Compliance September 6, 2005

Partial Plan Termination Not Discriminatory

September 6, 2005 (PLANSPONSOR.com) - A district court judge threw out a participant's charge that he was specifically discriminated against when his employer terminated its 401(k) plan for a group of employees which included him.
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Timothy Carter filed charges of race, age, and disability discrimination against RHM Teleservices, Inc. because he was placed on an “unlawful Development plan” and had received “unlawful counseling threatening termination”, according to the court opinion.   He also claimed the company discriminated against him and violated ERISA when it terminated the plan for all telephone service representatives.

In his opinion, US District Judge Royal Furgeson of the US District Court for the Western District of Texas  found that Carter did not provide proof that the employer specifically discriminated against him when it terminated the plan for a group of employees.   Furgeson also said the company did not deny Carter his rights to receive benefits because he was still able to receive the benefits he had already accrued before the partial plan termination.

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Furgeson also agreed with the company that Carter had not exhausted all his remedies with the Equal Employment Opportunity Commission (EEOC) because his initial claim with them did not mention racial discrimination.   Therefore, he granted the motion to dismiss this claim as well.

Finally, Carter’s claims under the US and Texas constitutions were dismissed because there was no evidence that the state had “significantly involved itself with invidious discriminations” since the company was not “a state actor or acting on behalf of the state.”

The opinion in Carter v. RMH Teleservices Inc., W.D. Texas, No. SA-04-CA-1130RF, 8/10/05 can be found  here .  

Administration September 5, 2005

STRS Board Approves Only $2 Million in Bonuses

May 21, 2004 (PLANSPONSOR.com) - While the 103 investment staffers of the Ohio State Teachers Retirement System (STRS) will get a total of $2 million in bonuses, the remaining 268 noninvestment workers will get nothing.
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Divided 5 to 4, the STRS Board of Directors decided against awarding the additional $1.7 million in bonuses that had been promised to the noninvestment staff for work done in the fiscal year that ended in June 2003.   This despite the legal opinion of Assistant Attorney General John Patterson, who told the board employees would probably win a lawsuit if they were denied the bonuses because they had been promised to them in written agreements, according to coverage provided by the Cleveland Plain-Dealer.

Patterson’s boss Ohio Attorney General Jim Petro though was not so sure about the definitiveness of a lawsuit victory for the other employees as Petro’s representative on the board was one of the five no votes.

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In large part the Board was haunted by incentive payouts of the past.   STRS had budgeted for bonus payouts to all staff members last fall.    However, the $54 billion pension fund suspended the program after controversy erupted over prior annual bonus payments when it was discovered the fund paid out $14 million in employee bonuses as the fund lost 21% of it value (See Ohio Pension Fund Hit for Lavish Spending Practices ).   The imbroglio went all the way to the top and eventually cost former executive director Herb Dyer his job (See Dyer Steps Down From Ohio STRS Post ).

The STRS board has since adopted a less generous bonus program, one that does not include bonuses for the noninvestment staff.   YetDyer’s successor,Damon Asbury, said STRS had a legal obligation to pay the bonuses owed under the old system and last week said he would ask the board to approve the bonuses for all staff members (See  New STRS Chief Approves Bonuses ).

The Board approved the investment staff bonuses by a margin of 7 to 2.   Bonus payments will range from $438 for a junior analyst to nearly $80,000 for the director of fixed income investments, the Plain-Dealer report noted.

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