Do you ever wonder whether employees actually read the 401(k) fee disclosures you send them? It might not matter — they can still sue you years down the road.
That’s what came out of the U.S. Supreme Court in a recent ruling.
In Intel v Sulyma, the high court let employees proceed with an excessive fee class action suit, even after the three-year statute of limitation.
The reason: It couldn’t be determined when participants had “actual knowledge” of the fees. That’s despite the fact that the employer had sent out disclosures.
As many folks see their 401(k) balances sink, courtesy of COVID-19, you can bet they’re watching their investments – and your managing of them – more closely than ever.
Even if a retirement plan management complaint doesn’t make it to the highest court in the land — or any court at all — it could still turn into an expensive headache for you.
In FY2019, the Employee Benefits Security Administration restored more than $2.5 billion to plan participants and beneficiaries.
And the vast majority of fee complaints result in fines for employers.
A key protection now
So how can you best protect your company?
If you haven’t already, now’s the time to adopt e-delivery of disclosures. Creating a “click-through” agreement that requires employees to certify they’ve “read and understand” disclosures, will offer you some protection.
That’ll also let you confirm when employees have opened a disclosure which is critical in starting the three-year window to file a lawsuit.
More class-action suits to come
We may actually see an increase in class-action claims in the near future, courtesy of the coronavirus.
Class-action attorney groups agree that the current pandemic will result in an “explosion” of employee-driven claims, as unemployment continues
to rise.
Three particular areas to watch involve employees who say they were:
- denied wages
- discriminated against during layoffs, or
- put in unsafe conditions.
