NYSE Leave of Absence Policy not Discriminatory

October 3, 2006 (PLANSPONSOR.com) - The US District Court for the Southern District of New York has ruled the New York Stock Exchange (NYSE) did not discriminate against 15 disabled former employees when it adopted a leave of absence policy that terminated their health and life insurance benefits.

The employees, who were on long-term disability, claimed the new policy singled them out with a provision that called for the employment status of a worker to be terminated if they were not able to return to work within 24 months of starting leave. The plaintiffs sued for discrimination under Section 510 of the Employee Retirement Income Security Act (ERISA).

The court rejected their argument, saying in its opinion, “If every change to a welfare plan that disparately impacted participants were considered discriminatory, employers who reduce or terminate coverage for certain categories of illness … would face near-automatic section 510 liability.”  The court pointed out that, a ccording to the provisions of the disability plan as lined out in the NYSE’s summary plan description (SPD), the exchange reserved the right to “amend, modify or terminate any and all provisions of the plan (including any related documents or policies), in whole or in part, at any time and for any reason,” which included changing the eligibility rules and eliminating certain benefits.

Raymond Tirone, a senior trading investigator and market surveillant at the NYSE, filed a medical leave of absence in 1990 after he began having seizures. The company classified him as “totally disabled,” and therefore unable to return to work. Tirone collected long-term disability and a benefit equal to 60% of his last earned salary.

On January 1, 2005, the NYSE adopted the new leave of absence policy. Tirone’s benefits were stopped as of March 2005.

The case is Tirone v. New York Stock Exchange Inc. S.D.N.Y., No. 05 Civ. 8703 (WHP), 9/28/06.