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For profit owned by non-profit: benefits were same but now vary

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  • For profit owned by non-profit: benefits were same but now vary

    I presently work for a for profit corp. That's owned by a non profit org. About 3 years ago, our company suffered some financial difficulties that resulted in wage freezes and the loss of retirement benefits. During this period of time, we were told that when the debt was paid off and the company out of trouble, our retirement would be restored. Unknown to us, the non profit organization never lost any benefits. Fast forward to this week, we discovered the non profit owner still provides retirement and just gave a raise to their employees. Meanwhle, I was informed just a week prior to our discovery that NOBODY anywhere was getting a raise. Understand that we are producing a product and sending all proceeds to them. We have been able to do so the last 2 years. Now, we see our non profit counterparts receiving raises and keeping retirement when we were told they would probably lose their retirement, instead.

    Besides a moral issue, I am aware there is a law governing equal benefits by employees of companies owned by a parent company. Can anyone give me some direction if any law has been violated?

    I wish to clarify I'm looking for a Federal law since I'm sure no state law exists. And yes, we are within 75 miles of the owner.
    Last edited by fenceline; 09-10-2011, 06:09 AM.

  • #2
    My understanding is different then yours. The federal law most commonly associated with benefits is ERISA. It effects retirement plans (including 401(k)) and medical plans only. It is perfectly legal and possible for different companies owned by the same owners to have different benefit structures. The ERISA law for retirement and medical plans only:
    - Requires a formal written benefit plan, commonly referred to as a Summary Plan Document.
    - Requires that the employer give copies of the SPD to any employee who asks.
    - Requires that employers follow the exact wording of their plan to the letter or bad things will happen.
    - Employees can report ERISA plan violations to federal DOL.
    What ERISA does not do is:
    - What you said. It does not require each company owned by the employer to provide exactly the same benefits. It is very legal and very common for different employers with the same owner to have different benefit structures.
    - ERISA does not cover all benefits. Just retirement plans and medical plans. Everything else, including say vacation/PTO, is not an ERISA benefit and is not covered by federal law.

    Now there are other federal laws effecting benefits, but those are very narrowly written laws. Example. COBRA requires employers to give terminated employees the opportunity to pay for medical coverage themselves. But that is all that law does.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)


    • #3
      Are they talking about losing what's already there, or no longer having such a plan going forward? The second is legal; the first we'd have to see the plan document to say.
      The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.