OT Eligibility Decision not Intended to Reduce Company Match

May 30, 2008 (PLANSPONSOR.com) - A federal judge in Minnesota has cleared an employer of Employee Retirement Income Security Act (ERISA)-related wrongdoing by classifying some employees as overtime exempt.

U.S. District Judge David S. Doty of the U.S. District Court for the District of Minnesota ruled that Group Health Plan was making a business decision regarding the compensation status of plaintiff Amy Maranda and other employees and not a decision intended to reduce the employer’s 401(k) matching contribution to those workers.

Doty also pointed out that the Group Health 401(k) plan restricted money put into the plan to eligible earnings, which the court said involved money actually paid and not money that should have been paid. Group Health therefore was not required to make contributions based on overtime hours for which the employees did not receive actual compensation, according to the opinion.

Maranda asked that her lawsuit be certified as a class action representing other employees of Group Health Plan classified as exempt from the overtime requirements of state law and the Fair Labor Standards Act (FLSA). Maranda argued, among other things, that Group Health violated ERISA by misclassifying the employees, which reduced the amount of money it would match in a 401(k) plan.

The court said the plaintiffs could refile their suit to focus on state and federal FLSA claims.

The case is Maranda v. Group Health Plan Inc.,D. Minn., No. 07-4655 (DSD/SRN), 5/20/08.