United Airlines Class Action Challenges Retiree Early Out Program

United Airlines Early Out Program Class Action Lawsuit Overview:

• Who: United Airlines faces a class action lawsuit alleging its Early Out program illegally blocked retirees from accessing benefits and pay.
• Why: The plaintiff says she and other putative class members are entitled to benefits that they were denied.
• Where: The United Airlines class action lawsuit was filed in Illinois federal court.

United Airlines offers “early out” severance programs that illegally block retirees from accessing benefits and pay in violation of the Employee Retirement Income Security Act (ERISA), according to a class action lawsuit filed Nov. 30 in Illinois federal court.

Plaintiff Michael Hoffman, 64, of Colorado says she worked as an international flight attendant for United Airlines or its predecessor Continental Airlines from July 1998 through July 2020.

United allegedly instituted an Early Out Retiree Policy in 2017 which would enable an employee to be eligible for any additional benefits offered by an Early Out Program, provided that a program was offered within 36 months of an employee’s retirement and that the employee satisfied all participation criteria.

In 2020, United allegedly offered an early out program called the Voluntary Separation Program 2 (VSP2), an employee benefit plan that offers severance benefits. Hoffman retired under the VSP2 plan in July 2020.

In October 2020, United notified employees that it would be ending its Early Out policy on Jan. 1, 2021, but the policy would remain in place for employees like Hoffman who retired before that date.

United Airlines Rolls Out New Policy, Rejects Plaintiff’s Application

United subsequently rolled out the Frontline Voluntary Separation Leave (VSL) Program that allegedly offered better benefits, including a $125,000 health care account contribution and $112,500 in additional pay.

Hoffman applied for benefits from the VSL program but United rejected her application.

The airline allegedly informed her that “this program [the VSL] is not an early out, which is a financial incentive program that provides cash upon separation.” United claims that the types of benefits provided by the VSL are excluded from the 2017 Early Out Retiree Policy, which had been updated in 2020.

Hoffman appealed the decision to deny her benefits under the new VSL program, but United denied her appeal twice.

Class Action: United Mischaracterizes Plans as ‘Leaves of Absences’ United allegedly maintains that neither the VSP2 nor the VSL are “early out” programs and are more accurately characterized as paid “leaves of absence.”

Hoffman asserts that this characterization is “form without substance.” 

“A leave of absence allows an employee to return to work when it ends,” Hoffman alleges. “Here, the VSP2 and VSL offer cash benefits to an employee who agrees to terminate his/her employment.”

Hoffman says she met all of the requirements under the 2017 Early Out Policy and should be entitled to the benefits of the VSL plan.

The proposed Class includes all United employees who retired within 36 months of the VSL and were not paid the benefits offered by the VSL even though they were entitled to those benefits under the Early Out Policy.

Do you think the plaintiff is entitled to the benefits offered under United’s new plan? Let us know in the comments below.

Hoffman is represented by Jamie S. Franklin of The Civil Litigation Clinic at Chicago-Kent College of Law.

The United Airlines Early Out Class Action Lawsuit is Michael (Susie) Hoffman v. United Airlines Inc., et al., Case No. 1:21-cv-06935, in the U.S. District Court for the Northern District of Illinois, Eastern Division.

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