Certain Project Completion Incentives May Not Be Covered Under ERISA

A recent case before the Fifth Circuit Court of Appeals¹ determined that a "Project Completion Incentive" applying to employees on a construction project (the "Plan") was not governed by the Employee Retirement Income Security Act of 1974 ("ERISA").²

Former laborer Employees of the construction manager Employer filed a lawsuit in Louisiana State Court asserting that the Employer was required to pay them the "Project Completion Incentive" under the Plan for the time spent on the project-despite conceding that they quit the project before completion and were therefore not eligible for the incentive under the Plan terms.³ The Employees asserted that the Plan's terms violated Louisiana State law as an illegal wage forfeiture agreement.⁴ The case was removed to federal court-where if ERISA governed, the Employees would have no claim.⁵