A recent 401(k) lawsuit that made its way to the United States Supreme Court alleged the Vice President for Human Resources at a major company violated their fiduciary duty in managing employee retirement plans. The case demonstrates the responsibility HR representatives have in managing the 401(k) plans at their companies.
ERISA Violations Lead to 401(K) Lawsuit
HR management of ERISA covered retirement plans may seem like a secondary role given the vast majority of responsibilities assigned to human resources managers; however, HR staff omitting what appears to be minor details could lead to a 401(k) lawsuit.
Personal liability and significant legal consequences may apply to a human resources manager named in a 401(k) lawsuit. One recent Supreme Court case illustrates that even those high-ranking resources officials may find themselves in the midst of a fiduciary breach 401(k) lawsuit. In that particular case, Tibble v. Edison International, participants in a retirement plan alleged that multiple parties breached fiduciary duties and caused harm to the plan participants. The plaintiffs allege that their 401(k) plans were mishandled, leading to more than $7 million in unnecessary costs. They pursued a class action 401(k) lawsuit under the Employee Retirement Income Security Act (ERISA).
The initial 401(k) lawsuit alleged plan administrators purchased retail shares in 1999 rather than institutional shares. The institutional shares would have led to lower fees. The 401(k) lawsuit also alleged that money from the retail shares was used to offset plan management costs that were ultimately charged by the plan record keepers.
The District Court in that 401(k) lawsuit concluded that three of the funds invested after 2001 should have been bought as institutional shares. However, the District Court also founds that some of the plaintiff’s claims were barred by the statute of limitations under ERISA. Ultimately the plaintiffs appealed and the issues regarding the time limit were heard in U.S. Supreme Court.
The District Court was determined to have made an error in reviewing the statute of limitations, according to the Supreme Court ruling, because the court failed to properly evaluate the fiduciary duty responsibilities that would have been associated. The claim was then sent back to District Court that eventually determined those plan administrators as well as the human resources vice president was liable. Losses, in addition to attorney fees, and entitlement were awarded to the plaintiffs in that 401(k) lawsuit.
The past several years have included an increasing number of ERISA or 401(k) lawsuits alleging breach of fiduciary duties and neglect on the part of plan administrators. When plan participants are harmed by behavior as a result of plan administrators, including human resources directors according to the Supreme Court ruling, those individuals could be held responsible in a lawsuit.
If you are concerned about the administration of your 401(k), the experienced attorneys at Bradley/Grombacher may be able to help and potentially start a 401(k) lawsuit- fill out the form on this page to learn more.
Note: Bradley/Grombacher is not representing the plaintiff in this lawsuit.