[Podcast]: Severance Pay Plans & ERISA

In this benefits law edition of The Proskauer Brief, senior counsel Anthony Cacace and partner Robert Projansky discuss how severance plans can be subject to ERISA. We will discuss the key advantages of having severance pay arrangements covered by ERISA and what employers can do to design plans that comply with the substantive and procedural requirements of ERISA, but also maximize the likelihood of benefiting from ERISA coverage. Whether a severance plan or arrangement is governed by ERISA is a rather fact-intensive analysis, so be sure to tune in for how those facts and circumstances can give rise to an ERISA plan.

Listen to the podcast.

Anthony Cacace: Hello. Welcome to the Proskauer Brief, Hot Topics in Benefits Law. I'm Anthony Cacace, here with Rob Projansky and today we're going to discuss severance pay arrangements and ERISA. So, Rob, when is the severance pay arrangement covered by ERISA?

Rob Projansky: Anthony, a lot of people focus on whether or not a document is in writing. So a written plan document that's operated in compliance with ERISA it's sometimes used as evidence that the arrangement's ERISA covered, but that's not really the defining criteria for whether or not something is covered by ERISA. If you look to ERISA what you'll see is that the definition of a plan is a plan, fund or program established or maintained by an employer for the purposes of providing severance to its employees. Distinguish that from a one-time arrangement where there is no ongoing administrative scheme. For example, I'm paying out a lump sum to everybody, just an exact amount to everybody, close the plant. Goodbye. That typically wouldn't be an ERISA plan but if you have some kind of plan or program that people can look at and say oh, yeah, there is an ongoing administration here, that's typically going to make it ERISA covered. Whether a severance plan or arrangement is governed by ERISA is actually a pretty fact intensive analysis with a lot of nuances and you pretty much have to talk to your lawyers about when those facts and circumstances give rise to an ERISA plan.

Anthony Cacace: So let's say the facts and circumstances are that an employer's severance pay arrangement is subject to an ongoing administrative scheme and covered by ERISA. What are some of the things that the employer needs to do to make sure it does not run afoul of ERISA?

Rob Projansky: We're going to talk in a few minutes about the benefits of ERISA and why ERISA coverage...