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Don’t sugarcoat benefit changes

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in Employee Benefits Program,HR Management,Human Resources

Many companies are cutting costs by changing their employee benefits programs. But don't shoot from the hip when explaining these changes to employees, or try to gloss over the painful parts. The Employee Retirement Income Security Act (ERISA) places the burden squarely on you to provide truthful and accurate information.

To help control the flow of benefit information, limit the number of managers authorized to provide such data. Tell managers that if they can't answer a benefits question, they shouldn't guess; look up the answer or send the person to HR. To make sure employees receive a consistent message, you can videotape benefits presentations at corporate headquarters for viewing at field offices.

Recent case: A manufacturing company's Human Resources director held meetings encouraging workers to take early retirement. Employees were told they would have health plan benefits for the rest of their lives and that the benefits would never change.

Some workers took early retirement based on these assurances, but the perks weren't as good as advertised. The benefits changed and, in some cases, were terminated. Furious retirees sued under ERISA, claiming the bogus advice led them astray. A federal appeals court agreed, ruling that the HR rep's misleading statements were enough to bind the company to its verbal promise of lifetime retiree medical benefits. (James v. Pirelli Armstrong Tire Corp., No. 02a0318p, 6th Cir.)

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