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Hiding in Plain Sight: Why Every Employment Lawyer Should Know About ERISA Section 510
An overview of ERISA Section 510

The acronym “ERISA” strikes fear in the hearts of many lawyers, even those seasoned in employment law.  Believing it is too complex for all but those who specialize in employee benefits, that it will preempt all other claims, or that it provides no meaningful recovery, lawyers who represent employees often have a knee-jerk aversion to taking a case if ERISA—the Employee Retirement Income Security Act—is involved.  It is of course true that ethical and practical considerations proscribe lawyers from taking cases they are not qualified to handle.  It is also true that much of ERISA is best left to attorneys whose practice focuses on employee benefits.  Nevertheless, these common fears about ERISA are not always well-founded.  One particular provision of ERISA is underutilized by employees and their lawyers: Section 510.  Claims under section 510 are easy to understand and spot, can be brought at the same time as other employment claims, and can provide significant monetary relief.  All employment lawyers—whether they represent employers or employees—should cast off their fears about ERISA and make themselves aware of section 510.

 A.    What is ERISA Section 510?

Section 510 prohibits two types of conduct: “adverse action taken because a participant availed himself of an ERISA right (an ‘exercise’ or ‘retaliation’ violation), and interference with the attainment of a right under ERISA (an ‘interference’ violation).”[i]  The statutory language states in pertinent part: 

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provision of an employee benefit plan, [or ERISA] . . . or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, [or ERISA]. . . .[ii]

Creating independent claims for both “retaliation” and “interference,” ERISA section 510 is thus structurally similar to the Family and Medical Leave Act (“FMLA”), a staple for employment lawyers. 

Congress created section 510 “primarily to prevent persons and entities from taking actions that might cut off or interfere with a participant’s ability to collect present or future benefits or which punish a participant for exercising his or her rights under an employee benefit plan.”[iii]  It was viewed by Congress as a “crucial part of ERISA because, without it, employers would be able to circumvent the provision of promised benefits.”[iv]  While section 510 was intended “primarily at preventing unscrupulous employers from discharging or harassing their employees in order to keep them from obtaining vested pension rights,”[v] it applies to non-vested benefits as well.[vi]  Thus, viable claims under section 510 often revolve around employer-provided health insurance plans (a non-vested benefit) and the employer’s efforts to avoid added costs under those plans.

Aside from being similar in form to the FMLA, the legal framework used to analyze section 510 claims will be familiar to employment lawyers as well.  For both types of section 510 claims, the framework mirrors the one used in cases under Title VII and other employment laws.  In either type of section 510 case, the plaintiff must first prove a prima facie case by either direct or circumstantial evidence.  Where there is no direct evidence, the ubiquitous McDonnell Douglas framework is applied.[vii]  In an interference case, a plaintiff establishes a prima facie case by showing he or she was: (1) covered under an employer’s plan; (2) subjected to adverse employment action; (3) meeting the employer’s reasonable expectations; and, (4) discharged under circumstances giving rise to some basis for believing prohibited intent existed.[viii]  In a retaliation case, the prima facie case requires the employee to show: “‘(1) she was engaged in activity that ERISA protects; (2) she suffered an adverse employment action; and (3) a causal link exists between her protected activity and the employer’s adverse action.’”[ix]  As with cases brought under other employment laws, the analysis in section 510 cases next turns to the existence of a legitimate, non-discriminatory reason for any adverse action, followed by an inquiry into pretext.[x]  Although plaintiffs must show the employer had “specific intent to violate ERISA,” they need not show that was the employer’s sole purpose.[xi]  Instead, plaintiffs may prevail by showing “denial of benefits was a motivating factor in the decision.”[xii]

B.     ERISA Section 510 Claims are Easy to Spot.

In many cases, a section 510 claim is hiding in plain sight.  Section 510 should be considered whenever adverse action against an employee could be motivated by the employer’s desire to avoid increased healthcare costs, or shortly before a pension vests.  These situations arise in a number of fact patterns common to discrimination and FMLA cases.  Yet while most lawyers, and even many non-lawyers, can frequently spot potential discrimination—and to a lesser extent, FMLA—issues, section 510 claims are rarely asserted.

