Every day, many Americans go to work with the expectation that they can retire with enough income. A primary source of their income is often a traditional employer pension or an employer-sponsored 401(k) plan. However, what if an employer denies an employee’s retirement benefits? This does happen and with more frequency than one might think. Sometimes, employers deny retirement benefits because of a technicality, policy change, or incorrect employment records. There are even occurrences in which companies fire employees just days or weeks from being eligible for full retirement benefits.
Whatever the reason, an employee who is denied benefits should know their rights. An employee has protection under the law, and an employment lawyer may be able to restore their rightful benefits.
Does the Law Protect My Pension Benefits?
Most private industry employees who participate in employer-sponsored retirement benefit plans are protected under the Employee Retirement Income Security Act of 1974 (ERISA). The ERISA is a federal law that preempts, replaces, and provides remedies for state law claims and gives federal jurisdiction over those claims. The ERISA requires employer-sponsored retirement plans to do the following:
- Provide participants with plan information, including features and funding.
- Establish minimum standards for plan participation, vesting, benefit accrual, and funding.
- Provide fiduciary responsibilities for asset management and control.
- Establish a grievance and appeals process when participants are denied benefits.
- Give participants the right to sue for benefits and breaches of fiduciary duty.
- Guarantees payment of benefits to participants in a defined benefit plan that is terminated.
The ERISA applies to all employer-sponsored retirement benefit plans, including traditional pensions, health insurance, short-term and long-term disability insurance, and 401(k) retirement plans.
It is important to note that the ERISA does not cover plans established or maintained by governmental entities or churches for their employees. It also does not cover plans that exist only to comply with Workers’ Compensation, unemployment, or disability law. Plans maintained outside the U.S. primarily to benefit non-resident aliens or unfunded excess benefit plans are also not covered under the ERISA.
How Do I File a Claim for Retirement Benefits?
Every ERISA-covered employer is required to provide plan participants a copy of the Summary Plan Description (SPD) for health and retirement benefit plans. The SPD details the benefits the programs offer and how they work. Federal law allows ERISA-covered employees to receive benefits when they are 65 years old or when they attain 10 years of service. To get benefits, an employee must file a claim with the administrator who oversees the plan.
Once the employee files a claim, the plan has up to 90 days to decide the claimant’s eligibility for benefits. They can take up to 180 days if they notify the claimant that they need an extension. If the plan determines the employees are eligible for benefits, they must begin benefits within 60 days after the end of the plan year in which the employee becomes eligible.
If the plan denies benefit eligibility, there must be a written document to inform the employee. The document must state the following:
- Specific reasons for claim denial.
- Outline of the plan provisions used in decision-making.
- Information of whether additional information is needed to make a decision.
- Details of the deadlines and procedures for a denial review.
Steps to Take After the Denial of Benefits
If an employer, plan administrator, or insurance company denies an employee’s claim for benefits, the worker should immediately hire a lawyer. An employment lawyer can guide the employee through the often complex and lengthy appeals process, starting with an internal appeal. The lawyer will file this internal appeal on the employee’s behalf after resolving potential problems or technicalities resulting in the denial of the claim.
The internal appeals process must occur before an employee can file a lawsuit. During the internal appeal, the benefits plan administrator, insurance company, and employer must comply with ERISA requirements and provide a reason for the claim denial. If the appeal is unsuccessful, the employee’s lawyer can file an ERISA lawsuit in federal court.
How Do I File a Lawsuit for Retirement Benefits?
An employment lawyer will file an ERISA lawsuit in federal court. All ERISA lawsuits go immediately before a judge and do not use juries. A judge will review administrative records from the internal appeal to determine if the denial of benefits was appropriate. These records include documents and information the plan used to deny benefits. Sometimes, a judge will allow evidence outside of the administrative record.
A successful employment lawyer will recover the amount of benefits due under the plan and possibly lawyer fees. A judge cannot award punitive damages or damages for pain and suffering in an ERISA claim.
What can I Sue for in Addition to Restored Benefits?
The ERISA prohibits employers from discriminating against an employee to prevent them from using benefits or retaliatingagainst an employee for using employment benefits. In addition to the denial of benefits, an employee may be able to sue for employment discrimination or retaliation if an employer does the following:
- Terminates an employee upon learning they will incur medical bills on the provided health insurance plan.
- Changes the employee’s status as a paid employee to an independent contractor.
- Cuts the employee’s hours so they cannot receive benefits.
- Fires or lays off employees who are close to being vested in retirement benefits.
- Terminates employees with medical conditions who receive benefits through the provided health insurance plan.
- Discriminates or retaliates against employee plan participants who exercise their ERISA rights.
The above are examples of retaliation and discrimination related to provided benefits and are not an exhaustive list of circumstances.
In a discrimination or retaliation claim, an employee can seek payment of denied benefits, a reinstatement to their former job if applicable, back pay, front pay, and lawyer fees. An employee may also be able to sue a plan administrator, employer, or insurance company for breach of fiduciary duty.
Under the ERISA, a plan fiduciary has the responsibility to run the benefits plan in the participant’s sole interest with care, skill, prudence, and diligence. A plan that is underfunded, mismanaged, goes bankrupt, or provides less than promised could be a candidate for a breach of fiduciary lawsuit. An employment lawyer can help a plan participant determine whether there has been a breach of fiduciary responsibilities.
Bucks County Employment Lawyers at The Gold Law Firm P.C. Help Clients Secure Their Retirement Benefits
You have worked hard for the right to enjoy a peaceful, secure retirement, but an employer, plan administrator, or an insurance company can deny your retirement benefits. However, employees have protections under the law. A skilled Bucks County employment lawyer at The Gold Law Firm P.C. will file an appeal on your behalf if your benefits were denied. Call us at 215-569-1999 or contact us online for a free consultation. We have offices in Philadelphia and Pennsauken, New Jersey, and we serve clients throughout South Jersey and southeastern Pennsylvania, including Wilkes-Barre, Scranton, northeast Philadelphia, Bucks County, Chester County, Delaware County, and Montgomery County.
