HP Inc. has received backing in its ongoing appeal before the Ninth Circuit concerning the management of forfeited funds within its 401(k) plan. A nonprofit law firm has filed an amicus brief supporting HP’s position, asserting that the company’s practices align with legal standards.
The dispute centers on HP’s allocation of forfeited employer contributions—funds from employees who left the company before their contributions fully vested. HP has been applying these forfeitures to offset its own future contributions to the plan. Plaintiffs argue that this approach violates the Employee Retirement Income Security Act (ERISA), contending that the forfeited funds should instead be used to cover plan administrative expenses or be redistributed to plan participants.
In February 2025, the U.S. District Court for the Northern District of California dismissed the lawsuit, affirming that HP’s use of forfeitures to reduce its employer contributions did not breach ERISA. The court noted that this practice is consistent with longstanding legal interpretations and does not obligate fiduciaries to maximize financial benefits for participants at every opportunity. ([news.bloomberglaw.com](https://news.bloomberglaw.com/employee-benefits/hp-employees-401k-plan-forfeiture-challenge-dismissed-again?utm_source=openai))
The plaintiffs have since appealed this decision to the Ninth Circuit. The outcome of this appeal is anticipated to have broader implications, as similar lawsuits are pending against other major corporations, including Clorox Co., Mattel Inc., and Qualcomm Inc. ([news.bloomberglaw.com](https://news.bloomberglaw.com/us-law-week/hp-workers-seek-9th-cir-win-in-first-401k-forfeiture-appeal?utm_source=openai))
Legal professionals and corporate fiduciaries are closely monitoring this case, as the Ninth Circuit’s ruling could establish a significant precedent regarding the permissible use of forfeited funds in 401(k) plans under ERISA.
HP Inc. has received backing in its ongoing appeal before the Ninth Circuit concerning the management of forfeited funds within its 401(k) plan. A nonprofit law firm has filed an amicus brief supporting HP’s position, asserting that the company’s practices align with legal standards.
The dispute centers on HP’s allocation of forfeited employer contributions—funds from employees who left the company before their contributions fully vested. HP has been applying these forfeitures to offset its own future contributions to the plan. Plaintiffs argue that this approach violates the Employee Retirement Income Security Act (ERISA), contending that the forfeited funds should instead be used to cover plan administrative expenses or be redistributed to plan participants.
In February 2025, the U.S. District Court for the Northern District of California dismissed the lawsuit, affirming that HP’s use of forfeitures to reduce its employer contributions did not breach ERISA. The court noted that this practice is consistent with longstanding legal interpretations and does not obligate fiduciaries to maximize financial benefits for participants at every opportunity. ([news.bloomberglaw.com](https://news.bloomberglaw.com/employee-benefits/hp-employees-401k-plan-forfeiture-challenge-dismissed-again?utm_source=openai))
The plaintiffs have since appealed this decision to the Ninth Circuit. The outcome of this appeal is anticipated to have broader implications, as similar lawsuits are pending against other major corporations, including Clorox Co., Mattel Inc., and Qualcomm Inc. ([news.bloomberglaw.com](https://news.bloomberglaw.com/us-law-week/hp-workers-seek-9th-cir-win-in-first-401k-forfeiture-appeal?utm_source=openai))
Legal professionals and corporate fiduciaries are closely monitoring this case, as the Ninth Circuit’s ruling could establish a significant precedent regarding the permissible use of forfeited funds in 401(k) plans under ERISA.