On June 24, 2010, the Third Circuit Court of Appeals held, in the case of Edwards v. A.H. Cornell and Son, Inc., that unsolicited internal complaints by employees about alleged employer violations of ERISA are not protected under ERISA's anti-retaliation provision. In so doing, the Court held that the employer's termination of its HR manager after she made complaints to her supervisors about alleged ERISA violations by the employer that she had uncovered, was not illegal.
The plaintiff, Shirley Edwards, was the HR director for A.H. Cornell and Sons, Inc.. In early 2009, she discovered that A.H. Cornell was allegedly engaging in numerous ERISA violations, such as allegedly administering the group health plan on a discriminatory basis, misrepresenting to some employees the cost of coverage in order to dissuade employees from opting in, and enrolling non-citizens in its ERISA plans by providing false social security numbers and other fraudulent information to insurance carriers. Edwards objected to and complained about these alleged violations to her supervisors. As a result of her complaints, she was fired.
Edwards then filed suit, claiming that her termination was illegal under the federal ERISA law, which makes it unlawful for an employer "to discharge, fine, suspend, expel or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding," relating to ERISA or group health plans. Edwards argued that her complaints about A.H. Cornell's alleged ERISA violations fell squarely within the protection of this provision, and as such, her subsequent termination was illegal.
The Third Circuit disagreed, and held for the first time that the ERISA "whistleblower" protection language quoted above only applies when the complaining employee does so in the context of an "inquiry or proceeding," and that the phrase "inquiry or proceeding" is limited to formal actions, not unsolicited day-to-day complaints made in the course of one's employment. The Court noted that, in this case, Edwards' complaints to her supervisors were not requested or asked for, and were unconnected with any internal or external investigation or probe. Rather, Edwards made her complaints by her own choice in her role as the HR representative. And, in doing so, was clearly not "testifying" or "giving information" in the context of a formal hearing or process. As such, Edwards' complaints did not fall under the protection of the ERISA anti-retaliation provision, and offered her no protection for continued employment.
If you are an HR representative in Pennsylvania, be aware of the fact that you can now be terminated or otherwise disciplined for complaining to a supervisor or manager about alleged ERISA violations in your company, unless your complaints are made in the context of a formal inquiry or proceeding. The troubling part about this case is that it practically allows for no recourse by a conscientious HR representative to remedy or complain about such conduct by their employer that the HR representative discovers, if he or she is truly interested in keeping his or her job. Based solely upon the language of the ERISA statute, the Court's legal logic in this case is intellectually sound. But, the practical implications and repurcussions of the Court's holding are decidedly less so. Hopefully, Congress will take note of this decision, along with the other Circuits that have addressed this same issue, and amend the ERISA law to clearly prohibit retaliation even in such informal circumstances. Until that day, however, my advice to all HR representatives or other employees who find themselves in this quandry? Tread lightly. And, be careful what you complain about and who you complain to.
You can read the Court of Appeals' Opinion in Edwards v. A.H. Cornell and Son, Inc., here: http://pacer03.ca3.uscourts.gov/opinarch/093198p1.pdf