Individual agreement can be ERISA plan
Under a written agreement an employer agreed to pay the Chief Financial Officer (CFO) US$75,000 (EUR 83,350) annually in monthly installments over a ten-year period to commence 60 days after retirement or termination. This agreement was contingent upon not competing with the employer within a 75-mile radius for five years. The employer claimed the CFO violated the agreement, and so the CFO sued. In determining whether there was an ERISA plan, the court required that there be:
- Reasonably ascertainable terms regarding:
- source of financing;
- procedures for receiving benefits.
- An ongoing administrative scheme.
The first factor was stipulated, and therefore the issue was whether an ongoing administrative structure was in place, for example, the need to monitor the CFO's activities to determine if he violated the agreement. Applying the court's reasoning, an ERISA plan would exist if there were a finding of an ongoing administrative scheme even if under a single contract.
Source: Nelson v. Jones & Brown, Inc. Civ. No. 01-481 (W.D. Pa. 2001). Howard Pianko, Epstein Becker & Green