordance with the provisions of the
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA),
the Small Business Administration has established a National
Small Business and Agriculture Regulatory Ombudsman and 10
Regional Small Business Regulatory Fairness Boards to receive
comments from small businesses about federal agency
enforcement actions. The Ombudsman annually evaluates
enforcement activities and rates each agency’s
responsiveness to small businesses. If a small business wishes
to comment on the enforcement actions of EBSA, it may call
1.888.REG.FAIR (1.888.734.3247) or write to the Ombudsman at
409 3rd Street, SW, MC 2120, Washington, DC 20416.
Notice of the right to comment to the SBREFA Ombudsman will
be provided by copy of the EBSA Customer Service Standards
pamphlet to all plan sponsors, plans, or plan service
providers with less than 100 participants or employees during
the course of ERISA Title I civil investigations. Discretion
is granted to EBSA Regional Directors regarding the timing of
the delivery of the pamphlet/notice on a case-by-case basis.
The case file must reflect appropriate documentation of the
SBREFA notice.
The right to file a comment with the Ombudsman does not
affect EBSA’s authority to enforce or otherwise seek
compliance with ERISA. The filing of a comment by a small
business with the Ombudsman is not a substitute for complying
with an EBSA subpoena or addressing EBSA’s proposed
corrective action in a timely manner to protect the business’
interests.
(Figure 1)
Investigative Plan
Subject: (Same subject as on case opening
form)
To: (Supervisor)
Investigative Plan for Subject Case
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Allegation - set forth the alleged violation.
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Planned Investigation - (Using
Figure 2 as a
guide, list the areas to be investigated.)
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Time - Estimate the number of workdays
necessary to complete the investigation.
Approved:
____________________
____________________
Supervisor
Date
(Figure 2)
ERISA Section 510
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Name of employee
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Address
-
Phone Number
Employment History
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Period of service for the company. (If possible give
data under next heading for each job.)
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Job at the time of alleged discrimination.
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Duties
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Department
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Immediate Supervisor
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Length of service
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Wage rate
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Efficiency
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Expressions from company
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Statements
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Wage increases
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Other evidence
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Seniority as compared to other employees in same
category
Circumstances of Discharge or Other Adverse Action
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Timing
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Circumstances leading up to the discharge
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Complaints or warnings before discharge
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Circumstances surrounding discharge
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Complete story
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Whether manner of discharge was in line with customary
practice
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Reason given by company at time of discharge--state who gave reason and when.
Lack of work
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Whether force was being reduced
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Number of other employees who were similarly discharged
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Name, dates, and reasons given for discharge
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Proportion of union and non-union employees
discharged
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Method used to determine who was discharged
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Whether method was in line with usual practice
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Whether others were uniformly affected for similar cause
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Names, positions and dates
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Whether the practice was the same prior to the time of
alleged discrimination
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Whether company plans to recall these employees.
Status of Replacement
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Identity
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Name
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Address
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Phone Number
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Other status
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Experience
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Length of service
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Rating with company
Evidence to Show Motive of Company
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Threats before discrimination
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Explanations after
Steps Taken After Discrimination
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Application to have company reconsider
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Grievance machinery
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Agreement to arbitrate
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Satisfaction or waiver
Inefficiency
Insubordination
Violation of Rules
(Figure 3)
Certified Mail - Return Receipt Requested
October 14, 2005
Mr. John H. Lewis
Director, Benefit Plans and Personnel Policies
ABC Company
123 Main Street
Kansas City, Missouri 64106
Dear Mr. Lewis:
Mr. Elmo Jones, a former employee of your company, has
lodged a complaint with this office alleging that recent
action was taken with respect to his employment for the
purpose of interfering with a right to which he may become
entitled under the provisions of the ABC Company Retirement
Plan. If true, such action would constitute a violation of
section 510 of the Employee Retirement Income Security Act of
1974 (ERISA).
Briefly, section 510 of ERISA provides that it shall be
unlawful for any person to discharge, fine, suspend, expel,
discipline, or discriminate against a participant or
beneficiary of an employee benefit plan for the purpose of
interfering with the attainment of any right to which such
participant may become entitled under an employee benefit
plan, Title I of ERISA, or the Welfare and Pension Plans
Disclosure Act.
In his complaint, Mr. Jones alleges that when he was
terminated he was within five months of completion of
sufficient years of participation under his retirement plan to
reach retirement status. Mr. Jones furnished to us a copy of a
letter to you, dated October 4, 2004, wherein he requested
that he be considered for other positions with the company so
he would be able to complete the necessary years of
participation. He also included a copy of a letter from you,
dated October 29, 2004, denying his request. Mr. Jones
contends that other employees with fewer years of service than
he were given other positions within the company.
You are requested to furnish this office, within 14 days
from your receipt of this letter, a written statement of your
company's position with respect to Mr. Jones' complaint. You
are free to include all pertinent facts relating to this
matter.
