In Atkins v. CB&I, L.L.C., No. 20-30004, __F.3d__, 2021 WL 1085807 (5th Cir. Mar. 22, 2021), a dispute involving a bonus payment to employees who worked until the completion of a construction project, the Fifth Circuit considered whether a Project Completion Incentive Plan (“the Plan”) is an ERISA plan. It held that it is not.
Plaintiffs-Appellants worked as laborers on a construction project but quit before the project ended. Defendant did not pay them a bonus under the Plan because they quit. The Plan provides:
CB&I will pay to CRAFT employees who meet the eligibility requirements below a Project Completion Incentive payment equal to five percent (5%) of the employee’s total earnings … earned while working for CB&I … as a retention incentive to continue working on the Project until their role on the project is complete. The Project Completion Incentive is calculated based on total earnings earned by the employee at the Project site beginning the date employment begins at site until the eligible employee is laid off in a reduction-in-force or CB&I transfers the employee from the Project site when the employee’s role on the project is complete. Employees who quit, transfer or terminate their employment for any other reason are not eligible for the Project Completion Incentive payment. CB&I will pay the Incentive payment to an eligible employee on his/her final paycheck.
Though Plaintiffs quit, they sued Defendant in state court seeking the 5% bonus on the theory that making employees ineligible for bonuses amounts to an illegal wage forfeiture agreement under the Louisiana Wage Payment Act. La. Stat. Ann. § 23:631, 23:632, 23:634. CB&I removed the matter, claiming the Plan is governed by ERISA. Plaintiffs did not seek a remand but argued in response to the ERISA case management order that the Plan is not governed by ERISA because it does not involve an ongoing administrative scheme. The district court concluded that it was an ERISA plan because it required ongoing discretion and administration in determining whether a qualifying termination took place.
The Fifth Circuit determined that the Plan is not an ERISA plan which results in the case going back to state court where Plaintiffs can pursue their state law claim. In coming to this conclusion, the Fifth Circuit found that the Plan does not involve “the ongoing administrative scheme characteristic of an ERISA plan,” as required by the Supreme Court’s decision in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987). First, the Plan involves only a single payment in the final paycheck and single payments usually do not require an ongoing administrative scheme. The calculation for the payment is simple: 5% of the employee’s earnings while working on the project (plus tax withholdings). The payment is triggered when the construction project is completed; there are no varying eligibility points. With respect to discretion, “[i]t is difficult to discern a clear dividing line on when cause-type determinations involve the requisite level of discretion,” but here there is no “for cause” assessment. An employee gets the bonus if they are laid off in a reduction-in-force, if the company transfers the worker to another location, or when the employee’s role on the project is complete. There is little complexity to the determination and there is no “special administrative apparatus dedicated to overseeing the Plan.” Because the Plan involves a single and simple payment, little discretion in determining eligibility, and no administrative structure devoted to the Plan, there is no “ongoing administrative scheme” creating an ERISA plan. The court vacated the judgment of the district court and remanded the case to be returned to state court.