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Termination of Employment Following Rescission of an Involuntary Termination Notice is a Voluntary Termination

The?áU.S. Court of Appeals?áfor the Seventh Circuit recently held that the decision by the plan administrator of an ERISA-covered severance pay plan was not arbitrary or capricious when it denied severance benefits to employees who terminated employment after the company sent involuntary termination notices, but later rescinded such notices. The court held that the employees?ÇÖ termination was voluntary. In Reddinger v. SENA Severance Pay Plan, the employees received notices stating that the plant where they worked was closing, their employment would be terminated effective May 2, 2008, and severance pay would be provided if they timely executed and returned a release agreement. Following receipt of the termination notices, the employees sought alternative employment. Two weeks after the termination notices were sent, the company notified the employees that the plant was going to stay open until October 1, 2008, and that releases were no longer being accepted. A retention bonus and… Continue Reading

March 2013
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