Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
By Jacklyn Wille
Dec. 23 — A former vice president at a Pennsylvania nonprofit hit a roadblock in his quest for nearly $60,000 in deferred compensation when a federal judge found that his retirement plan was a top-hat plan exempt from ERISA ( Sikora v. UPMC, 2015 BL 421507, W.D. Pa., No. 2:12-cv-01860-MRH, 12/22/15).
The judge found that the vice president couldn't rely on the protections of the Employee Retirement Income Security Act because the retirement plan in question qualified as a top-hat plan. The judge said that the plan benefited only a select group of highly compensated employees—less than half of a percent of the nonprofit's workers, many of whom made more than $500,000 per year.
In arguing against the plan's top-hat status, the vice president urged the court to adopt “bargaining power” as an essential element of a top-hat plan. Relying on a Department of Labor opinion letter, the vice president argued that a top-hat plan must be one in which the plan participants have the bargaining power to substantially influence the design and operation of the plan.
The court squarely rejected this invitation, saying that “It is plain that there has not been one federal court that has applied ‘bargaining power' as an element in determining whether a deferred compensation plan is a top hat plan that is exempt from ERISA coverage. This Court declines to be the first.”
The Dec. 22 opinion was written by Judge Mark R. Hornak of the U.S. District Court for the Western District of Pennsylvania.
The vice president was represented by Diefenderfer Hoover McKenna & Wood LLP. The nonprofit was represented by Eckert, Seamans, Cherin & Mellott.
To contact the reporter on this story: Jacklyn Wille in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)