United States: Labor And Employment Law Weekly Update (Week Of November 21, 2011)

By George, It Must Be Formal — Informal Complaints May Not Be Protected by ERISA's Anti-Retaliation Provision

Written by: Theodore T. Eidukas

Section 510 of the Employee Retirement Income Security Act of 1974 (ERISA) protects an employee who "has given information or has testified or is about to testify in any inquiry or proceeding relating to" ERISA from retaliation by that person's employer. 29 U.S.C. § 1140. It is clear that, if an employee testifies regarding an alleged ERISA violation in a case pending in court or talks to the Department of Labor (DOL) as part of an active DOL investigation of potential ERISA violations, this section prohibits the employer from discharging, fining, suspending, expelling, or otherwise discriminating against the employee. But what if an employee informally volunteers information to the DOL when no litigation or investigation is pending and no formal complaint is filed?

So far, five federal circuit courts have ruled on this question, with two (the Fifth and Ninth Circuits) holding that such informal complaints do trigger the anti-retaliation protections of ERISA Section 510 and the other three (the Second, Third, and Fourth Circuits) holding that this provision does not apply to informal complaints. In George v. Junior Achievement of Central Indiana, Inc. (S.D. Ind. Sept. 28, 2011), the Southern District of Indiana faced this question and had to predict how the Seventh Circuit would answer it. In George, the executive vice president of Junior Achievement was concerned that funds withheld from his paychecks were not being deposited into his 401(k) account by Junior Achievement. He contacted the DOL and informed the DOL that Junior Achievement was removing funds from his paycheck but not depositing them into his retirement account. However, he never filed a written complaint and declined the DOL's invitation to open a case file. While Mr. George complained about the issue internally to Junior Achievement's president and board members, he never told Junior Achievement that he had contacted the DOL. However, when Junior Achievement terminated Mr. George a few months later, he claimed that the firing was related to his accusations of improper 401(k) account funding and filed suit alleging, among various state law claims, a violation by Junior Achievement of ERISA Section 510.

The court examined the reasoning of the other federal courts that had ruled on this question and concluded that the Seventh Circuit would agree with those that have held that ERISA Section 510 does not apply to informal complaints, such as those Mr. George made to the DOL. The court focused on the language of the section and reasoned that the word "inquiry" indicates a request for information so that the unsolicited provision of information, such as Mr. George made, would not be covered by the statute. Similarly, the court reasoned the term "proceeding" means a formal action. Reaching this conclusion, the court granted judgment in favor of Junior Achievement on Mr. George's ERISA Section 510 retaliation claim because he never filed a complaint and the DOL never initiated an investigation.

Care must be taken in terminating any employee who has made even an informal complaint under this ERISA provision. Until the United States Supreme Court rules on this issue, the answer to this question varies depending on which federal appeals court covers the area in which the employee worked.

NLRB Delegates Certain Authority to General Counsel in Preparation for Loss of Quorum

Written by: Michael W. Groebe

On November 3, 2011, the NLRB issued an order contingently delegating to the general counsel full authority over court litigation matters that would otherwise require Board authorization and full authority to certify results of any secret ballot election conducted under the National Emergency provisions of the Labor Management Relations Act. The delegation over court litigation matters includes full and final authority to initiate and prosecute injunctions under Sections 10(j), 10(e), and 10(f), as well as to initiate and prosecute contempt proceedings pertaining to the enforcement of, or compliance with, any order of the Board.

The delegation becomes effective if the Board's membership drops below three members. Currently, there are three Board members, Mark G. Pearce (D), Craig Becker (D), and Brian Hayes (R). Unless the Senate approves the recess appointment of Mr. Becker by the end of the current session of Congress, the Board membership will be reduced to two members. With the current political makeup of the Senate, it is unlikely that Mr. Becker's appointment would be approved, especially given the fact that Mr. Becker was a controversial pick in the first place based on his direct ties to organized labor.

The Board's delegation likely is in response to last year's New Process Steel v. N.L.R.B. decision in which the Supreme Court held the Board did not have statutory authority to act with only two Board members. The New Process Steel decision invalidated approximately 600 cases that were decided by a two-member Board.

While the Board has previously delegated such authority to the general counsel in orders dated December 14, 2001, and November 19, 2002, it is unclear whether this delegation would be upheld if challenged. Given the decision in New Process Steel and the Board's stance that its most recent order relates to "internal management" of the Board and is, thus, exempt from normal notice requirements, any significant actions taken pursuant to this latest delegation likely will result in future court challenges.

Labor and Employment Trivia

Last week's question What is a "wildcat strike" and what is the origin of the term?

Answer: A wildcat strike occurs when workers stop working in breach of a collective bargaining agreement's no-strike clause, or otherwise strike without proper authorization from a duly designated labor union. Under Section 301 of the Taft-Hartley Act of 1947, an employer who is the victim of a wildcat strike may be able to sue for damages caused by the strike. The origins of the term are unclear. One theory holds that the term originated from a bankrupt bank in the 1830s that had a panther or wildcat on its banknotes. Since 1838, wildcat meant "a hastily formed and financially precarious, or speculative, bank."

This week's question: (Submitted by a loyal reader) What is the blue flu? Is it legal? What is an employer's recourse?

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