LinkedIn Corp. has agreed to disburse $6.75 million to settle a class action lawsuit alleging the company violated its fiduciary duties in administering a participant-directed 401(k) plan. This settlement will impact over 17,000 current and former employees, as per recently filed court documents.
The accusation contends that the social network acted “imprudently” by selecting riskier funds with higher fees, thereby violating the Employee Retirement Income Security Act (ERISA) of 1974. Judge Edward J. Davila of the U.S. District Court for the Northern District of California supports the order mandating compensation.
Plaintiffs estimated that the company owed the affected class a sum ranging from $3.9 million to $15.9 million in damages, according to court documents.
Despite disagreeing with the claims surrounding LinkedIn’s former 401(k) plan, the company opted for a settlement as the preferred avenue to resolve this legal conflict. A company spokesperson, in an emailed statement, expressed, “At LinkedIn, we work to provide our employees with access to opportunities to build the future they desire.”
The Employee Retirement Income Security Act (ERISA) establishes minimum standards that retirement and health plans must meet to protect the interests of participants and beneficiaries. This regulatory framework emphasizes the importance of transparency and diligence in managing these plans.