Oregon Court of Appeals affirms employer's unilateral changes to retirement plan

Applying the contract law doctrine of accord and satisfaction, the Oregon Court of Appeals last week held that an employer did not breach a contract with its employees when it unilaterally increased the amount the employees must contribute to their retirement benefits.

In Lauderdale v. Eugene Water and Electric Board, the court held that the employer, EWEB, contracted to give its employees free or low-cost lifetime retirement benefits equal to active employees' benefits. Since those rights vested when the employees accepted employment or continued to work, EWEB could not unilaterally modify or revoke the retirement benefits without breaching the contract. The court held, however, that those plaintiffs who were still working at the time of a unilateral cost increase accepted the increase as an accord and satisfaction by continuing to work for EWEB and not challenging the change in benefits.