Severance Plan Amendment Notice not Sufficient

July 25, 2007 ( - An Illinois federal court ruled Wednesday that a case claiming CNA Financial Corporation did not give members of its sales force sufficient notice of severance plan amendments will be allowed to move forward to trial.

The 90 former members of CNA’s life insurance and annuities sales force were terminated when their division was sold in 2004. However, the employees worked until the day the sale went through, unaware that their severance benefits had been amended. The amendment meant these workers’ benefits would be cut by more than $4 million.

The court found that the employers were not given reasonable notice that their severance plan had been changed.

The severance plan had required a notice of change in benefits, but those changes only appeared as a clause in the company’s internal intranet posting of the plan. According to the decision, the company “did not highlight, underline, or draw attention to the newly added language” that denied severance benefits to the employees.

The decision by Chief U.S. District Judge James F. Holderman to allow the complaint to go to trial goes against the finding of the company’s internal appeals committee, which said the employees were given sufficient notice. The court said the decision by the committee was a conflict of interest.

For the full opinion in Rosenberg, et al. v. CNA Financial Corp and the CNA Severance Pay Plan, No. 04 C 8219 go here .