Former Atmel employees sued after alleging that Microchip did not pay the severance benefits promised under Atmel’s plan and offered reduced payments in exchange for releases. The parties reached a proposed settlement in 2026, but as of October 4, 2026, it had only preliminary court approval; a final-approval hearing was scheduled for October 15.
What was the severance dispute about?
Atmel had a U.S. Severance Guarantee Benefit Program for certain employees terminated without cause during a specified period connected to a transaction. In September 2015, Atmel agreed to be acquired by Dialog. Microchip made a competing offer in January 2016, and Atmel’s board concluded that offer was better. Atmel withdrew from the Dialog agreement and signed a merger agreement with Microchip on January 19, 2016.
The later court record recounts plaintiffs’ position that the earlier Dialog transaction triggered the plan’s severance-protection period. During the contested acquisition process, Atmel management reportedly told employees that plan benefits would remain available whichever buyer prevailed. Those statements are part of the litigation record; they do not, by themselves, resolve the parties’ dispute over what benefits the plan required.
The Microchip acquisition closed on April 4, 2016, making Atmel a wholly owned Microchip subsidiary. The merger agreement required Microchip to honor disclosed employment and compensation contracts, including specified severance and termination contracts. It also provided transition-period compensation and benefits protections for continuing U.S. employees through December 31, 2016.
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Former employees alleged that after the acquisition Microchip treated the Atmel plan as expired and offered reduced severance to employees who signed releases. Defendants denied liability, argued that the plan did not require the additional benefits the employees sought, and maintained that the releases were enforceable. Those competing positions are allegations and defenses—not a final finding that either side was right about the unpaid benefits.
How did the case develop?
- September 2016: Employees Schuman and Coplin filed suit.
- February 2020: The district court certified a class of 220 former U.S. Atmel employees terminated without cause between April 4, 2016, and March 19, 2017. The court’s 2026 preliminary-approval order says 215 class members signed releases in exchange for part of the plan benefits.
- 2023–2025: The district court ruled that the named plaintiffs’ releases were enforceable under the test it applied and entered judgment for defendants as to those plaintiffs. In June 2025, the Ninth Circuit reversed and set out a non-exhaustive, nine-factor framework for assessing whether a release or waiver was knowing or voluntary.
- 2026: The district court denied motions to decertify the class and reopen discovery, and set trial for July 9. The parties reported a settlement in June. On August 3, the court granted preliminary approval; the court-authorized notice was filed August 7.
The district court called the case “a long-running ERISA class action” in its August 3, 2026, preliminary-approval order. The Ninth Circuit’s 2025 ruling concerned how to evaluate the releases; it was not a final decision that every class member was owed a particular severance amount.
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Who is included in the proposed settlement?
The court-certified class described in the preliminary-approval order consists of 220 former U.S. Atmel employees who were terminated without cause from April 4, 2016, through March 19, 2017. Whether a particular person is included, and how their proposed payment is calculated, should be checked against the court-authorized settlement notice and case records. This article does not determine an individual’s eligibility or legal rights.
The notice states: “As a former Atmel employee, you are entitled to a settlement payment even if you previously signed a claims release in 2016 or 2017 in exchange for 50% of the amount that you would have been entitled to under the Atmel Severance Plan.” That statement describes the proposed settlement for its class; it is not a general rule for other severance disputes.
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What does the proposed settlement pay?
The court-authorized notice bases the proposed benefit on the unpaid severance portion and whether the class member signed a release in exchange for partial severance. It also proposes compound annual interest at 3.96 percent, identified in the notice as the one-year federal Treasury bill rate used in the proposal. Interest would run from the employee’s termination through the settlement’s effective date.
| Class member’s situation | Proposed unpaid-severance payment | Proposed interest |
|---|---|---|
| Signed a release in exchange for partial severance | 80% of the unpaid severance portion | Compound annual interest at 3.96% from termination through the settlement effective date |
| Did not sign a release | 100% of the unpaid severance portion | Compound annual interest at 3.96% from termination through the settlement effective date |
Under the notice, the unpaid severance portion would be treated as wage income, with payroll taxes withheld. The interest portion would be treated as non-wage income without withholding. The notice does not establish an individual’s final payment amount here; the amount depends on the person’s unpaid severance calculation and the settlement’s effective date.
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What must class members do to receive payment?
The proposed process does not require a formal claim form. If the court grants final approval and the settlement becomes effective, class members must submit completed W-4 and W-9 forms within 45 days after the effective date to receive payment, according to the court-authorized notice. The 45-day period has not started as of October 4, 2026, because final approval and the effective date are still pending.
The settlement website listed October 1, 2026, as the deadline to opt out or object. That date had passed by October 4. The listed final-approval hearing was October 15, 2026, at 2 p.m. Pacific time. Because approval, objections, appeals, and timing can affect the next steps, class members should check the official “Schuman v. Microchip Technology Inc. Class Action Settlement” website or the court docket for updates rather than relying on an earlier date.
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What remains unresolved?
As of October 4, 2026, the district court had preliminarily approved the parties’ agreement, but had not finally approved it. The October 15 hearing was still in the future. Accordingly, the payment percentages, interest calculation, form deadline, and payment process described above remain proposed settlement terms, not a finalized payment schedule. Preliminary approval also did not resolve the underlying merits dispute between the employees and defendants.
The case concerns a particular Atmel benefit plan, class definition, set of releases, and litigation record. Its proposed resolution should not be treated as advice about eligibility or severance rights in other mergers or employment situations.
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