In Vermont can an employer take away grandfathered benefits?

An employee has worked for the same company for 25 years and has received grandfathered benefits – newer employees hired since 2004 have received different benefits, but those who were employed before 2004 benefits were honored and grandfathered. After 27 years the employer is stating that they have to take away grandfathered benefits because it is discriminatory to those who don’t receive the same benefits who were hired later. Is that legal?

Asked on June 12, 2017 under Employment Labor Law, Vermont

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

No, as a general matter, an employer only has to honor "grandfathered" benefits if there was a written employment agreement or contract guarantying them. Otherwise, in the absenece of a contract, the benefits which employees receive is at the employer's sole discretion (as a consequence of "employment at will," which is the law of the land when there is no written employment contract), and employers may change benefits at will: they can reduce the vacation or other paid time off offered, take away per diems or meal reimbursement, change health plans or types of insurance offered (though this last change can generally only be done at the end of the policy year or open enrollment season), stop allowing work from home, or stop providing pensions or 401ks, etc.. (In the last situation--40s and pensions--depending on how the plan was set up, there may well be money which has already "vested" for the employee and is already his or hers--so the employer does not have to keep offering the plan, vested money should belong to the employee and they can likely invest it themselves or roll it into an IRA.)


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