BP Sued For Alleged Misleading Workers About Retirement Benefits

In 1988, oil giant BP switched its workers’ retirement benefit package from a defined benefit system to a 401(k) system.

But two workers, who sued the company on Wednesday, say BP misled its employees about the nature of the changes and promised to shoulder the extra risk associated with a 401(k) account.

More from the Houston Press:

For more than three decades Fredric “Fritz” Guenther has worked for oil companies on Alaska’s treacherous North Slope.

Guenther, 56, will not be retiring in three years. He’s one of two BP employees who sued the oil giant in Houston federal court Wednesday, claiming the company misled workers when it changed how their pension benefits were calculated back in 1989. Internal company records filed in court show the company knew as early as 1988 that the switch from a traditional defined benefit plan to a 401(k)-like cash balance plan could hurt pensioners like Guenther. Instead of warning them, Guenther’s lawsuit alleges, BP promised workers that the company would shoulder any risk that came with pegging their retirement benefits to the market.

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One memo to employees regarding the new plan reads, “BP America is responsible for funding, and bears the full investment risk. And the plan provides a retirement benefit to career employees that is comparable to the fully competitive benefit under the prior formula.”

BP spokesman Brett Clanton emailed us this statement yesterday: “BP greatly values its employees and retirees. We have not been served with this suit but believe the management of the pension program for this group of employees is in compliance with the law.”

Guenther’s lawyers estimate there could be as many as 1,000 former or current BP workers in the same boat. In 2011, about 450 of them, including Guenther, filed a complaint with BP’s Office of the Ombudsman, a position created in the wake of the 2005 explosion at BP’s Texas City refinery to better address health, safety and other worker issues. The ombudsman, federal district court judge Stanley Sporkin, investigated their complaints for three years before recommending that BP fix its mistake and give the workers the benefits the company had promised.

Read the full story here.