Illustration of Fort Halifax non-plan

[Rip Verkerke <ripv@virginia.edu>]

Dear Employment Law Students:

Here is a straightforward application of the Fort Halifax doctrine
concerning non-plan severance benefits that we discussed in class.  Note
that the court here particularly emphasizes the one-time nature of the
payments.

Regards,

Rip

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DC - Voluntary retirement incentive program wasn't an ERISA plan.

Young v. Washington Gas Light (DC Cir 03/31/2000)
http://laws.findlaw.com/DC/997091A.html

Capsule:  Young argued on appeal that the employer's "one time only"
voluntary retirement incentive program was a plan subject to regulation by
the Employee Retirement Income Security Act (ERISA).  ERISA doesn't specify
what constitutes a "plan" within the meaning of that statute.  In Fort
Halifax Packing v. Coyne, 482 US 1 (1987), the United States Supreme Court
concluded that ERISA applies only to "benefits whose provision by nature
requires an ongoing administrative program to meet the employer's
obligation."  ERISA is not implicated by a one-time, lump sum payment
triggered by a single event.

The court observed that "[a]lthough Fort Halifax Packing has not yet been
applied by this court, the decisions of the other circuits agree with the
proposition that an employee benefit may be considered a plan for purposes
of ERISA only if it involves the undertaking of continuing administrative
and financial obligations by the employer to the behoof of employees or
their beneficiaries."  In Young's case, the employer only had to make the
initial determination of whether a given employee was eligible for the
voluntary retirement program.  The court concluded that this was not the
kind of administrative decision that requires ERISA protection, and affirmed
the dismissal of Young's suit.
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