SmithKline Settles Class Action Suit

October 15, 2004 ( - SmithKline Beecham Corp. has agreed to a $5.2 million settlement with a group who filed a class action suit contending that the company violated Employee Retirement Income Security Act (ERISA) provisions on the labeling of workers as part or full-time.

>The plaintiffs had claimed that SmithKline labeled some employees as part time, denying them pension benefits, even though they were essentially working full time for months or even years, according to The Legal Intelligencer. The settlement, which was approved by US District Judge William Yohn, Jr., will provide payments for almost 1,300 employees who were denied benefits. In January, Yohn will hear arguments that may allow the plaintiffs legal fees to be covered by SmithKline.

>The settlement agreement splits the group into three separate entities. The first group, consisting of 235 members, has already received additional vesting and eligibility credits, and will receive anywhere from $254 to $3,024. The second group, with 255 members, who have received no additional vesting credit, will receive anywhere from $475 to $3,236. The third group, that is comprised of the remaining members who did not respond to an April 2000 letter informing them of the possibility of additional vesting credits upon full-time employment will receive anywhere from $356 to $2,494.

>It is expected that recipients will have to pay taxes, since the awards are not being paid out of SmithKline’s benefits plan.

>Yohn approved the suit as class action in July 2001 on behalf of 1,290 workers who were hired originally as part time workers and later hired as full time workers.

>SmithKline had asked for the case to be dismissed, stating the statute of limitations had begun to run when the plaintiffs first started to work at the company. Yohn denied this motion in December 2003, stating that the statute did not apply until the workers were hired full-time. His logic was that since workers were not aware of any wrongdoing until they were hired full time, the statue of limitations should not apply until that point. To do otherwise would imply that the statute applied before any knowledge of wrongdoing, which would violate the meaning of the statute.

>Yohn later cleared the way for the plaintiffs to pursue claims for benefits under their retirement plans and for breach of fiduciary duty, the Intelligencer said.