Q&A; : What If You Retire Right Before There’s a Buyout?

Lucrative severance packages, aimed at spurring workers to accept early retirement offers, have become commonplace. Corporations ranging from AT&T; to Lockheed have used employee buyouts to jettison literally thousands of workers.

But what happens when you retire right before the buyout? Do you have any right to receive the thousands of dollars offered to workers who retired only weeks after you?

It depends. In a case decided earlier this year, James Mullins, a Pfizer Inc. retiree, was retroactively added to the group receiving severance benefits because a court determined that the buyout had been planned before he left. Reports about his case have spurred rafts of questions from retirees who were in similar straights. But most aren’t as lucky.

Here are a few questions and answers about who can and can’t qualify for lucrative buyouts--and what to do if you think you’ve been unjustly excluded.

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Q. I read about the man who retired right before the company offered a voluntary separation plan. How do I know whether I have a valid claim?

A. Thomas Moukawsher, the Connecticut attorney who successfully represented James Mullins in Mullins vs. Pfizer, has a four-question quiz to evaluate client prospects in this type of case.

1. Is your claim more than 6 years old? If the answer is yes, you cannot file suit. The statute of limitations has expired.

2. Did you retire more than 18 months before the company announced the voluntary separation package? If your answer is yes, your case would be very difficult to prove mainly because the package needed to be under “serious consideration” at the time of your retirement. It would be unusual for a company to consider something seriously for that long.

3. Were there rumors about a package before you retired? If so, your case is probably stronger.

4. Was your retirement voluntary--not a layoff? The Mullins case specifically dealt with a person who left voluntarily. This section of the Employee Retirement Income Security Act would not apply to someone who was laid off.

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Q. Is there any free legal help for this?

A. The U.S. Labor Department administers and enforces ERISA law. You can report violations to any Labor Department office, but it probably wouldn’t file suit on your behalf unless several other employees were involved.

Legal Aid offices are also located in most major cities, but few specialize in ERISA law. Most people pursuing these claims would have to hire an attorney who specializes in employment or ERISA law.

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Q. Are government employees--military, police, school teachers, etc.--covered by ERISA? I retired from government service only a few months before a voluntary separation plan was instituted that would have paid me a significant sum. I had asked if anything was in the offing and was told that there would not be another buyout in the foreseeable future. Do I have a claim?

A. ERISA does not apply to government workers. However, that doesn’t mean you have no legal claim, Moukawsher says. In some cases, you could sue under common law tenets regarding negligence, fraud or misrepresentation, he says. The bad news is that the so-called “burden of proof” standards are stricter.

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Q. At my company, the company’s intentions to implement a voluntary separation plan were “leaked” by some managers to certain employees, who were advised to delay their retirement plans to be eligible. Unfortunately, I was not among the select few. It would be very helpful if you could cite the specific section of ERISA that applies in this case.

A. There are numerous sections that apply and work in concert to obtain a favorable ruling, Moukawsher says. Attorneys often argue over which sections of the law are most applicable to any given case. However, Section 29, USC-1104, makes a plan administrator a fiduciary, Moukawsher says. Another section of ERISA says that plan administrators who breach their fiduciary duties are liable for them. Other portions of the law say that employees who have been wronged can claim damages.

Recently, the U.S. Supreme Court ruled that Section 1132(A3), which provides for “equitable relief,” is what attorneys should use when requesting damages. Winning a judgment for equitable relief would result, essentially, in putting the ex-employee into the separation plan.

Moukawsher is at Moukawsher & Moukawsher in Groton, Conn., at (860) 445-1809.