Can a Severance Program Be an ERISA Plan? Court Allows Deere Employees’ ERISA Claims to Proceed

In Ahmed v. Deere & Company, No. 4:26-cv-04114-SLD-RLH, 2026 WL 3306360 (C.D. Ill. Nov. 2, 2026), the United States District Court for the Central District of Illinois denied a motion to dismiss ERISA claims by two longtime Deere employees. Plaintiffs alleged that Deere manufactured negative performance reviews to push them out of the company and avoid paying them benefits under its severance program. The court held that Plaintiffs plausibly alleged that the severance program was an ERISA plan, that they were participants in it, that Defendants breached their ERISA fiduciary duties, and that a release one Plaintiff signed did not bar his claims.

What led to the ERISA lawsuit against Deere?

Deere manufactures agricultural machinery and other heavy equipment. It has reduced its workforce on and off since 2015, and the pace has increased since 2022. In the summer of 2024, Deere eliminated nearly 500 salaried positions in Iowa and Illinois in a reduction in force it called “Mozart.” As part of Mozart, Deere sponsored a severance program for salaried employees. The program paid half a month of salary for each year of service, up to twelve months. It also allowed managers to grant unpaid leave of up to thirty days so an employee could apply for another open position at Deere, and it allowed eligible employees to request unpaid leave to bridge to retirement for pension and retiree medical purposes. To receive the severance payments, employees had to keep performing satisfactorily in their positions until their last day, sign a release of claims, remain bound by confidentiality agreements, and agree not to solicit Deere employees, suppliers, or customers for twelve months. During Mozart, every employee who lost a job through position elimination received the severance payments, even employees with recent poor performance ratings. Deere continued to sponsor the program after Mozart and distributed FAQ sheets describing it.

Plaintiffs alleged that after Mozart, Deere executives announced that additional positions would be eliminated through “attrition” and “forced attrition.” Management then required that at least 10% of employees receive “Performance Needs Improvement” ratings and revised the rating system to make those ratings easier to assign. Both Plaintiffs had received good reviews for years before unexpectedly receiving negative reviews. One Plaintiff had worked for Deere for nearly twenty-five years, most recently as a product manager. The other had worked there for over twenty-eight years, most recently as a senior software engineer.

Deere gave Plaintiffs two choices: accept three months’ severance pay, sign a release, and leave; or complete a sixty-day performance improvement period and face termination without severance if they failed to meet expectations. Deere did not tell Plaintiffs they were eligible for benefits under the severance program. One Plaintiff, who did not have a lawyer, accepted the three months’ pay and signed the release. Under the severance program, he would have received twelve months’ pay. The other Plaintiff chose the performance improvement period, and Deere terminated him at the end of it. Both Plaintiffs contested Deere’s refusal to pay benefits under the severance program. Deere did not respond to one of them and told the other that it did not sponsor a formal severance plan.

Plaintiffs brought an ERISA claim for severance benefits and breach of fiduciary duty against Deere, Deere as administrator of an employee welfare benefit plan, and the Deere & Company Severance Pay Plan for Salaried Employees. One Plaintiff also brought separate employment discrimination claims that the motion did not address. Defendants moved to dismiss the ERISA claim.

Did Deere’s severance program qualify as an ERISA plan?

Yes, based on the allegations in the complaint. The court started with Fort Halifax Packing Company v. Coyne, 482 U.S. 1 (1987), in which the Supreme Court held that an ERISA plan requires “an ongoing administrative program for processing claims and paying benefits.” The court noted one clear rule from later cases: the need to arithmetically compute each person’s severance amount does not, by itself, create that kind of administrative scheme, citing Cvelbar v. CBI Illinois Inc., 106 F.3d 1368 (7th Cir. 1997). Beyond that rule, courts weigh several considerations, including whether payments are continuous or one-time, whether the program imposes long-term obligations on the employer, whether many separate events trigger payment rather than a single event, whether the program requires individualized review, and whether it involves managerial discretion. No single factor controls.

The court found that Plaintiffs alleged facts making the severance program an ERISA plan. First, the program imposed long-term obligations because Deere had to pay varying amounts indefinitely into the future to each employee who lost a job for a qualifying reason, which included reorganization or restructuring, job elimination, job combination, and workload reduction. Second, many separate events triggered the obligation, recurring regularly and with unpredictable frequency. Third, the program required case-by-case review, including determining eligibility for year-end bonuses, assessing eligibility to bridge to retirement, tracking which employees signed releases so Deere could enforce the non-solicitation provision, and monitoring whether employees continued to perform satisfactorily. Fourth, managers held substantial discretion over the reason for each termination, whether an employee performed “satisfactorily,” and whether to grant unpaid leave to apply for a new position. Against that backdrop, the court found it was not dispositive that each employee received a single, arithmetically calculated payment.

The court compared Deere’s program to those in Collins v. Ralston Purina Co., 147 F.3d 592 (7th Cir. 1998), and Emmenegger v. Bull Moose Tube Co., 197 F.3d 929 (8th Cir. 1999), both of which qualified as ERISA plans because of extended exposure to liability, the absence of a single triggering event, and the need for discretionary judgments about individual employees.

The court distinguished the cases Defendants relied on: Hoffman v. United Airlines, Inc., 2025 WL 1262504 (N.D. Ill. May 1, 2025); Coveny v. Cablevision Lightpath, LLC, 2026 WL 787880 (E.D.N.Y. Mar. 20, 2026); Atkins v. CB&I, L.L.C., 991 F.3d 667 (5th Cir. 2021); and Bowser v. Gabrys, 746 F. Supp. 3d 256 (W.D.N.C. 2024). The court read those cases to hold that a severance program does not become an ERISA plan merely because the employer must decide whether an employee was in good standing or fired for cause, or because each termination or retirement triggers a payment. Deere’s program differed in four ways. Its payment obligation arose more frequently and continued indefinitely, while the obligations in Hoffman v. United Airlines, Inc., Coveny v. Cablevision Lightpath, LLC, and Atkins v. CB&I, L.L.C. depended on a contingency or lasted for a limited period or single project. Deere’s managers exercised discretion over satisfactory performance and unpaid leave. Deere had to track compliance with releases and non-solicitation provisions. And the program interacted with other benefit programs, such as providing a pro-rated long-term incentive award to employees who would not otherwise qualify.

Were Plaintiffs ERISA plan participants even though Deere fired them for performance?

Yes, at the pleading stage. Defendants argued that Plaintiffs did not qualify as participants because Deere ended their employment for performance reasons rather than for a qualifying reason under the program. The court explained that a person with a “colorable claim to vested benefits” has standing under ERISA, citing Kamler v. H/N Telecommunication Services, Inc., 305 F.3d 672 (7th Cir. 2002), and that plan terms determine eligibility.

The court also looked to ERISA’s anti-interference provision, 29 U.S.C. § 1140, which prohibits an employer from discharging a participant to interfere with rights under a plan. Because that provision protects only “a participant or beneficiary,” the court reasoned that a rule allowing a pretextual termination to strip an employee of participant status would gut the statute. The court also noted that Plaintiffs specifically pleaded liability under § 1140.

Drawing all inferences in Plaintiffs’ favor, the court found that the allegations of forced attrition, the 10% ratings quota, and the revised rating system suggested that Defendants pretextually created the performance process to reduce the workforce. Plaintiffs therefore plausibly alleged that the true reason for their separations was job elimination and Deere’s business needs, which would make them eligible under the severance program.

Did Plaintiffs state an ERISA breach of fiduciary duty claim?

Yes. The court first explained that individuals may seek equitable relief for a breach of fiduciary duty under 29 U.S.C. § 1132(a)(3), citing Anweiler v. American Electric Power Service Corp., 3 F.3d 986 (7th Cir. 1993). Defendants challenged only whether Plaintiffs alleged a breach. The court relied on Anweiler v. American Electric Power Service Corp. and Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574 (7th Cir. 2000), for the principle that fiduciaries must not mislead participants or misrepresent plan terms and must communicate material facts affecting participants’ interests, whether or not a participant asks. Plaintiffs alleged that Deere changed its evaluation policy to force out well-performing employees and avoid paying severance benefits, and that Defendants did not tell Plaintiffs about their rights under the program. The court held that such conduct would violate the duty to communicate and the duty not to misrepresent plan terms.

The court rejected Defendants’ argument that the fiduciary claim merely duplicated a denial-of-benefits claim. Under Sumpter v. Metropolitan Life Insurance Co., 683 F. App’x 519 (7th Cir. 2017), a denial of benefits alone does not constitute a breach of fiduciary duty, but misconduct surrounding the denial may. Here, the alleged failure to inform Plaintiffs of their rights and the alleged pretextual employment practices took the claim beyond a bare benefit denial.

Did the release bar one Plaintiff’s ERISA claim?

No, not at this stage. The court applied the totality-of-the-circumstances factors from Hampton v. Ford Motor Co., 561 F.3d 709 (7th Cir. 2009), and found that at least half favored invalidating the release. The Plaintiff who signed it had no apparent input in negotiating its terms and had no lawyer. Accepting the allegations of pretextual termination and Deere’s failure to disclose his rights under the program, the factors addressing consideration and improper inducement also weighed against enforcement. The complaint said nothing about the remaining factors, so the court could not conclude that the release must be enforced.

The court also rejected Defendants’ argument that this Plaintiff had to repay the three months’ severance before challenging the release. Although Fleming v. U.S. Postal Service AMF O’Hare, 27 F.3d 259 (7th Cir. 1994), recognizes a general tender-back requirement, an exception applies when the person received only something he was already entitled to, citing Lawson v. J.C. Penney Corp., 580 F. App’x 492 (7th Cir. 2014). If Plaintiffs’ allegations are true, this Plaintiff was entitled to twelve months’ severance and received only three, so the release failed for lack of consideration. Any amount he received would be set off against any recovery.

What else did the court decide?

The court treated as waived Defendants’ undeveloped argument that the ERISA claim was logically inconsistent with one Plaintiff’s discrimination claims, because Defendants cited no authority and offered no further argument. The court also granted Defendants’ motion for leave to file a reply brief to address an unexpected exhibit in Plaintiffs’ response. The court denied the motion to dismiss in full.