Is It Legal to Alter Retiree Benefits?

Q: I retired from a large company in 1985 after 21 years of service. My retirement benefits included a fixed pension, and a medical and prescription drug plan. The plan requires fixed annual deductions and provides coverage for a fixed percentage of expenses.

The plan is described in brochures in my possession, but no copy of the contract covering the plan is available.

In recent years, the deductibles have been increased and the percentage of expenses covered has been decreased. Is it legal for the company to change the terms of these plans arbitrarily?

--N.S., Laguna Beach

A: This is probably the most litigated issue in the area of employee benefits.

There are no laws limiting an employer’s ability to amend its retiree health care plans. Nevertheless, some courts have taken it upon themselves to create special rules, which generally require that an employee’s benefits are not to be altered after retirement.

However, even those courts permit an employer to amend retiree health care plans if the employer consistently alerted employees to the fact that the company retained the right to amend the retiree health care plan at any time.

Because these cases are determined on the facts and circumstances for each employer, the results may vary. Thus, it is impossible to predict how a particular case would be decided.

--Kirk F. Maldonado

Employee benefits attorney

Riordan & McKinzie

Employee’s Absence Strains Small Firm

Q: We are a small company that can’t afford extensive vacancies. One of my employees was injured in an auto accident earlier this year and can’t work full time. She only worked six days one month. Now she is claiming disability. Can I terminate her or declare her a part-time employee? Would I have to keep her job open when she is on disability?

--J.C., Rowland Heights

A: Since you say the company is small, I assume it has fewer than 50 employees and therefore is not required to grant leave under the federal Family and Medical Leave Act/or the California Family Rights Act.

If your company has fewer than five employees, you have no statutory obligation to permit this employee to be absent because of a nonindustrial injury and can terminate her employment unless you and she have entered into a contract by which you have agreed not to do that. A contract can be express (oral or written), or implied from the circumstances.

If your company has five or more employees, it must make a reasonable accommodation for this employee if she has a “physical or mental disability.” Under the Americans With Disabilities Act, a “disability” is physical or mental impairment that substantially limits one or more major life activities, such as seeing or walking.

Your employee may have a physical impairment that is not a “disability.” An impairment ordinarily will not qualify as a disability if it is temporary, with little or no long-term impact, such as some kinds of injuries commonly incurred in auto accidents. If your employee does not have a disability, you have no statutory obligation to accommodate her absences from a nonindustrial injury.

If your company has five or more employees and the employee has a disability, she is entitled to a leave of absence to recuperate if, after the leave, she is likely to be able to perform the essential functions of her job and the leave is not an undue hardship on the business. A leave of absence need not be taken in one continuous period of time.

However, as a general rule, an employer need not tolerate unpredictable absences because of a nonindustrial injury, unless the injury is covered under the Family and Medical Leave Act/or the California Family Rights Act.

Regarding the second aspect of your question, you can always declare an employee to be part time if he or she is working part time.

--Deborah C. Saxe

Management attorney

Heller Ehrman White & McAuliffe

For Exempt Employees, No Limit to Workweek

Q: I am a salaried employee. I have been given a task and instructed to do it on a day now designated as one of my days off. Since I can’t do the work from home, I must go into the office for an additional six to seven hours. I am not paid for the additional work hours or given additional time off.

Even though I am a salaried employee, can my manager demand that I work the additional time indefinitely on my day off?

--A.A., Long Beach

A: Even though you are a “salaried” employee, you aren’t necessarily exempt from overtime laws. You must be salaried and performing work of a professional, managerial or administrative nature.

If you are classified as exempt, however, an employer can make you work as many hours as necessary to complete your particular job assignment. If you can finish the job assignment in half a day, you should be able to leave early. If it takes 18 hours a day or weekend work to complete this assignment, the employer can require an extended schedule as well.

The employer can require you to be present during certain business hours if it is reasonably necessary to complete your job duties. If your presence is required when it is not necessary, you may not be accurately classified as salaried. The employer may risk losing an employee’s exempt status by imposing this work schedule, and be forced to pay overtime as a result.

But if your job is “never done” and you are truly an exempt employee, the employer could require you to work 24 hours a day seven days a week without having to pay you additional compensation. Unfortunately, the only fallout from such abuses is that the employer risks losing valuable employees to other employers who are fair.

--Don D. Sessions

Employee rights attorney

Mission Viejo

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Mail questions about on-the-job situations to Shop Talk, Los Angeles Times, P.O. Box 2008, Costa Mesa, CA 92626; dictate them at (714) 966-7873; or e-mail them to shoptalk@latimes.com. Include your initials and hometown. The Shop Talk column is designed to answer questions of general interest. It should not be construed as legal advice.