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Court: Early Retirement Program not Being Considered When Employee Retired
In its opinion, the court agreed with the company’s argument that it was not seriously considering offering an incentive program in May or June 1999 when the appellant, a former employee, asked her supervisor.
Sylvia Rashid, upon turning 55, had asked her supervisor in May and in June 1999 whether the company would offer an early-retirement incentive program, according to the court document. Rashid told her supervisor that she would be willing to stay longer if the company offered such a program. Her supervisor contacted the company’s president, who told her that there was no incentives program being considered. Rashid retired on July 1, 1999.
In October 1999, the company came up with a business plan to reduce costs in 2000, and the plan included layoffs, attrition and voluntary retirement. The company’s director of employee benefits was instructed to draft and early-retirement incentive plan in December 1999.
Upon learning of the incentive plan, Rashid sued First Energy Corp. and a lower court granted summary judgment for the company. The appellate court confirmed.
In its opinion, the appellate court said a plan administrator cannot make “affirmative material misrepresentations to plan participants about changes to an employee pension benefits plan.” A “material misrepresentation” occurs when a company states to an inquiring employee that it is not considering a pension plan change but is actually giving “serious consideration” to changing it.
According to the appellate court, “serious consideration” was not being given to an early-retirement plan until October 1999.
The decision in Rashid v. First Energy Corp. Pension Plan is here .