Salesforce to pay $1.35m to settle 401(k) plan misconduct lawsuit
August 30, 2024
Salesforce has agreed to pay $1.35 million to more than 50,000 employees to settle two lawsuits that alleged the company of mismanaging its 401(k) plan, Pensions and Investments reports.
The plaintiffs claimed that plan managers violated the Employee Income Retirement and Security Act, which is a federal law that sets minimum standards for most retirement and health plans in the US private sector.
The lawsuit claimed the company failed to select lower-cost investments, specifically accusing the defendants of imprudently retaining expensive versions of the JPMorgan Institutional Target Dates Funds, the Fidelity Contrafund and the Fidelity Diversified International fund without sufficiently exploring lower-cost options of each of them.
It also accused the plan managers of maintaining certain investments with weaker performance compared to similar options and charging “unreasonable” record-keeping fees.
Former employees Gregor Miguel and Amanda Bredlow also alleged the company, along with its board and CEO Marc Benioff, breached their fiduciary duties by failing to adequately monitor the 401(k) committee.
The settlement notice was filed in the US District Court in San Francisco, California. The class-action settlement covers participants and beneficiaries from March 11, 2024, until the date of preliminary approval.
The notice represented two sets of plaintiffs whose lawsuits, one filed in March 2020 and another in February 2024, were consolidated.
The lawsuits were consolidated as they named the same Salesforce entities and involved overlapping questions of law and fact between the two. In addition, both cases centered on the defendants’ actions in overseeing the 401(k) plan, which had more than 50,000 participants with account balances.
The 2020 lawsuit was initially dismissed later that year, but the Ninth Circuit reinstated it two years later, ruling that the workers had plausibly alleged the defendants neglected their financial duties to plan participants.
A hearing for the settlement is set for September 27.
Last Updated: 30 August 2024