Can an ERISA Section 510 Retaliation Claim Be Forced into Arbitration? A Texas Court Says Yes, Even with a Benefits Carve-Out

In Hawkins v. Wells Fargo Bank, N.A., No. 3:26-cv-00026, 2026 WL 2905988 (S.D. Tex. Sept. 28, 2026), a magistrate judge in the Southern District of Texas compelled an ERISA Section 510 interference and retaliation claim to arbitration, holding that such a claim is not a “claim for benefits” and therefore did not fall within the arbitration agreement’s narrow carve-out for ERISA benefits claims.

What claims did the plaintiff bring, and what was actually in dispute?

Plaintiff, proceeding pro se, sued Wells Fargo, the Wells Fargo short-term disability plan, and Lincoln National Life Insurance Company, asserting seven counts tied to his employment. Those included wrongful denial of benefits under ERISA Section 502(a)(1)(B), interference and retaliation under ERISA Section 510, and disability discrimination claims under the Americans with Disabilities Act and the Rehabilitation Act. As a condition of his 2022 hire, Plaintiff had signed Wells Fargo’s mutual arbitration agreement, and the parties stipulated that it was valid. Plaintiff conceded that his ADA and Rehabilitation Act claims had to be arbitrated, and both sides agreed that his benefits claim under Section 502(a)(1)(B) did not. That left a single disputed question: whether his ERISA Section 510 interference and retaliation claim had to go to arbitration.

How did the court read the arbitration agreement’s ERISA carve-out?

The agreement broadly covered claims arising out of employment, including claims for discrimination, retaliation, wrongful discharge, and violations of any federal statute. It then carved out a narrow set of exceptions, among them “claims for benefits under the Employee Retirement Income Security Act.” Plaintiff argued that his Section 510 claim fit within that ERISA carve-out. Applying the two-step framework from Polyflow, L.L.C. v. Specialty RTP, L.L.C. and the Federal Arbitration Act’s policy favoring arbitration, the court disagreed. The carve-out, the court explained, reaches only claims to recover benefits due under a plan, while the agreement otherwise required arbitration of all employment-related discrimination and retaliation claims, including those arising under federal statutes.

Why isn’t an ERISA Section 510 claim a “claim for benefits”?

Section 510 makes it unlawful to discharge or discriminate against a participant for exercising plan rights or to interfere with the attainment of those rights. The court reasoned that a Section 510 claim challenges the employer’s actions and its motivation for a termination rather than seeking benefits due under the plan, making it more akin to an employment grievance than a benefits claim. The court drew on Magdalasov v. ByteDance Inc. and Xie v. JPMorgan Chase Short-Term Disability Plan, both of which held that a Section 510 claim is distinct from a claim to recover benefits and falls within similarly worded arbitration agreements. It also noted that Plaintiff could not identify a single case holding a Section 510 claim outside the scope of a comparable arbitration provision. Finding no federal statute or policy that would render the claim nonarbitrable, the court compelled the Section 510 claim to arbitration.

What happens to the benefits claim now?

The court denied Plaintiff’s motion for declaratory judgment and granted the defendants’ motion to compel arbitration as to the Section 510 claim and the ADA and Rehabilitation Act claims. Because the parties agreed that the Section 502(a)(1)(B) claim for benefits was not arbitrable, the court lifted its earlier stay as to that count and allowed it to proceed in federal court, while the arbitrable claims remain stayed pending arbitration.