Amazon accused in lawsuit of mismanaging forfeited 401(k) funds

By Daniel Wiessner

Dec 31 (Reuters) - Amazon.com has been hit with a proposed class action claiming it violated federal law by using nearly $350 million in forfeited 401(k) funds to offset the company's own contributions rather than to reduce administrative fees for more than 20,000 participants.

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

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

Instead of using that money to cover administrative fees for the plan, which totaled more than $18 million during that period, Amazon used it to reduce its own matching contributions, Curtis alleged in the complaint.

Amazon did not immediately respond to a request for comment.

The lawsuit seeks certification of a nationwide class of Amazon 401(k) participants and an order requiring Amazon to "make good to the Plan all losses to the Plan resulting from each violation of ERISA."

The case is Curtis v. Amazon.com, U.S. District Court for the Western District of Washington, No. 2:24-cv-02164.

For Curtis: Beth Terrell and Jennifer Murray of Terrell Marshall; Paul Sharman of the Sharman Law Firm

For Amazon: Not available

(Reporting by Daniel Wiessner in Albany, New York)