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Severance Plan That Doesn’t Require Ongoing Administration Is Not an ERISA Plan

June 15, 2021


An employer’s project completion bonus payable to employees is not an employee benefits plan under the Employee Retirement Income Security Act (ERISA) if the plan does not involve an ongoing administrative program, the 5th U.S. Circuit Court of Appeals ruled.

The employer created a project completion incentive plan that required the employer to pay a completion bonus to employees who were laid off in a reduction-in-force or transferred by the employer when the employee’s role on the project ended. The plaintiffs, five former employees of the employer who were not entitled to the completion bonus because they quit before the project ended, argued that the plan violated state law.

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