Flexible Spending Account Legal Question

[PEWood]

What is the name of your state?OH

I am currently involved in a civil case against my former employer. The short story is that when I left the company, the employer continued to make deductions for my flexible spending account (so far, so good). I did not object as I wanted to continue applying for reimbursement.

The issue is that after my last paycheck (approximately three weeks after my last day of employment), the employer abruptly closed my account, and did it RETROACTIVE to my last employment date. This meant that any attempt to seek reimbursement after my termination date were denied. Since I was unable to collect (the majority of the deductions were for dependent care, a weekly cost), the unused funds eventually reverted back to my former employer.

I am arguing that he is acting in bad faith, but I am unable to find any state or federal laws being broken. Does anyone know of any legal arguement I can make?

 

[JETX]

Does anyone know of any legal arguement I can make?

Nope. The employer had no obligation to continue your 'flex account' after you left. He was right in closing it. You have no case.

 

[tkilburn]

Well, I am a bit confused now. I thought FSA's were COBRA eligible? Wouldn't the employer have to offer this?

Thanks,
TK

 

[Beth3]

Yes, COBRA reg's do require that the employer offer COBRA continuation to departing FSA participants.

In order to address your primary question, one would have to review the employer's Flex Plan Document. It's customary for active participation to cease when employment ends (unless an employee elects COBRA) however it's standard for the employee to have 90 days following termination to submit eligible expenses incurred while employed. You need to see what the exact wording of your Plan Doc dictates on this. If the employer violated the Plan Doc, then you need to contact the federal Department of Labor and file a complaint.

 

[JETX]

Beth is correct. However, it is my contention that her 'example' is not common... and thereby my answer remains as the more likely one.
There is no INHERENT obligation for an employer to continue a flex account upon an employees leaving their employ.

 

[pattytx]

Huh? If you left the company, how could deductions continue? Were you getting severance pay on a continuing basis?

 

[PEWood]

Clarification

JETX - I don't think you fully understand the scenario. I am not objecting that he closed my account. I am objecting to how he closed my account. He continued to make deductions after my termination date, yet closed the account on my termination date. In essence, he deducted money and then made it impossible for me to submit claims, since I was unable to submit any claims that occurred after my termination date (but before the last deduction occurred).

Pattytx - I was paid in two weeks in arrears. I was not paid my first check until I was with the company for two pay periods. I left the company two days before a payday. This meant I was still owed a paycheck one pay period after that one. Therefore, I was owed two paychecks when I left.

I plan on asking a judge to force him to provide me with copies of the agreement so I can review it to see if there are any violations.

 

[seniorjudge]

...

I plan on asking a judge to force him to provide me with copies of the agreement so I can review it to see if there are any violations....

How much are we talking about here?

This lawsuit will cost you several thousands of dollars and take a very long time.