The Investigator/Auditor named below has been assigned to
represent this office in this matter. You may contact him/her
for additional information or assistance.
Your cooperation in this matter will be appreciated.
Sincerely,
Joe Johnson
Regional Director
Investigator/Auditor: Richard Stevens
Telephone Number: 100.212.4141
(Figure 4)
No ERISA Violations Detected
Dear (Plan Administrator/Fiduciary):
The Department of Labor has recently conducted an inquiry
involving entitlement of (name of complainant) to a benefit
from (name of plan) pursuant to the Employee Retirement Income
Security Act of 1974 (ERISA).
This is to advise you that our inquiry is now concluded and
no further action on this matter is contemplated at this time.
(We appreciate the cooperation you and members of your staff
extended to us.)
Sincerely,
Regional Director
Enclosure: SBREFA Notice(1)
cc: OE
File
(Figure 5)
Report of
Investigation
Sample Format |
U.S.
Department of Labor
Employee Benefits Security Administration |
|
|
This document is the
property of the Employee Benefits Security
Administration.
Its contents are not to be disclosed to unauthorized
persons. |
File No. |
Subject: (Last Name of
Complainant) v. Employer |
Date |
Address of Employer |
By Investigator/Auditor |
EIN/PIN |
Approved by |
|
Status
Closed |
-
Predication
State reason for case opening.
-
Issues and Findings
-
Set forth the allegation/issue.
(Cite the facts that show that the allegation/issue was not
a violation; or in cases where violations were substantiated,
cite the facts to show voluntary compliance was achieved or
that other dispositive action was taken.)
-
(Repeat as above for each allegation/issue.)
-
Other Findings
(This heading can be used to present facts or any other
investigative activity not previously mentioned.)
(Figure 6)
Report of
Investigation
Sample Format |
U.S.
Department of Labor
Employee Benefits Security Administration |
|
|
This document is the
property of the Employee Benefits Security
Administration.
Its contents are not to be disclosed to unauthorized
persons. |
File No. |
Subject: (Last Name of
Complainant) v. Employer |
Date |
Address of Employer |
By Investigator/Auditor |
EIN/PIN |
Approved by |
|
Status
Action |
-
Predication
State reason for case opening.
-
Potential Jurisdictional Problems
If no jurisdictional problems are anticipated, enter
"None." If any are known, set forth the facts to
identify them and document jurisdiction under Section
____________________. Any
issue or potential defense relating to whether the plan is
covered under ERISA should be set forth in this section.
-
Background
If appropriate.
-
Issues and Findings
-
Set forth the allegation/issue.
(Cite the facts that show that the allegation/issue is a
violation.) In the last paragraph present the position taken
by the plan administrator or other fiduciary(ies) concerning
the issue and indicate efforts made to obtain voluntary
compliance. Include copies of any correspondence or RIs of
conferences with the plan officials as exhibits.
-
If there are multiple or diverse issues involved, repeat
the format set forth above.
-
Other Findings
This heading can be used to present facts or any other
investigative activities not previously mentioned.
Exhibits
All significant facts presented in the report should be
supported with exhibit citations. The following procedure
should be used in submitting exhibits:
-
State the name of the individual who is the subject of
an RI or signed statement and the date of the interview.
-
Documents, schedules, etc., should be precisely
identified.
-
Each supporting document should be a separate exhibit.
-
Multiple page exhibits should be numbered.
-
Exhibits should be identified by number.
-
All copies must be legible.
-
All plan documents (trust agreements, etc.) must be
included as exhibits.
List of Documents and Workpapers Available in RO but Not
Used as Exhibits
List documents, schedules, RIs, and other materials in the
RO file that were not included as exhibits. Identify the date
of each document.
(Figure 7)
To: |
Regional Solicitor |
From: |
RD |
Subject: |
Name of Plan
EIN
Case File No. |
The following must be included in the body of the memo:
-
Give a brief synopsis of the violations.
-
Each violation must be supported by appropriate
references to the regulations, interpretive bulletins,
exemptions, variances, policy statements, previous no decisions involving similar cases, and any other authoritative
references which would tend to establish the existence of the
violation.
-
When appropriate, outline the RO's efforts to obtain
voluntary compliance.
-
State the position of the violator(s) and other
responsible plan officials with respect to each violation.
-
Discuss the RD's recommendations for the final
disposition of the case. If a partial settlement offer has
been made the RD should comment on its acceptability.
cc: File
(Figure 8)
Issue(s) |
Date of Unlawful Practice |
Analogous State Statute |
Applicable Statute of Limitations
Date |
1. |
|
|
|
2. |
|
|
|
3. |
|
|
|
4. |
|
|
|
-
Include when subject of investigation is a plan, or other
business entity, with fewer than 100 participants or employees
and when the notice has not been provided previously.
|