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Noncompete buried in benefit plan? Admin sets the terms

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in Employee Benefits Program,Human Resources

Are some of your benefits—such as bonuses or other merit payments at retirement or departure—contingent on complying with a covenant-not-to-complete? Chances are the benefits plan administrator—not a federal court—will be interpreting the terms.

Recent case: George worked in pharmaceutical research. Sometime during his employment, he signed onto a benefit plan that made payments at departure contingent on not working for a competitor.

George retired and went to work for another pharmaceutical company. He requested payments under the plan. When his former employer discovered George was working for what it considered a competitor, it denied his request.

He went to federal court, arguing that his new employer wasn’t a competitor under the benefit plan’s definition. The court deferred to the plan administrator and dismissed George’s case. (Wall v. Alcon, No. 13-10117, 5th Cir., 2014)

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