Review Questions #4

[Rip Verkerke <ripv@virginia.edu>]

A student asked:

I would like to ask you some employment law questions about
some things I am still not sure about.

What are shutdown benefits?

Are defined contribution plans subject to ERISA 203 vesting
schedules?

Is the Skagerberg case old law because it requires a
definite term contract or additional consideration to
receive just cause protection, whereas today, you can still
use a definite term contract to receive just cause, but you
can also contract for it directly, or rely on oral
modifications and implied in fact contracts.

Thank you very much.

Rip responded:

(1) Shutdown benefits are special payments made to employees in the event
that a plant closes.  The union in LTV had negotiated shutdown benefits for
its members and the company was able to threaten plant shutdowns that would
create new benefit obligations that PBGC would have to guarantee.

(2) Yes, the employer-contributed portion of the balance in a defined
contribution plan can be subject to forfeiture.  However, it must vest
according to the five-year cliff or seven-year graduated schedule in section
203.  Moreover, any portion of the balance attributable to employee
contributions is fully vested immediately.

(3) That is exactly correct about Skagerberg.  The case establishes a much
stronger presumption against finding just cause protection than most modern
courts would do.  But remember that, even today, jurisdictions vary quite
considerably in how willingly they will find a just cause contract.

Regards,

Rip