In an article written by Rebecca Moore (published in PlanSponsor), Moore provides insights on Department of Labor positions and two lawsuits in which former employees of Marriott International argued that the deferred stock bonus awards (Retirement Awards) program in which they participated was not a top hat plan and was subject to ERISA vesting requirements. The plan, which at one time covered more than 2500 employees was amended after the Department of Labor’s 1990 advisory opinion letter and then covered only an approximate 100 employees.
Moore explained, “According to the DOL, allowing an employer to intentionally draft or operate a top hat plan to include ordinary employees who are neither management nor highly compensated directly undermines ERISA’s protections for employees who are not in a position to negotiate for a separate pension plan and who are thus the primary targets of the entire ERISA statutory scheme.”
In Advisory Opinion 90-14A, the DOL said, “It is the view of the Department that in providing relief for ‘top hat’ plans from the broad remedial provisions of ERISA, Congress recognized that certain individuals, by virtue of their position or compensation level, have the ability to affect or substantially influence, through negotiation or otherwise, the design and operation of their deferred compensation plan, taking into consideration any risks attendant thereto, and, therefore, would not need the substantive rights and protections of Title I.”
You can read the full article here: DOL Reiterates Its Stance on Top Hat Plans
Other related information includes:
- Brief for the Secretary of Labor, United States Court of Appeals for the Fourth Circuit
- Bond, et al v. Marriott International, Inc. et al [10-cv-01256-RWT] Memorandum Opinion and Order 8.9.13
- Court Orders Trial for Determining Plan’s Top Hat Status