What's Not a Top-Hat Plan

A thank you to PlanSponsor for finding Guiragoss v. Khoury, E.D. Va., No. 1:06vy187, 8/10/06, a case determining that a plan was not a top-hat plan exempt from ERISA. Unfortunately, the case is not all that useful, as is true of most cases on top-hat plan status. At least it makes clear one way to screw up top-hat status.

The plaintiff and sole participant was a clerk for the employer jewelry store, so the result is hardly surprising. Some of the language is troubling, saying "Guiragoss had no influence on the terms of the agreement and never consulted with an attorney prior to signing the agreement." Both of these statements are true of most top-hat plan participants, which is why the language is troubling. With any luck, and because this is a District Court decision, future courts will ignore that language and focus instead on the participants'' bargaining power, or lack thereof, rather than whether there was any actual bargaining.