Amazon.com is facing a proposed class action lawsuit filed in federal court this week, accusing the e-commerce giant of violating federal law by mishandling nearly $350 million in forfeited 401(k) funds. The lawsuit, brought by Amazon employee Cory Curtis, claims the company used these funds to offset its own contributions rather than to reduce administrative fees for over 20,000 plan participants.
The complaint, filed on Monday in the U.S. District Court for the Western District of Washington, accuses Amazon of engaging in self-dealing and breaching its fiduciary duties under the federal Employee Retirement Income Security Act (ERISA) of 1974. ERISA sets standards for employee benefit plans, ensuring that companies manage workers’ retirement funds with loyalty, care, and prudence.
According to the lawsuit, Amazon employees become fully vested in their 401(k) plan after three years of service, which entitles them to matching contributions from the company. However, between 2018 and 2023, over 20,000 plan participants who did not fully vest forfeited approximately $349 million in matching funds.
Rather than using these forfeited funds to cover the plan’s administrative fees — which totaled more than $18 million during that period — Amazon allegedly diverted the money to reduce its own matching contributions. This, according to the lawsuit, represents a breach of Amazon’s fiduciary duties to the plan participants under ERISA.
“Amazon chose to use the forfeited funds to offset its own financial obligations, instead of applying them where they were needed most — to reduce the administrative costs of managing the 401(k) plan,” said Cory Curtis in his complaint. “This decision appears to benefit Amazon at the expense of its employees’ retirement savings and violates federal law.”
The lawsuit seeks certification as a nationwide class action, representing all Amazon employees who participated in the company’s 401(k) plan during the relevant period. Curtis is requesting that the court order Amazon to restore all losses to the 401(k) plan resulting from these alleged violations of ERISA.
The lawsuit, Curtis v. Amazon.com, also calls for Amazon to be held accountable for its role in what is described as a breach of fiduciary duties, specifically accusing the company of “self-dealing” and failing to act in the best interests of its employees.
In response to the lawsuit, Amazon has not yet issued a public statement or comment.
The case raises significant questions about how large corporations handle their employees’ retirement savings and whether they are prioritizing their own interests over those of the employees who depend on these funds for their future security. If successful, the lawsuit could have broader implications for other companies with similar 401(k) plan structures, potentially leading to increased scrutiny of how forfeited funds are managed within employee benefit programs.
The case is Curtis v. Amazon.com, U.S. District Court for the Western District of Washington, No. 2:24-cv-02164.
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