Supplemental materials for LEAP 2025 session The Benefits Workshop.
Your handbook probably states you reserve the right to amend it at any time for any reason. That disclaimer helps protect against claims that your handbook is a binding contract. But that kind of language can cause problems if your handbook describes benefits that may be covered by the Employee Retirement Income Security Act.
Recent case: When Bristol Compressors needed to close a factory, it first decided to cancel a severance plan it had embedded in the employee handbook. The handbook included a contract disclaimer saying it could only be amended in writing by the HR department. Before closing the plant, the company’s board of directors voted to terminate the severance plan and cut it from the handbook.
Several workers sued, arguing that the severance plan was covered by ERISA and could only be changed by HR. After all, the handbook said changes had to be carried out by HR.
The 4th Circuit Court of Appeals ruled the workers were right; the company hadn’t followed its own rules. Therefore, the ERISA-covered severance plan was still in effect at the time the plant closed. (Messer, et al., v. Bristol Compressors, 4th Cir., 2023)
Advice: Review your handbook and consider removing any references to potential ERISA-covered benefits.
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
