Compliance July 14, 2021

Koch Industries Agrees to $4 Million Settlement of ERISA Excessive Fee Suit

The settlement includes a stipulation to perform a recordkeeper RFP.

Reported by


Koch Industries has agreed to pay $4 million to settle a lawsuit alleging the company, Koch Business Solutions and the Koch Benefits Administrative Committee allowed excessive recordkeeping fees to be charged to participants in Koch-affiliated defined contribution (DC) retirement plans.

In addition to the monetary relief, the terms of the proposed settlement, which still need court approval, provide that the defendants will issue a request for proposals (RFP) for recordkeeping services for the plans within 180 days of the settlement effective date.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

The original complaint noted that Alight has been the recordkeeper for the plans since 2009. It said the plan assets were all held in one master trust, and the size of the trust gave Koch “significant leverage to negotiate recordkeeping expenses.”

The complaint pointed out that, in addition to acting as the recordkeeper for the DC plans, Alight has also administered the Koch Industries Employees’ Pension Plan since 2009 and administers Koch Industries’ online benefits portal through which all employee benefits are managed. The plaintiffs suggested the firm’s fiduciary failures were either from lack of a prudent process or from interest in getting discounts from the recordkeeper on other services.

In the memorandum in support of a motion to approve the settlement, the plaintiffs’ attorneys say that although the plaintiffs still have confidence in their claims, the settlement eliminates the risk and cost of a lengthy legal process.

“At the time the parties reached a settlement, the defendants’ motion to dismiss was pending. In the event the motion was denied, there was a risk that the court might have dismissed the claims on summary judgment, as it did in another recent case,” the memo states. “Assuming the case proceeded to trial, the defendants still might have prevailed.”

The attorneys note that Employee Retirement Income Security Act (ERISA) cases often lead to lengthy litigation. “There is little doubt that continuing the litigation would have resulted in complex and costly proceedings, which would have significantly delayed relief to class members even if the plaintiffs ultimately prevailed,” the memorandum says.

Compliance July 13, 2021

Lawsuit Claims Yum! Brands Misclassified Employee, Denied Him Retirement Benefits

The complaint alleges that the plaintiff met the test for employee status per prior case law, but Yum misclassified him as an independent contractor for 25 years.

Reported by


A man has sued Yum! Brands Inc., Taco Bell Corp. and various individual defendants, seeking recognition of his years of employment from 1995 through 2020 for purposes of calculating his retirement benefits with three retirement plans, including a nonqualified deferred compensation (NQDC) plan, sponsored by the company.

According to the complaint, common law employees were eligible for the plans per their governing documents. The complaint alleges that the plaintiff met the test for employee status per prior case law, but Yum misclassified him as an independent contractor.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The lawsuit explains that the man started employment as a recruiter for Taco Bell when it was owned by PepsiCo. It details how he stayed with the company when it was spun away and eventually acquired by Yum. During his 25 years with the company, the plaintiff held the title of executive recruiter.

Although he was classified as an independent contractor, the plaintiff participated in Yum corporate events and team meetings, the company dictated his hours, he was given an office in Taco Bell’s corporate headquarters and he used a company email address and the company’s computer systems to perform his work. The plaintiff was also prohibited from taking outside work to perform similar services for other fast-food businesses.

According to the complaint, “other similarly situated Yum employees received salaries, bonuses and employee benefits such as pensions, vacation pay and health insurance. However, the plaintiff was only compensated on a monthly basis as an independent contractor and received no other employee benefits although he was treated as an employee for all other purposes.”

The lawsuit includes several claims for relief under the Employee Retirement Income Security Act (ERISA), seeking the benefits that are allegedly due to the plaintiff. In addition, he brings claims under federal and state labor codes for failure to pay all wages and for unreimbursed expenses.

The complaint contends that it would be futile for the plaintiff to exhaust administrative remedies because the company first ignored and then declined his request for a copy of pertinent plan documents, saying they could not be provided because he was not a participant in the plans. In addition, the lawsuit says the plaintiff “lacks meaningful access to the review procedures” under the plans.

Yum! Brands has not yet responded to a request for comment about the lawsuit.

«