Atlanta, GAWhen employers offer an ERISA plan to employees, they have a duty to properly manage that plan. That includes ensuring that employee contributions to the employee savings plan or to the employee stock plan are put into those ERISA plans in a timely manner.
A lawsuit filed by the US Department of Labor against a software company alleges the company violated the Employee Retirement Income Security Act (ERISA) by withholding $15,000 in employee contributions to a 401(k) profit-sharing plan. The company allegedly also failed to forward more than $160,000 in employee contributions to the plan in a timely manner.
According to an article in The Atlanta Journal-Constitution (04/12/11), the lawsuit seeks to recover lost interest for participants of the plan.
In a separate lawsuit, the Department of Labor also filed a complaint against the named trustee of a 401(k) for violating financial laws. According to the lawsuit, the trustee failed to collect and transfer employee contributions to the plan. The lawsuit alleges that more than $5,000 of employee contributions was withheld from paychecks but was not transferred into the 401(k) account. The retirement plan was reportedly funded only by employee contributions.
"The withheld funds were used to benefit the company, rather than the employees, who trusted that their hard-earned retirement savings would be secure," said Edward Maloney, acting regional director of the Labor Department's Employee Benefits Security Administration in Boston, in a news release (04/12/11). "The law specifically requires that plan funds be held in trust and used only for the benefit of participants and their beneficiaries."
The suit seeks to restore plan losses and interest, undo prohibited transactions and bar the trustee from serving as a fiduciary on any ERISA plan. The company is no longer operating and is currently in voluntary receivership.
Employees make contributions to their ERISA-covered plans—both stock options and savings plans—believing that the money is being properly invested. When that money is not properly invested or when fiduciaries fail to follow ERISA laws, employees might be able to recover withheld funds that were not forwarded to the account, as well as interest lost by this failure. Plan trustees and fiduciaries have a duty to follow ERISA laws.
If you or a loved one have suffered losses in this case, please click the link below and your complaint will be sent to an employment law lawyer who may evaluate your Employee Stock Option claim at no cost or obligation.