Amazon.com is facing a lawsuit that claims the company violated U.S. federal law by using nearly US$350 million in forfeited 401(k) funds to offset the company’s own contributions rather than to reduce administrative fees for plan participants, according to a report by Reuters.
In December, Cory Curtis, an employee of the online retail company, filed a lawsuit that alleged the organization violated its duties of loyalty and prudence under the federal Employee Retirement Income Security Act of 1974, which governs employee benefit plans.
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According to the report, the complaint noted that participants in Amazon’s 401(k) plan become fully vested, entitling them to matching contributions from the company, after three years of service. Between 2018 and 2023, plan participants who didn’t fully vest forfeited about $349 million in matching funds. Instead of using that money to cover administrative fees for the plan — which totalled more than $18 million during that period — Amazon used the funds to reduce its own matching contributions.
The lawsuit, which could become a class action, seeks certification of a nationwide class of Amazon 401(k) participants and an order requiring Amazon to “make good to the plan all losses to the plan resulting from each violation of ERISA.”