Law Office of Mike Forni - Severance Plans

Top Hat Plans

A Top Hat Plan (or Excess Benefit Plan) is a plan that provides deferred
compensation to highly compensated employees or key members of management
upon termination of their employment or retirement. Top Hat Plans are unfunded
plans that are exempt from ERISA's participation requirements, vesting provisions,
funding requirements, and fiduciary rules. There are several issues that can arise in
the administration and operation of a Top Hat Plan. Below are just a few examples:

Unfunded v. Funded. A common issue litigated with Top Hat Plans is whether the
plan is "funded" or "unfunded." If the court determines that the Top Hat Plan is
funded, then the plan will be subject to the fiduciary rules of ERISA. This finding is
significant because it expands the scope on which a plaintiff can maintain a successful
claim against potential abuses. As a result, it is not uncommon to see this issue
challenged by plaintiffs.

Calculation of benefits. Another issue that arises with Top Hat Plans is the
calculation of benefits. The plan may be silent on certain factors of the calculation,
which causes the parties to commence a dispute. In one instance, the difference in
calculations was approximately 35 million dollars, which involved 8 different attorneys
and 3 actuaries.

If you are involved with a dispute involving your Top Hat Plan, you should Contact Us
to review your case.

Severance Plans

A Severance Plan is a plan that provides employees a predetermined amount of
money when their employment is terminated (severed) with their employer. There are
several issues that can arise in the administration of a Severance Plan. Below are
just two examples:

Triggering (Severing) Event. Sometimes the plan document does not properly
define a "triggering" or "severing" event in which the employee is entitled to benefits.
For example, an employee may be entitled to benefits under the plan if the parent
company (owner of its employer) engages in a stock purchase agreement with a third
party and a "change of control" occurs at the parent company level but not at the
subsidiary level. In other instances, this is not the case.

ERISA Plan v. Non-ERISA Plan. Some Severance Plans are not subject to the rules
of ERISA. Before a lawsuit is filed, the responsible attorney should determine whether
the plan constitutes a "welfare plan" under ERISA and commence litigation in the court
with the appropriate jurisdiction.

If you are involved with a Severance Plan dispute, you should Contact Us to review
your case.










				This website was designed and is administered by Mike Forni. All questions regarding the contents of this website should be forwarded to mikeforni@erisa-litigation.com. All Copyrights Reserved 2004. "WARNING" - This website provides only general information and should not be relied on any respect. Visitors should consult with legal counsel in order to ensure a thorough and proper application of the complex rules that are highlighted in this website.