Although it does not provide definitive answers, the Tolbert decision is a good summary of existing legislation. The courts focus on the percentage of registered labour (and no court has yet gone beyond the 15.34% allowed to Demery) as well as what the Tolbert court called qualitative factors. Although no court has so far asked for evidence of substantial influence, the question remains on the basis of the famous DOL statement. Another question under discussion is whether the presence of a small number of participants who do not meet the selectivity criteria can distort the whole plan: the Second Circuit de Demery stated that a small number of these collaborators would not distort the plan, but the DOL seems to continue to take the opposite position. The “top-hut plan” exception to ERISA`s full coverage of an employee performance plan is the real basis for deferred executive compensation. The exception provides that a “plan that is not funded and managed by an employer primarily for the purpose of obtaining deferral compensation from a group of highly compensated executives or workers” must not comply with the many requirements of ERISA, in particular the free movement and financing provisions applicable to ErISA. The exception applies to all types of deferred compensation agreements, ranging from a single-executive employment contract to a program that complements a 401 (k) plan for a wider range of senior executives. The court focused on a number of issues. With respect to the so-called “selectivity” issue, i.e.
the question of what a group of highly distressing executives or collaborators is, the court found that there were both quantitative and qualitative factors. With respect to quantitative factors, the Tribunal found that some courts focused on the percentage of workers covered by the plan. For example, the second circuit in a case of 2000, Demery v. Extebank, found a plan covering 15.34% of the staff, a plan with a hat, although the court noted that this percentage was probably close to or close to the ceiling of acceptable size for a “selected group”. There are two main types of unfunded NQDC plans: defined contribution plans (or individual accounts) and defined benefit plans. Defined benefit plans pay a pension-like benefit, often based on years of service and/or average end-of-life pay. The plan often provides benefits that go beyond what can be provided under an employer`s qualified pension plan. In an individual account plan, the employee`s performance depends entirely on the value of his or her deferred compensation account.