Verizon Communications Inc., a big telecommunications company, was accused of mishandling its employees’ retirement money. This led to a lawsuit about breaking rules under the Employee Retirement Income Security Act (ERISA). Dealing with legal issues like this can be tricky, especially when it involves your own savings. This article will break down the Verizon ERISA Settlement into simple terms to help you understand what happened and what it means for you.
Verizon Overview
Verizon Communications Inc. is a multinational telecommunications conglomerate based in New York City. The company offers various services, including wireless communications, broadband, and cable television.
With a workforce of over 130,000 employees, Verizon manages a substantial 401(k) retirement plan for its staff. The plan, known as the Verizon Savings Plan for Management Employees, allows participants to invest in various funds for their retirement savings.
The Lawsuit Against Verizon
In February 2016, a plan participant named Melina Jacobs filed a class-action lawsuit against Verizon and its employee benefits committee. The lawsuit, titled “Jacobs v. Verizon Communications Inc. et al.,” was filed on behalf of Jacobs and other participants in the Verizon Savings Plan.
The primary allegation in the lawsuit was that Verizon failed to monitor the performance of one of the funds in the plan, the Global Opportunity Fund. This target-date fund significantly underperformed, leading to substantial losses for plan participants.
Despite the fund’s poor performance, the lawsuit claimed that Verizon and its benefits committee did not take corrective action. This alleged failure to act was the basis for the ERISA violations claimed in the lawsuit.
Plaintiff & Defendant Claims
The plaintiffs in the case argued that Verizon and its employee benefits committee failed to properly monitor and address the underperformance of the Global Opportunity Fund. This hedge fund was included in the plan’s target-date funds. Additionally, they claimed Verizon did not disclose important investment information to plan participants.
On the other hand, Verizon likely denied any wrongdoing or mismanagement. Companies often settle lawsuits to avoid prolonged legal battles and expenses, even if they dispute the allegations. The settlement allows both parties to move forward without admitting fault.
Settlement Details
Under the settlement agreement, Verizon will pay $30 million to be distributed among the approximately 160,000 class members. This includes participants and beneficiaries of the Verizon Savings Plan for Management Employees.
Eligible class members will receive their portion of the settlement as tax-deferred additions to their existing plan accounts. Alternatively, they can choose to have the funds rolled over into tax-deferred individual retirement accounts (IRAs). This allows the money to continue growing for their retirement.
The settlement covers claims related to the time period from April 1, 2010, to August 1, 2016. The allegations focused on how the plan’s investment options were selected, monitored, and performed during that window.
Ongoing Legal Proceedings
The settlement was granted preliminary approval by U.S. District Judge Paul G. Gardephe on July 26, 2023. However, it still needs to go through a fairness hearing, which is scheduled for November 16, 2023. At this hearing, the judge will consider any objections and decide whether the settlement is fair, reasonable, and adequate.
The law firms representing the plaintiffs in this case included Glancy Prongay & Murray LLP, Schneider Wallace Cottrell Konecky LLP, and Edgar Law Firm LLC. Reaching this $30 million settlement was a significant result of their efforts on behalf of the plan participants.
Legal Rights For Class Members
If you were a participant or beneficiary of the Verizon Savings Plan for Management Employees between April 1, 2010 and August 1, 2016, you are part of the class. This means you have legal rights in this settlement.
As a class member, you may be entitled to a portion of the settlement funds. The money will be distributed as tax-deferred contributions to plan participants’ accounts or as rollovers into individual retirement accounts.
It’s important to note that one-third of the settlement amount will go to the law firms representing the class. The rest will be divided among class members.
Important Deadlines
While the settlement still needs final court approval, there are some key dates to keep in mind if you’re a class member.
First, the fairness hearing on November 16, 2023 is when the court will decide whether to give the settlement final approval. If approved, the settlement administrator will provide further instructions on how class members can claim their portion of the funds.
Stay tuned for more information and keep an eye out for official notices with details on the claims process and deadlines. In the meantime, make sure your contact information is up-to-date with the settlement administrator.
Conclusion
The Verizon ERISA Settlement is a major step toward making things right for employees who had money in the Verizon Savings Plan between April 1, 2010, and August 1, 2016. The company will pay $30 million to address concerns about how a particular fund was managed. If you’re a part of this group, you’ll get your share of the settlement either added to your retirement account or moved to a new retirement account.
The final approval of this settlement happened on November 16, 2023.
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