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HR handles all transfers? Beware ERISA violation risk

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in Employee Benefits Program,Employment Law,Hiring,HR Management,Human Resources

The Employee Retirement Income Security Act (ERISA) protects employees’ benefits and allows them to challenge benefit denials. The law also says employers can’t punish employees who assert their ERISA rights by filing complaints or lawsuits.

Of course, in most companies, the HR department handles benefits—and HR is usually the first to know when an employee files an ERISA complaint or lawsuit. Since HR also typically handles transfer, hiring and promotion paperwork, that can put the company at risk for a retaliation lawsuit. The attorney of an employee who has filed an ERISA complaint could try to show that HR knew about the complaint. Then it’s just a matter of showing that HR treated that employee differently than others.

That’s why it’s crucial to document each and every application, transfer and promotion decision and insist on solid business reasons for each selection. Should an employee allege retaliation, the company will be able to offer a legitimate business decision to counter the claim.

Recent case: Cari Hamilton was working for a General Motors division as an administrative assistant when she began suffering from fibrocystic breast disease. She took medical leave and applied for short-term disability benefits—which were denied.

When she returned to work, she filed an appeal. The plan was an ERISA-covered benefit. Hamilton had sharp words with the HR department as she sought the benefits she believed she was due.

Shortly after, Hamilton’s division reorganized—everyone would lose their jobs unless they applied for and got other open positions. The HR office processed all transfer requests. Hamilton was the only employee targeted for termination who wasn’t offered a position.

She sued, alleging that this was retaliation for pushing for her disability benefits.

But the 6th Circuit Court of Appeals saw things differently. Although the HR office knew about Hamilton’s ERISA claims, GM was able to convince the court that those claims had nothing to do with her lost position. The court pointed out that the HR office could document every transfer decision with specific job-related reasons why another candidate was selected instead of Hamilton.

For example, one co-worker was offered an open buyer position because the job required computer-systems knowledge, which Hamilton did not have. Another co-worker scored the print coordinator job because she had many years of experience specific to that field, while Hamilton had just one year. Hamilton was simply the least qualified for any of the open positions and therefore didn’t get one. In the game of musical chair transfers, Hamilton was left standing. (Hamilton v. Starcom Mediavest Group, No, 07-1208, 6th Cir., 2008)

Note: Hamilton eventually did win her disability benefits.

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