Employees Who Refused To Cooperate in Criminal Investigation Were Fired for ‘Cause’ and Not Entitled To Benefits

On June 16, 2016, the Second Circuit ruled that Employees who refused to answer questions after they were named in a criminal investigation that also implicated their employer, Marsh & McLennan Companies, had been fired for “cause” and were therefore not entitled to employment benefits.

The case arose out of an investigation in April 2004, in which the New York Attorney General investigated “contingent commission” arrangements by which insurance brokers steered clients to certain insurance companies. As part of Marsh & McLennan’s internal investigation, two executives, William W. Gilman and Edward J. McNenney Jr., were interviewed by a law firm retained to look at the commission payments. Several months later, the employer’s counsel asked them to sit for further interviews and warned them that failure to cooperate would result in termination. Both men refused to submit to additional questioning and were fired immediately thereafter. Although the company asserted that the employees were fired for cause, Gilman and McNenney filed suit for lost benefits, alleging violations of the Employee Retirement Income Security Act (ERISA) and breach of contract.

The Second Circuit found it reasonable, under the circumstances, for the employer to demand that the employees submit to interviews during the internal investigation. Further, the Court decided that there was no violation of their employment contracts when they were fired for refusing to partake in the interviews.

Read more in the New York Times article, http://www.nytimes.com/2016/06/21/business/dealbook/message-to-workers-u...