Amazon faces class action over misuse of $350M in 401(k) funds

Investing.com -- Amazon.com (NASDAQ:AMZN ) is facing a proposed class action lawsuit, alleging that the company violated federal law by misusing nearly $350 million in forfeited 401(k) funds. The suit claims that Amazon used these funds to offset its own contributions, rather than to reduce administrative fees for over 20,000 participants.

The lawsuit was filed in a Seattle federal court on Monday by Amazon employee Cory Curtis. Curtis accuses the online retail giant of self-dealing and breaching its duties of loyalty and prudence, as outlined under the federal Employee Retirement Income Security Act of 1974, which governs employee benefit plans.

According to the complaint, participants in Amazon's 401(k) plan become fully vested, which entitles them to matching contributions from the company, after three years of service. Between 2018 and 2023, plan participants who did not fully vest forfeited about $349 million in matching funds.

The lawsuit alleges that Amazon did not use this money to cover the plan's administrative fees, which totaled more than $18 million during the same period. Instead, it is claimed that Amazon used this money to reduce its own matching contributions.

The case is identified as Curtis v. Amazon.com, and it's being heard in the U.S. District Court for the Western District of Washington, under case number No. 2:24-cv-02164.

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Source: Investing.com