Section 510 claims often intertwine with disability discrimination or FMLA claims.  For instance, an employer might fire an employee shortly after the employee gets sick.  Depending on the nature of the illness and whether the employee has sought or taken leave, the Americans with Disabilities Act (“ADA”) or the FMLA might prohibit that conduct.  But if the employer fired the employee because the employee’s illness would result in increased costs under the employer’s group health insurance plan, the employer has violated section 510’s “interference” prong.  An employer also violates the interference prong by firing an employee because the employee has a sick family member who is either covered under the group health plan, or who may become eligible for it.[xiii]  That fact pattern is a frequent one under the FMLA, which permits employees to take leave in order to care for the serious health condition of a parent, spouse, or child.[xiv]  It is also found in “associational discrimination” claims under the ADA—discrimination against those who are closely associated with an individual with a disability, such as a spouse or child.[xv]  Section 510 may also overlap with the ADA where an employee is fired because the employee previously suffered from a disability that results in higher healthcare costs for the employer, for instance cancer in remission or a chronic condition that periodically flares up.[xvi]

Potential age discrimination cases can also overlap with section 510 cases.  On average, older employees have higher healthcare costs and are closer to vesting in their pensions.  Although a claim of age discrimination cannot rest solely on the employee’s costs to the employer or proximity to pension vesting, a plaintiff can assert a section 510 claim on either basis.[xvii]  It would certainly violate section 510 to fire an employee in order to stop the employee from vesting in a pension or to keep the employee from attaining group healthcare benefits.[xviii]

While these fact patterns will give rise mostly to interference claims, section 510 retaliation claims are easy to spot as well.  A retaliation claim can arise from an employee’s use of disability benefits.[xix]  Subsequent adverse action that may appear solely as disability discrimination can create a potential section 510 retaliation claim as well.  A retaliation claim might also stem from an employee’s complaint about the employer’s failure to provide benefits or information called for under a benefit plan.[xx]

C.    Section 510 Claims Have Value for Employees.

Contrary to common fears, ERISA section 510 claims can help ensure an aggrieved employee obtains meaningful relief.  A plaintiff who prevails on a section 510 claim is entitled “to recover benefits due to him under the terms of his plan.”[xxi]  Given the high cost of healthcare, that may be a significant recovery for an employee who has lost or been denied employer-provided health insurance.  Benefits recovered might also be sizeable for an employee who lost a pension after years of employment, but shortly before vesting.  A successful section 510 plaintiff is also entitled to “other appropriate equitable relief.”[xxii]  Within the Sixth Circuit, that relief includes the critical remedies of back pay and front pay.[xxiii]  In addition, attorneys’ fees are available to a prevailing plaintiff under ERISA.[xxiv]  Moreover, a section 510 claim can succeed, even when a contemporaneous discrimination or FMLA claim fails.[xxv]

If carefully pleaded, section 510 claims can even be brought without preempting actionable state law discrimination claims.  It is true ERISA preempts state (but not federal) claims that relate to any employee benefit plan.[xxvi]  Even where a section 510 claim is brought though, ERISA only preempts state law claims relating to an employee’s discharge if those state law claims are premised on a “‘pension-defeating motive in terminating the employment.’”[xxvii]  By contrast, a “straight . . . discrimination case which has no counterpart or superseding cause of action in ERISA” is not preempted.[xxviii]  If the state law claim in the complaint is not predicated on an employer’s motivation to avoid payment of plan benefits, the claim will likely not be preempted.[xxix]  For example, an employee may bring a section 510 claim and a state law disability claim at the same time, provided that the latter does not allege the employer discriminated in order to avoid higher healthcare costs.[xxx]  Thus, the general assumption that ERISA preempts all other claims should not stop employment lawyers from being aware of section 510.

* * *

Because of fears about the complexities of employee-benefits law in general, limited damages, and preemption, many lawyers fail to consider claims under section 510 of ERISA.  Those lawyers should not be so dismissive.  Section 510 claims are easily spotted, arising under the same fact patterns that employment lawyers see time and time again.  When brought, the claims do not necessarily preempt other applicable claims, and are analyzed under common employment law frameworks.  If successful, they can provide a meaningful financial remedy. And, they can even prevail where a discrimination or FMLA claim would not.

No matter which side of the aisle, all employment lawyers should start becoming aware of section 510.  It is too significant a potential claim for employees, employers, or their respective lawyers, to ignore.



[i] Coomer v. Bethesda Hosp., Inc., 370 F.3d 499, 506 (6th Cir. 2004).

[ii] 29 U.S.C. § 1140 (emphasis added).

[iii] Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1133 (7th Cir. 1992).

[iv] Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 143 (1990).

[v] Mattei v. Mattei, 126 F.3d 794, 798 (6th Cir. 1997) (quotation omitted).

[vi] Inter-Modal Rail Employees Ass’n v. Atchison, Topeka and Santa Fe Railway Co., 520 U.S. 510 (1997); Coomer, 370 F.3d at 509, n.8.

[vii] Smith v. Hinkle Mfg., Inc., 36 Fed. Appx. 825, 828 (6th Cir. 2002); see Momchilov v. McIlvaine Trucking, Int’l, Inc., 2010 U.S. Dist. LEXIS 27620, *9–10 (N.D. Ohio Mar. 24, 2010).

