Retention-Based Long-Term Incentive Awards Are ERISA-Exempt Bonus Programs Unless They Systematically Defer Pay to Termination or Provide Retirement Income

3.1. Precedents Cited

A. Procedural and ERISA-threshold requirements

• Boyer-Liberto v. Fontainebleau Corp.: Cited for the summary-judgment posture—facts are recited in the light most favorable to the non-movant. This framed the analysis as whether, even on Milligan’s version of disputed inferences, the program could qualify as an ERISA pension plan.
• Fraver v. N.C. Farm Bureau Mut. Ins. Co.: Used for the threshold proposition that a plaintiff must first show the challenged arrangement is an ERISA-covered plan. That gatekeeping function mattered: if WealthChoice is not a pension plan, ERISA’s vesting, fiduciary, and anti-forfeiture rules never come into play.

B. Administrative authority and post-Loper Bright statutory interpretation

• Loper Bright Enterprises v. Raimondo: The court treated Loper Bright as prescribing a structured method when Congress delegates discretion: recognize a valid delegation, fix its boundaries, and ensure reasoned decisionmaking within those boundaries. The Fourth Circuit used that template to uphold the Secretary of Labor’s authority under 29 U.S.C. § 1135 and to credit the long-standing bonus-plan regulation.
• United States v. Kokinda: Cited as an example of evaluating “reasoned decisionmaking” by considering statutory purpose when assessing an agency’s interpretation after Loper Bright.
• CFTC v. Schor and NLRB v. Bell Aerospace Co.: Used for congressional acquiescence logic: when Congress revisits a statute without disturbing a long-standing administrative interpretation, that silence can be “persuasive evidence” the interpretation aligns with congressional intent. Here, Congress amended ERISA in 1980 without displacing the bonus-plan regulation.

C. ERISA’s purpose as interpretive context

• Lockheed Corp. v. Spink: Cited for ERISA’s protective purpose—ensuring employees are not “left emptyhanded” after being guaranteed certain benefits. The court leveraged this to distinguish guaranteed retirement benefits from discretionary, performance/retention bonuses.
• Pension Benefit Guar. Corp. v. R.A. Gray & Co. and Nachman Corp. v. Pension Benefit Guar. Corp.: Cited for ERISA’s core concern with retirement security and plan underfunding/termination risks. The Fourth Circuit used these cases to support the view that bonus programs generally do not present the same systemic retirement risk ERISA was enacted to address.

D. Persuasive circuit authority on bonus plans vs pension plans

• Emmenegger v. Bull Moose Tube Co. (8th Cir.): Treated a phantom stock arrangement for key employees as a “classic bonus” plan aimed at performance and retention—supporting the Fourth Circuit’s characterization of WealthChoice as an unfunded, contingent incentive device rather than deferred wages.
• McKinsey v. Sentry Insurance (10th Cir.): Held a “Golden Career Bonus Plan” was not a pension plan where employees could access vested amounts and thus payments were not systematically deferred to termination. The Fourth Circuit analogized: systematic deferral is the critical dividing line.
• Tolbert v. RBC Capital Markets Corp. (5th Cir.) and Boos v. AT&T, Inc.: Cited as the contrasting scenario: a plan can be an ERISA pension plan when it requires employees to forego current income in exchange for later payments, including at separation or in retirement installments—i.e., true deferred compensation.

E. Department of Labor guidance

• DOL Advisory Op. 2025-03A: Used to rebut the argument that revenue-based calculations cannot be “bonus” calculations; the DOL has applied the bonus-program regulation to revenue-percentage incentives.
• DOL Advisory Op. 98-02A: Used to illuminate what might constitute systematic deferral or retirement-income function (e.g., disproportionate allocation to near-retirees, inordinate retiree concentration, or payments delayed so long they effectively serve as retirement income), and to note that how the plan is communicated may matter.

F. The concurrence’s broader statutory-interpretation and disruption concerns

• Murphy v. Inexco Oil Co., Oatway v. Am. Int'l Grp., Inc., Rich v. Shrader, and Wilson v. Safelite Grp., Inc.: Cited by the concurrence to show circuit disagreement/variation, but with multiple circuits rejecting the “any post-termination payment equals ERISA pension plan” approach urged by Milligan.
• Rivers v. Roadway Express, Inc. and City of Oklahoma City v. Tuttle: Cited for the principle that Congress can change statutory meaning, but courts should not presume Congress intended sweeping disruption without clear signals.
• West Virginia v. EPA and Biden v. Nebraska: Invoked to emphasize the need for congressional clarity before effectuating major economic and social change (through the “Major Questions Doctrine” framing), supporting judicial restraint against massively expanding ERISA coverage via interpretation.

