Third Circuit Holds Excess Pension Program is Not Governed by ERISA

In Weller v. Linde Pension Excess Program, et al., No. 23-1293, 2024 WL 3887275 (3d Cir. Aug. 21, 2024), the Third Circuit considered whether an excess pension program is governed by ERISA. Linde North America offered both a pension plan and an “excess” pension program to certain employees. Excess benefit payments go into the plan based on various factors, including an employee’s covered earnings. When Linde first started this plan, excess benefit payments were calculated annually but paid out in a lump-sum upon retirement or termination. The plan was amended in 2007 to make these payments annually, however, participants enrolled prior to the amendment could choose the former one-time distribution or receive their payments annually. Employees who joined the plan after the amendment were not given the option and received their payments annually (including while still employed).

Following a dispute between Plaintiff and Linde about whether wages paid to him via a settlement should have been factored into his excess benefit payments, Plaintiff sued Linde and the Program alleging violations of ERISA, breach of contract, and breach of the covenant of good faith and fair dealing. The district court determined that the Program was not governed by ERISA. The Third Circuit agreed.

Plaintiff argued that the Program is subject to ERISA since ERISA covers any program, established or maintained by an employer, that by its express terms results in a deferral of income by employees for periods extending to the termination of covered employment or beyond. 29 U.S.C. § 1002(2)(A)(ii). The court explained that just because some payments under a plan may be made after an employee has retired or left the company does not result in ERISA coverage. While the pre-amended plan deferred employee payments until retirement, the amended plan (and the one covering Plaintiff), does not. Plaintiff could use the excess benefit payment at his total discretion annually throughout his employment. Just because some employees received deferred retirement income does not make the entire Program covered by ERISA. The court concluded that the district court did not err in granting summary judgment for the Defendants.