ERISA-Seventh Circuit Rules That An Informal Complaint About A Violation of Fiduciary Duties Under ERISA Can Be Protected By ERISA’s Anti-Retaliation Provision In Section 510

In George v. Junior Achievement of Central Indiana, Inc., No. 11-3291 (7th Cir. 2012), the plaintiff, Victor George (“George”), a vice president of Junior Achievement of Central Indiana, Inc. (“Junior Achievement”), discovered that money withheld from his pay by Junior Achievement was not being deposited by it into George’s retirement account and health savings account. After complaining to Junior Achievement’s accountants, executives and board, and repeatedly asking how the situation would be rectified, George received checks for about $2,600 to make up for the missed deposits plus interest. George’s employment with Junior Achievement was terminated as of December 1, 2009, after he withdrew sums from the retirement account, even though was entitled to do so. One question for the Seventh Circuit Court of Appeals (the “Court”): was George protected against termination by the anti-retaliation provision in section 510 of ERISA?

In analyzing the case, the Court noted that an employer’s failure to deposit money withheld from an employee’s paycheck into that employee’s retirement account is a breach of the employer’s duties as a fiduciary under ERISA. George protested his employer’s violation of that duty, and maintains that the protests led to his firing. Section 510 of ERISA prohibits retaliation “against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to ERISA.” The issue becomes whether George’s protests are protected under section 510. After reviewing section 510, the Court concluded that section 510 should be divided into two spheres: the informal sphere of giving information in or in response to inquiries, and the formal sphere of testifying in proceedings.

The Court then said that George comes under the first sphere. George had notified Junior Achievement of the potential breach of its fiduciary duties and asked (repeatedly) what would be done to remedy the situation. Those conversations involved an informal giving “information” in an “inquiry”. This obtains particularly since Junior Achievement responded to the conversations rather than ignoring them. (If it had ignored them, the conversations could not have caused the discharge.) Therefore, George’s complaints could be protected by section 510. Having provided this guidance, the Court remanded the case back to the district court to determine if George’s termination was actually in retaliation for his complaints-and therefore in violation of section 510- or for some other reason.

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