EMPLOYERS HAVE been struggling for some time to understand under what circumstances severance arrangements will be deemed by courts to be “employee welfare benefit plans” and, therefore, subject to the Employee Retirement Income Security Act of 1974, as amended, 29 USC ��1001-1961 (ERISA).[1]�
For instance, under certain circumstances, informal severance practices may be treated as ERISA-qualified plans and, therefore, governed by ERISA, regardless of the intent of the employer. ERISA provides both additional protections and obligations and thus employers may or may not wish their severance arrangements to be preempted, and therefore governed, by ERISA. For example, employers may prefer ERISA-qualified plans because in an ERISA action (i) plaintiffs are not entitled to a jury trial;[2]� (ii) plaintiffs are not entitled to extra-contractual damages, such as punitive, consequential and compensatory damages;[3]� and (iii) there is a limited scope of review.[4]�
