Compliance January 31, 2008

Ex-Mellon Employee Eligible for Displacement Benefits

January 31, 2008 (PLANSPONSOR.com) - An employee of an HR consulting firm fired as part of a corporate merger won a legal battle when a federal judge ruled that he was due benefits under a displacement program.
Reported by

U.S. District Judge Faith S. Hochberg of the U.S. District Court for the District of New Jersey ruled that plaintiff Robert Howley was never given a bona fide job offer at the acquiring company because a decision had been made before the sale that Howley was to be part of a planned reduction in force.Since that was true, Hochberg reasoned, Howley’s job responsibilities, salary, and work location would not be the same, as was required for a worker to be covered under the sale of business exception to the displacement program.

The court noted that if Howley had a year of participation in that program, he would have qualified for early retirement and for increased medical benefits during retirement. According to Hochberg’s ruling, Howley worked for Mellon Human Resources and Investor Solutions, a subsidiary of Mellon Financial Corp., for 25 years. When he was terminated, Howley was 11 months short of early retirement.

Mellon HR&IS was sold through a stock purchase sale in May 2005, to Affiliated Computer Services Inc. (ACS) (See HR Outsourcing Consolidation Continues with ACS-Mellon Deal ). Howley then was fired on his first day of work for ACS.

For its part, according to the ruling, Mellon argued that it took a “snap shot” of Howley’s employment at the stock sale, and decided that because Howley received an offer of employment with ACS for the same job at the same location and with the same pay, he had not been “displaced” by the sale, and was ineligible for benefits under the displacement benefit program.

Mellon began drawing up a list of employees to be terminated before the sale of Mellon HR&IS, the court said, so it was clear Howley would not ever be able to perform his job under the new company.

“Mellon’s insistence upon a ‘snap shot’ review of an employee’s termination was thus arbitrary and capricious because it ignored the reality of Plaintiff’s non-employment offer implemented pursuant to a pre-planned RIF,” Hochberg wrote.

Hochberg turned away the employer’s request to dismiss Howley’s suit.

The case is Howley v. Mellon Financial Corp.,   D.N.J., No. 06-5992 (FSH), 1/29/08.

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