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The world’s most popular fast food chain is being investigated for possible breach of its fiduciary responsibility when it came to employees’ 401k plans.
Attorneys are looking into whether McDonalds participated in unsuitable portfolio investments and caused employees’ 401k plans to lose value.
McDonalds provides a generous employee 401k plan as part of its McDonalds employee benefits package. Employees have the option to save up to 50 percent of their earnings directly into a McDonalds 401k plan, with McDonalds matching its employees’ contributions by 300 percent for the first 1 percent of pay the employee contributes and 100 percent for each dollar on the next 4 percent contributed.
By the year 2000, the fast food giant invested 81 percent of its McDonalds 401k savings in company stock, a practice begun by many large American corporations in the 1980s.
By comparison, by the year 2000, 62 percent of Enron’s 401k plan assets were invested and, following the highly publicized Enron securities fraud incident, Enron employees had their entire 401k savings wiped out.
Fiduciary Duty and Protection
Employers, or fiduciaries, are responsible for acting cautiously to avoid conflicts of interest. A fiduciary that fails to act in the best interest of the 401k plan participants has breached its fiduciary duty and may be vulnerable to a 401k class action lawsuit for ERISA violations.
According to the Employee Retirement Income Security Act (ERISA), fiduciary in lay terms means someone personally responsible for the future retirement of employees, former employees and their beneficiaries. In a 401K plan, they are given unfamiliar titles like “plan sponsor, plan administrator and retirement plan committee member.”
Consequences of a Fiduciary Breach
A 401k provider may be held liable for a breach of duty when the selection of investments by the plan’s investors was not prudent. In addition to making prudent investments, 401k plan investors are required to make certain disclosures. When a court determines that a fiduciary has breached their duty of care, the fiduciary will be required to return any profits made through the use of plan assets.
Breaching their fiduciary duty could mean that the company’s personal assets will be used to correct their errors, restore balances and pay fines. They may also be subject to any additional penalties, as deemed appropriate by the court.
Legal Precedence
Many organizations are keeping a close watch on a current 401k lawsuit the Supreme Court just agreed to hear because depending on how this unfolds, employees may have even more power to come after their employers for charging excessive plan fees.
The case the Supreme Court will consider is Tibble v. Edison International (EIX), and it revolves around 401k fees and the statute of limitations under ERISA.
An appeal filed by Edison International workers claims that 401k participants should be able to sue over “imprudent investments” even though a federal appeals court said a federal statute of limitations bars retirement plan lawsuits over any investments that were added to a retirement plan more than six years ago.
If Edison’s employees are successful in winning a 401k fee lawsuit that pre-dates ERISA’s statute of limitations it could have huge repercussions on employers like McDonalds and the retirement plan industry.
401k Plan Lawsuit Investigations
Many employers, like McDonalds, are suspected of including some reckless investments in their portfolios which in turn causes its employees’ 401k plans to lose value. Employees who suspect their 401k plan has been mismanaged by their employers are protected under the law. Employees who had a McDonalds 401k plan since 2007 can participate in a free class action lawsuit investigation to see if they have a legal claim.
Join a Free McDonalds 401k Class Action Lawsuit Investigation
A class action lawsuit investigation is currently underway to pursue the possibility of taking legal action against McDonalds for potentially violating ERISA. If you are a McDonalds employee who signed up for a McDonalds 401k account since 2007, you may have a legal claim.
