Wal-Mart Hit with Class-Action Over 401(k) Plan
Gregory L. Ash, Tuesday, April 24, 2007 | Filed under: 401(k) Plans, ERISA Litigation, Fiduciary Duties
Plaintiffs’ attorneys have filed a purported class-action lawsuit class action lawsuit against Wal-Mart and the fiduciaries of its 401(k) retirement plan. The suit, which was filed in a Pennsylvania federal court, builds on prior allegations that Wal-Mart unlawfully forced hourly employees to work without compensation. A jury returned a $78.5 million verdict for Wal-Mart’s Pennsylvania employees late last year.
The new nationwide class-action alleges that because Wal-Mart makes profit-sharing contributions to its 401(k) plan based on each employee’s compensation, illegally “shaving” that compensation operated to reduce Wal-Mart’s profit-sharing contributions. Plaintiffs allege that the 401(k) plan fiduciaries breached their duties under ERISA by participating in or failing to stop this reduction.
Employers should take note of this suit. A similar suit could be filed against any employer accused of “shaving” wages if that employer also determines retirement plan contributions or benefits based on employee compensation.
If you have questions about the matters addressed in this article, please contact:
Gregory L. Ash, Chair of Spencer Fane’s ERISA Litigation Group
gash@spencerfane.com
Phone:(913) 327-5115