3.2. Legal Reasoning

A. Validity and role of 29 C.F.R. § 2510.3-2(c) after Loper Bright

A major move in the opinion is its insistence that Loper Bright does not disable long-standing, congressionally-authorized agency clarifications. The court’s chain of reasoning is:

1. Delegation exists: Under 29 U.S.C. § 1135, the Secretary of Labor may issue regulations “necessary or appropriate” to carry out ERISA, including defining “accounting, technical and trade terms.”
2. The boundary is broad enough: The court treats “employee pension benefit plan” as specialist “trade” vocabulary, allowing the Secretary to clarify the limits of that term.
3. Reasoned decisionmaking is satisfied: The regulation was issued contemporaneously (within a year of ERISA), has remained stable, addressed “numerous inquiries,” and aligns with ERISA’s protective purpose (retirement-income security rather than ordinary bonus practices).
4. Congressional acquiescence supports stability: Congress amended ERISA later without negating the bonus regulation, reinforcing its fit within ERISA’s scheme.

This portion of the opinion matters beyond the immediate dispute: the court treats the DOL’s bonus-plan regulation as a central, durable boundary marker for ERISA pension coverage, not as a mere interpretive suggestion to be brushed aside.

B. Interpreting “systematically deferred” and “retirement income” in practice

Applying 29 C.F.R. § 2510.3-2(c), the court asks whether WealthChoice is (i) a bonus for work performed, and if so, whether it is nonetheless transformed into a pension plan because payments are “systematically deferred” to termination/beyond or provide retirement income.

The court characterizes WealthChoice as a retention-based, performance-contingent bonus:

• It is awarded to a select, high-performing group meeting revenue thresholds.
• It is unfunded and tracked via a notional account indexed to a reference investment; it is an “unsecured, unfunded, contingent promise,” not segregated employee earnings.
• It is conditioned on continued employment through an eight-year vesting date (subject to enumerated exceptions).
• Payment is generally made shortly after vesting and cannot be further deferred by employee election.

Critically, the court rejects the idea that delayed payment alone equals pension-like deferral. The “systematically deferred” concept is treated as a functional, program-level inquiry (what the program is designed to do and what it typically does), not a literalistic trigger satisfied by the existence of any post-termination payment pathway.

C. The opinion’s new (non-exhaustive) factor list

The Fourth Circuit synthesizes peer-circuit decisions into a usable set of considerations for determining whether a program is an ERISA-exempt bonus plan:

1. Whether the plan contemplates universal participation or imposes heightened eligibility requirements;
2. Whether the plan is funded with money that would otherwise be immediately payable to the employee;
3. Whether the plan is actually funded or involves phantom investments;
4. Whether employees can unilaterally postpone payments until termination or beyond;
5. Whether the plan is presented as a vehicle for obtaining retirement income;
6. Whether firm performance impacts plan payments.

Applying those factors, WealthChoice comes out as a bonus program: selective eligibility, no deferral of otherwise-immediately-due wages, unfunded notional tracking, no employee election to push payment to retirement/termination, express retention messaging, and revenue/performance linkage.

D. The concurrence: avoiding “ERISA everywhere”

Judge Wilkinson’s concurrence adds a pragmatic statutory-warning: Milligan’s reading of 29 U.S.C. § 1002(2)(A)(ii) would treat virtually any compensation practice as a pension plan if it results in even a single post-termination payment—potentially sweeping ordinary payroll timing (like a final paycheck after termination) into ERISA. The concurrence stresses the magnitude of ERISA compliance burdens and penalties and warns that employers might eliminate humane exceptions (for retirees, disabled employees, or families of deceased employees) to avoid ERISA classification.

While the majority resolves the case via the bonus regulation and functional analysis, the concurrence highlights the stakes of adopting an interpretation that would create “an avalanche” of unintended consequences in compensation design.

3.3. Impact

A. A clearer safe harbor for long-term retention incentives

The decision materially strengthens the position that long-term incentive awards with extended vesting—common in financial services and executive compensation—are not ERISA pension plans where they are: (i) selective, (ii) unfunded/contingent, (iii) designed for retention/performance, and (iv) not employee-elective deferrals to termination/retirement.

B. A practical test for future litigation

The newly articulated factor list is likely to be cited in future Fourth Circuit ERISA coverage disputes involving: phantom equity, carried-interest-like incentives, long-term cash plans, “career” bonuses, clawback-linked retention grants, and change-in-control awards. It gives district courts a structured way to evaluate substance over labels.

C. Post-Loper Bright validation of long-standing DOL boundary regulations

By applying Loper Bright Enterprises v. Raimondo to uphold 29 C.F.R. § 2510.3-2(c), the court signals that ERISA’s implementing framework—especially long-standing definitional regulations issued soon after ERISA—can remain highly persuasive and operative where Congress delegated definitional authority and the agency acted consistently and purposively.

D. Litigation strategy implications

Plaintiffs challenging forfeiture of long-term incentives will face a higher threshold unless they can show hallmarks of true deferred compensation: employee elections to defer, segregation/funding, retirement-oriented marketing, or payment patterns that concentrate at termination/retirement in a way that is “systematic.”