In a prominent legal resolution, LinkedIn Corp. has agreed to pay $6.75 million to over 17,000 current and former employees. This agreement comes in response to allegations lodged against the company’s 401(k) plan administrators accusing them of inadequate investment monitoring. It was endorsed by a federal judge who was involved in the proceedings of the lawsuit.
The crux of the lawsuit accused LinkedIn of contravening the rules of the Employee Retirement Income Security Act (ERISA). It was alleged that the social media giant adhered to “imprudent investments”, while overlooking “readily available suitable alternative” ones. This has reportedly led to the plan having to shoulder irrational expenses. The plaintiffs’ panel of experts calculated the damages to fall in the range of $3.9 million to $15.9 million during the six-year class period.
Included in the settlement was the approval of $2.25 million towards attorneys’ fees, along with a sum of $119,386 in costs. However, worth noting is the fact that this settlement approval followed the dismissal of the complaint by the judge.
This ruling is a significant reminder to corporations about the stringent enforcement of ERISA rules and the potential serious financial implications of violations. Undoubtedly, this case serves as an important precedent for future lawsuits around the fiduciary responsibilities of 401(k) plan administrators.
For the full details of this ruling, visit the original case coverage on Bloomberg Law.