AOL Time Warner Retirees v AOL Time Warner
AOL Time Warner Settles Pension Benefits Lawsuit
A $2.9 million settlement was awarded to end claims by former AOL Time Warner Inc. employees who allege the media giant failed to annualize partial years of service in calculating their pension benefits. The settlement was approved June 7 by the U.S. District Court for the Southern District of New York.
The court said the $2.9 million was fair given that the "best-case scenario" was that the employees would receive $16 million if they fully litigated their claims, and it appeared likely that the employees' claims would ultimately turn out to be meritless.
The lawsuit, which named multiple AOL Time Warner companies as defendants, claimed the company violated the Employee Retirement Income Security Act when it failed to calculate pension benefits following the language of the companies' various pension plans.
The pension plans at issue provided that employees' benefits would be calculated based on their average annual compensation for the five years prior to the time they left their employment. Under the plans' terms for calculating an employee's average salary, if an employee worked less than a full calendar year, the employee's compensation for that year was to be annualized according to a set formula.
The settlement requires compensation to nearly 10,000 employees.
