DOL Sues for 401(k) Fringe Benefit Contributions

Based on an investigation by the Employee Benefits Security Administration (EBSA), the Department of Labor (DOL) filed a complaint alleging that James Brunk and Brunk Industries, Inc. are plan fiduciaries that failed to collect fringe benefit contributions owed to the Brunk Industries Contractors and Employees 401(k) Plan, in violation of the Employee Retirement Income Security Act (ERISA).

According to the complaint, the 401(k) plan’s governing documents provided that fringe benefit contributions from contracts compensating services rendered under prevailing wage laws that provide for a specific amount in fringe benefits in addition to the required hourly wage rate, be contributed to the plan for each employee who performed work on such a contract. The documents required mandatory employer fringe benefit prevailing wage contributions to be made by the employer to the plan on an annual basis for employees employed on certain public works construction projects no later than the due date for the employer’s federal income tax return for the year for which the contributions are due.

The DOL alleges that during the period from July 1, 2009 through June 30, 2013, Brunk and Brunk Industries failed to collect mandatory employer prevailing wage contributions to the 401(k) plan in the amount of at least $108,120.08, and instead retained and commingled the funds with company assets.

The agency seeks restoration of the plan’s losses, removal of Brunk as the plan’s fiduciary, and appointment of an independent fiduciary to terminate the plan and distribute assets to the participants.