Blogging Employee Benefits

August 19, 2006

ERISA 510 Claim Time-Barred

Filed under: Litigation — Fuguerre @ 8:11 am

Insurance salesmen’s claims that an insurance company’s modification of its employment contract violated ERISA §510 were not filed before the expiration of the applicable state’s statute of limitations, according to a 7th Circuit decision affirming the district court. [Berger and Laxton v. AXA Network LLC and Equitable Life Assurance Society of the United States, No. 05-2495]

The insurance salesmen had been employed as independent contractors through an “honor system” agreement under which they were eligible for participation in the insurance company’s ERISA plans. In 1999, the company eliminated the honor system in favor of an objective annual sales goal that was to be met by an agent in order to continue to be recognized as a statutory employee. Two Illinois agents lost their employment status under the revised agreement in 1999 and 2000, along with several thousand other of the company’s agents nationwide. In 2003, the plaintiffs filed a complaint alleging that the company’s revision of their employment agreement violated ERISA §510, which prohibits interference with protected ERISA rights through discharge of employment.

ERISA §510 is given no express statute of limitations under ERISA itself and was enacted too early to come under the default 4-year federal limitations period of 28 U.S.C. §1658(a). Turning to the most analogous state law, the court’s analysis led it to New York, the state in which the insurance company’s corporate offices were located and the forum of law specified in the employment agreement. Next seeking New York state law most analogous to the concerns of ERISA §510, the court turned to New York Workers’ Compensation Law §120, which carried a 2-year statute of limitations.  Finding that the claim accrued in February 1998, when the 1999 change in the employment agreement was communicated to the agents, the appellate court affirmed the district court’s dismissal of the action as time-barred.

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