Employee Transition Benefits Not Wages:

ERISA preempts state unemployment law

Minnesota case law summary by Attorney Richard Clem: MN unemployment, ERISA, preemption.

Thomas V. Engfer v. General Dynamics Advanced Information Systems, Inc.. MN unemployment, ERISA, preemption

When Thomas V. Engfer was laid off from General Dynamics Advanced Information Systems, Inc., he elected to participate in the company's Employee Transition Benefit (ETB) plan. This plan was governed by ERISA, and under the plan, he was also required to apply for state unemployment benefits, which he did.

The Minnesota Department of Employment and Economic Development and the Unemployment Law Judge held that the ETB payments constituted "wages" under the unemployment statute, Minnesota Statute 268.035. Therefore, he was held to be ineligible for unemployment benefits. Engfer took the position that this was contrary to federal law, and appealed to the Minnesota Court of Appeals.

The Court of Appeals agreed, and held that the Minnesota Statute was preempted by ERISA, 29 U.S.C. 1144(a). Accordingly, the Court of Appeals reversed, in an opinion authored by Judge Stoneburner, with Judge Halbrooks concurring. Judge Schellas dissented, and would have held that the state law was not preempted.

No. A13-0872 (Minn. Ct. App. Mar. 17, 2014).

Please see the original opinion for the court's exact language.


Richard P. Clem is an attorney and continuing legal education (CLE) provider in Minnesota. He has been in private practice in the Twin Cities for 25 years. He has a J.D., cum laude, from Hamline University School of Law in St. Paul and a B.A. in History from the University of Minnesota. His reported cases include: Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia v. Dow Quimica de Colombia, 988 F.2d 559, rehearing denied, 5 F.3d 530 (5th Cir. 1993), cert. denied, 510 U.S. 1041 (1994); LaMott v. Apple Valley Health Care Center, 465 N.W.2d 585 (Minn. Ct. App. 1991); Abo el Ela v. State, 468 N.W.2d 580 (Minn. Ct. App. 1991).

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