Disablity Plan Not A Welfare Plan Notwithstanding The Fact That Employer Referred To This Plan As An ERISA Plan In Its Summary Plan Description

As my students are well aware, it is often difficult to determine whether a certain plan is a "welfare plan" governed by ERISA. In Langley v. Daimler Chrysler Corp., ___F. 3d ____(6th Cir. Sep't. 18, 2007), the 6th Circuit held that the employer's "Disability Absence Plan," which provided payments to employees unable to work, was not an ERISA welfare plan. This was largely because payments were made from the employer's general assets. The court relied on a Department of Labor regulation which states that such programs are considered "payroll practices" and therefore, not an ERISA welfare plan. See, 29 CFR Sec. 2510.3-1(b)(2). Such payroll practices are not regulated by ERISA.

The interesting aspect of this case and why I bring it to your attention is that in the Summary Plan Description, the Disability Absence Plan was specifically referred to. The court concluded in light of the those representations employees could conclude that the plan was governed by ERISA.

Never-the-less, the 6th Circuit held that the Disability Absence Plan was not a welfare plan because the summary plan description was not determinative. To hold otherwise, said the court, would allow an employer to convert an otherwise exempt benefit into one covered by ERISA.

This opinion appears to clearly be correct. The plaintiff did not make any estoppel argument.  The result may indeed be different, if the participant is able to generate some type of detrimental reliance. Apparently, there was no such reliance in this case.

Mitchell H. Rubinstein