Following a U.S. Department of Labor lawsuit (DOL), an out-of-business California-based construction company and its former owner have been ordered to restore $519,601 to the company's 401(k) profit-sharing plan, according to the terms of a judgment and order.
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Get Your Report Now!The judgment and order, entered in the U.S. District Court for the Eastern District of California, resolve a DOL lawsuit that was based on an investigation by its Employee Benefits Security Administration (EBSA).
The suit alleged that Explore General Inc. and its owner failed to pay required fringe benefits to the plan and breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by not administering the plan solely in the best interests of participants.
Chief Judge Anthony W. Ishii found that the construction company was required to pay its workers an hourly prevailing wage rate, including a fringe benefit for each participant in the form of contributions to the retirement plan, when it was contracted to perform work on projects financed by government agencies. The company was paid in full by the agencies for its work, including fringe benefit amounts, and certified that it was sending the fringe benefits to the plan.
However, the company failed to remit more than $300,000 to the plan, choosing instead to use the money for operating expenses. In addition to that amount, the judge's order requires the company to restore lost earnings to the plan.
The Labor Department's regional solicitor in San Francisco litigated the case. Additional information can be found at http://www.dol.gov/ebsa/.