Lincoln National Didn't Violate ERISA Section 510

December 20, 2004 ( - A federal court has ruled that Lincoln National Corp. and its affiliates did not violate the Employee Retirement Income Security Act (ERISA) by categorizing worker terminations as "outsourcing" and not "job elimination".

>US Magistrate Judge David Cohen of the US District Court for the District of Maine dismissed a putative class action suit brought by former employees of the company and its affiliates that claimed that the company had violated Section 510 of ERISA. Cohen also ruled that the employee who brought the suit was time-barred by the plan, which set a six-month limitation of claims in federal court.

>The suit was brought by Robert Sheckley, an employee of Lincoln’s information technology department. In Early 2002, the company decided to outsource 26 jobs in the department to Computer Sciences Corp., and employees were instructed to apply to CSC for a position. Sheckley was hired, and was told he would be immediately vested in the Lincoln’s pension plan because his employment had been terminated.

>However, Sheckley was later informed that because his job had been outsourced and not eliminated, he would not be immediately vested in the company’s plan.

>Sheckley then brought suit on behalf of himself and the other employees affected by the move, claiming that the company had violated Section 510 of ERISA by mischaracterizing the job terminations as outsourcing. The suit sought immediate vesting in the company’s plan.

>Cohen, however, dismissed the suit, ruling that Section 510 requires that each defendant must have intentionally impaired a participant’s ability to become entitled under a plan. This was not the case with Lincoln, Cohen ruled, since Sheckley’s job termination “cannot reasonably be construed, even under the favorable standard applicable to motions to dismiss, to allege discrimination.”  

>Cohen also noted the six-month time limitation set by the plan limited the claim, which Shockley said did not apply because of the initial, yet false, notification of full vesting.

>The ruling in Sheckley v. Lincoln National Corp. is available  here .