Employer Group: Wage Bill Needs Scrutiny

The American Benefits Council letter neither supports nor opposes H.R. 2831.

But, if an employee makes allegations about discrimination that occurred 30 years earlier, the defendant company “may have no effective way to defend the case, which hardly seems fair,” James Klein, president of the council, writes in the letter about the bill.

“Our question is: how would a judgment in favor of the plaintiff affect the company’s retirement plan?” Klein asks. “If the company maintains a defined benefit plan that calculates benefits based on an employee’s final average pay, would the plan need to recalculate the plaintiff’s benefit based on the revised pay, which could be substantially higher? What if the lawsuit is a class action, so that large numbers of plan participants could be making the same claim for much higher benefits?”

Successful class actions could cause pension plans to become “woefully underfunded,” Klein writes.

In some cases, a plan participant might ask for a pension benefit increased based on a plan benefit formula that had not been in effect for years, Klein writes.

“The burdens of recreating both old data and old benefit formulas in order to recalculate that individual’s benefits would be immense, yet would arguably be required by the legislation,” Klein writes.