Recent cases examine definition of ERISA "plan."

• Author: Amoroso, Vincent

The Employee Retirement Income Security Act of 1974 (ERISA) imposes a broad range of protective requirements on "employee pension benefit plans" and "employee welfare benefit plans. " Different requirements apply depending on whether the plan is a pension plan or a welfare benefit plan. In either case, the threshold question - i.e., the question that determines whether the ERISA applies at all - is whether the arrangement constitutes a "plan, fund, or program." The definition of these terms has proved to be elusive, and is the subject of continuing litigation.

Letter establishes

ERISA plan

In Williams v. Wright, 11th Cir., 1991, in October 1981, after 34 years of employment with Wright Pest Control Co. (WPCC), James Williams discussed with WPCC president Fred Wright the possibility and terms of Williams's retirement. Wright subsequently gave Williams a letter in which WPCC offered to pay Williams $500 a month starting Jan. 1, 1982, which, when added to the Social Security benefits Williams would begin receiving on that date, would approximately have equaled Williams's monthly net pay at the time. The letter further stated that in exchange for these payments, Williams was expected to be available as a consultant and adviser on pest control matters.

WPCC paid these benefits until September 1985. At that point, Wright informed Williams that WPCC was being dissolved and its assets were being sold to another pest control company. As a result, Williams's retirement benefits were being terminated. Williams brought suit against Wright and WPCC, alleging ERISA violations.

In examining the threshold issue of whether the arrangement with Williams was a plan, fund or program within the meaning of ERISA Section 3(1) or 3(2)(A), the district court applied the guidelines prescribed by the Eleventh Circuit in Donovan v. Dillingham, 688 F2d 1367 (11th Cir. 1982). Those guidelines provide that a plan, fund or program under the ERISA is established if, from the surrounding circumstances, a reasonable person can ascertain -the intended benefits; -a class of beneficiaries; -the source of financing; and -procedures for receiving benefits.

On the basis of these guidelines, the district court concluded that the arrangement with Williams did not constitute a plan, fund or program under the ERISA.

Unlike the district court, the Eleventh Circuit was not troubled by the fact that the only ascertainable source of financing for Williams's benefits was WPCC's general...