The appellate court reversed the decision of a lower court that dismissed the case after determining the plan qualified as a “top hat” plan and was exempt from ERISA’s vesting, funding and fiduciary responsibility requirements. Considering an affidavit by participant Rebecca Bakri, the court determined the plan did not meet the selectivity requirement of “top hat” plans since it covered participants “who had no supervisory, policy making, or executive responsibility, and had little ability to negotiate pension, pay or bonus compensation.”
According to the opinion, “The purpose of the “top hat” exception to ERISA coverage has been characterized by the Department of Labor as a recognition by Congress “that certain individuals, by virtue of their positions or compensation level, have the ability to affect or substantially influence, through negotiations or otherwise, the design and operation of their deferred compensation plan . . . and would, therefore, not need the substantive rights and protections of” ERISA.”
Bakri had worked for Venture Manufacturing Company for 20 years and left the firm after she expressed concern that she was paid less than male employees and was denied a raise. She sued the firm claiming Venture took back the $55,000 in contributions it made to the plan on her behalf plus the earnings.
A lower court granted summary judgment for Venture which argued the plan was a “top hat” plan and not subject to ERISA requirements. The appellate court remanded the case back to the lower court for further proceedings.
The opinion in Bakrit v. Venture Mfg. Company is here .