[viii] Geer v. United Precast, Inc., 2007 U.S. Dist. LEXIS 9209, *20­–21 (N.D. Ohio Feb. 7, 2007).

[ix] Momchilov, 2010 U.S. Dist. LEXIS 27620, at *9–10 (quoting Hamilton v. Starcom Mediavest Group, Inc., 522 F.3d 623, 628 (6th Cir. 2008)).

[x] See Smith, 36 Fed. Appx. at 828; Momchilov, 2010 U.S. Dist. LEXIS 27620, at *9–10.

[xi] Geer, 2007 U.S. Dist. LEXIS 9209, at * 20–21 (citing Schlett v. Avco Fin. Servs., Inc. 950 F. Supp. 823, 834–35 (N.D. Ohio 1996)).

[xii] Schlett, 950 F. Supp. at 834–35.

[xiii] See Smith, 36 Fed. Appx. at 825, 828.

[xiv] 29 U.S.C. § 2612(a)(1)(C).

[xv] 42 U.S.C. § 12112(b)(4).

[xvi] 42 U.S.C. § 12102(2) (including individuals with a “record of” a physical or mental impairment that substantially limits one or more major life activities within the definition of “disability”).

[xvii]Hazen Paper Co. v. Biggins, 507 U.S. 604, 612 (U.S. 1993) (holding that proximity to vesting in a pension is not a basis for an age discrimination claim); Allen v. Diebold, Inc., 33 F.3d 674, 677 (6th Cir. 1994) (“Plaintiffs must allege that Diebold discriminated against them because they were old, not because they were expensive.”).

[xviii] 29 U.S.C. § 1140; see Hazen Paper Co., 507 U.S. at 612 (noting that firing an employee to preclude vesting in a pension plan would be actionable under ERISA section 510); Pennington v. Western Atlas, Inc., 202 F.3d 902, 906–11 (6th Cir. 2000) (upholding a jury award under ERISA on a claim that the employer laid off 59-year old and 60-year old plaintiffs to keep them from vesting on their pensions).

[xix] See Huisjack v. Medco Health Solutions, Inc., 496 F. Supp. 2d 859, 863 (S.D. Ohio 2007).

[xx] See Schwartz v. Gregori, 45 F.3d 1017 (6th Cir. 1995); Browning v. Gutchess, 843 F.2d 1390 (6th Cir. 1988).

[xxi] 29 U.S.C. § 1132(a)(1)(B).

[xxii] 29 U.S.C. § 1132(a)(3).

[xxiii]  See Schwartz, 45 F.3d at 1022–23; Wiideman v. Daimerchrysler Corp., 2006 U.S. Dist. LEXIS 71929 (E.D. Mich. Oct. 3, 2006); cf. Bledsoe v. Emery Worldwide Airlines, Inc., 635 F.3d 836, 843 (6th Cir. 2011) (citing Schwartz’s holding with approval in a WARN Act case); contraMillsap v. McDonnell Douglas Corp., 2004 WL 1127189, at *6 (10th Cir. May 21, 2004).

[xxiv] 29 U.S.C. § 1132(g)(1).

[xxv] See Fleming v. Ayers & Assoc., 948 F.2d 993, 998 (6th Cir. 1991) (affirming a jury verdict on an ERISA section 510 claim and dismissal of Title VII gender discrimination claim); Huisjack, 496 F. Supp. 2d at 864 (denying summary judgment on an ERISA section 510 claim but granting summary judgment on an age discrimination claim); Conners v. Spectrasite Communs., Inc., 465 F. Supp. 2d 834, 859 (S.D. Ohio 2006) (denying summary judgment on an ERISA section 510 claim but granting summary judgment on disability discrimination and FMLA claims); cf. Hazen Paper Co., 507 U.S. at 612 (holding that firing an employee to prevent pension benefits from vesting “would be actionable under § 510 of ERISA . . . But it would not, without more, violate the ADEA.”).

[xxvi] Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1276 (6th Cir. 1991).

[xxvii] Welsh v. Wachovia Securities, LLC, 2007 U.S. Dist. LEXIS 61794, at *4 (N.D. Ohio Aug. 22, 2007) (quoting Ingersoll-Rand Co., 498 U.S. at 139).

[xxviii] Warner v. Ford Motor Co., 46 F.3d 531, 534 (6th Cir. 1995).

[xxix] See Kalo v. Moen Inc., 93 F. Supp. 2d 869, 874–75 (N.D. Ohio 2000).

[xxx] As a practical matter, since ERISA claims will make a case removable to federal court, in some instances, there will be no particular advantage to bringing a claim of discrimination under state law rather than an analogous federal statute. 

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