Misinformation regarding profit sharing benefits

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  #1  
Old 06-17-07, 01:55 PM
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Misinformation regarding profit sharing benefits

Question: Is it worth taking legal action against a former employer for deliberately providing misinformation regarding profit sharing benefits?

NOTE: I live in Maryland but the employer is based in Virginia.

I worked for a company for over 1 year. In my offer letter I was promised a profit sharing contribution of between 10% and 15% of my base salary for each year I'm with the company. There were no other stipulations given to me either verbally or in writing.

After recently leaving this company, I was surprised to find out that they have a 2 year waiting period to start vesting the contributions and it doesn't 100% vest until after 6 years. My employer claims he made this perfectly clear to me when I was hired but I certainly don't remember anything and I don't have anything in writing that explains the vesting schedule. When I pushed my employer he sent me the original document he has when he created the profit sharing plan. That's the first I've seen of this document and it doesn't have my initials on it or anything. He claims I'm the first employee to be upset about this and thinks he has done nothing wrong.

From what I've read, it is a requirement to show me the full terms of the profit sharing benefit at time of hire so I can walk away if I don't like the terms. If no terms are provided, I can assume I will be immediately vested at 100%. I read that he is also required to mail me a printed copy of the terms at least once a year, every year, without me even asking for it. My employer thinks I'm ridiculous and has resorted to name calling and threats. He even asked me not to contact other employees or he would bury me (a legal threat, not a physical one). I wanted to work this out peacefully with him but this no longer seems possible. It really bothers me that he treats his employees this way.

Do you think it is worth me taking legal action against this employer or should I just let it go? Do you know if there is help from the Department of Labor or some local government entity that could possibly help us do a professional mediation and take us to court if necessary? Any and all advice is appreciated.
 
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  #2  
Old 06-18-07, 08:42 PM
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Unhappy Pension Question

To answer your most important question of "should I hire a lawyer"? the answer is you are highly unlikely to find a lawyer with knowledge to help you. This is a very specialized area of the law. Even if you could find a knowledgable one, odds are very unlikely he would even take your case. The reason for this is you would probably lose on the merits of the case (the facts aren't in your favor, even if proved to be true) and your damages are probably minimal.

I am not suggesting that you weren't wronged. You probably were. The point is you'd be wasting your time to pursue this yourself.

His pension plan sounds a "defined contribution" plan, meaning he sets aside a certain amount of money each year, usually a percentage of your pay, in the plan for you. It can be set up so there also is an employee match, like a 401(k) plan where the employee is the one who puts the money in the plan. FYI, any money that YOU put into the plan is yours and he has to give it back to you.

The problem here is it sounds like he has in his plan what is known as "cliff vesting". CV means you have to be with the company a certain number of consecutive years of employment (usually 5) before you are entitled to any of that pension money. If you do stay employed with him that long, then all of the money is yours. Thus the term CV. Rather than vesting in a portion of it over a period of years, e.g. 20% is earned by you as each year passes so that at the end of 5 years, it's 100% your money.

So if you leave the company after that, the company would have to pay it to you once you reached the plan's retirement age. Oftentimes employers just give it to you now and you can roll it over into an IRA. They do this so they don't have to deal with investing your money in the plan for you and meeting other legal requirements, such as the annual reporting to you, that you mentioned, among other things.

This kind of plan weeds out employees who don't stay with their employer very long. It rewards those that do the requisite amount of time.

So what happens to the money if you don't stay the full five or six years with the company? Most plans provide you forfeit the money and it is allocated among any remaining employess that are in the plan based on a formula contained in the plan.

This area of the law is governed by both the IRS and DOL. You could possibly stir up the pot some by writing one or both of those oranizations a letter complaing and outlining the facts as you did here. They then might look into it for you. But given the magnitude of the problem (or lack thereof), they likely won't do a damn thing to help you. It would be considered a waste of the taxpayer's money for the Feds to get involved over such a small amount of money. So your only recourse is a lawsuit and as I indicated at the start of this post, no attorney would take this cause unless 1) you paid them by the hour with a big fat retainer up front 2) you can find an ACLU lawyer. Even if you did find one, he likely would be clueless as what your rights are and what to do about it.

You have every right though to see a copy of the plan or at least a synopsis (summary plan description) and an annual accounting. But again, who is going to enforce this?

I would just take my lumps and move on.

Good Luck!
 
  #3  
Old 06-24-07, 10:53 AM
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I think I'll move on

Thanks bmwgolfguy.

I appreciate your thoughtful reply and will probably just take my lumps and move on as you suggest. Thank you.
 
  #4  
Old 08-25-07, 06:44 AM
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I would at least write to the dept of labor, and most attorneys give a free 1/2 hour consult. They could be fined, and if it's a big enough deal it could be a class action lawsuit. If nothing else, depending on the amount, a letter from an attorney may prompt his attorney to tell him to pay you and amend his offer letters and employee handbook.

Although his is a typical plan, that is fair, he should be putting the terms in writing. Good luck.
 
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