Seventh Circuit Achieves Broad Interpretation of ERISA § 510

In a recent anti-retaliation lawsuit, the Seventh Circuit decided as a matter of first impression that unsolicited, informal complaints constitute a protected “inquiry” under ERISA § 510. In doing so, the Seventh Circuit became the most recent circuit to join in a split on this issue, joining with the Fifth and Ninth Circuits, despite opposing opinions from the Second, Third and Fourth Circuits.

Section 510 of ERISA prohibits retaliation “against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to this [Act].” 29 U.S.C. § 1140. In George v. Junior Achievement of Central Indiana, Inc., No. 11-3291, 2012 WL 3984408, — F.3d — (7th Cir. Sept. 24, 2012), an employee alleged that he was terminated because he complained to company accountants and executives that money being withheld from his paycheck was not being deposited into his retirement and health savings accounts as required under ERISA. This employee also contacted the U.S. Department of Labor regarding the company’s alleged ERISA violations, but he did not file a written complaint.

In George, the parties’ dispute revolved around proper interpretation of the word “inquiry” under ERISA § 510. The Seventh Circuit acknowledged that at one end of the spectrum, “‘inquiry’ could mean something official, such as the investigation that the Department of Labor conducts before deciding whether to file suit under ERISA,” while a different interpretation of inquiry “means nothing more than a question.” Id. at *2.

To resolve these conflicting interpretations, the Seventh Circuit waded deep into the “mess of unpunctuated conjunctions and prepositions” of Section 510 to ultimately “resolve the ambiguity in favor of protecting employees.” Id. Thus, the Seventh Circuit determined that the “inquiry” required for protection under § 510 may consist of an informal question posed by an employee, including the complaints raised by George. However, the Seventh Circuit cautioned that Section 510 does not cover “trivial bellyaches,” instead: “Someone must ask a question, and the adverse action must be caused by the question or the response. What’s more, the grievance must be a plausible one, though not necessarily one on which the employee is correct.” Id. at *5. Ultimately, the Seventh Circuit remanded the case for proceedings consistent with the opinion.

This case widens the circuit split on the proper interpretation of ERISA § 510. It also exposes employers to an increased number of anti-retaliation suits, while potentially discouraging the formal complaint process that would put such employers on notice of potential claims. Based on the circuit split, we may expect to see future guidance from the Supreme Court.