LinkedIn Corp. will pay $6.75 million to more than 17,000 current and former employees to settle a class-action lawsuit alleging the company violated its fiduciary duties in the management of a participant-directed 401(k) plan, according to court documents filed Wednesday.
The social media company allegedly acted “imprudently” in its handling of the investments by selecting riskier funds with higher fees, violating the Employee Retirement Income Security Act of 1974, according to the order signed by Judge Edward J. Davila of the U.S. District Court Northern District of California.
Plaintiffs estimated the company owed the class between $3.9 million and $15.9 million in damages, according to court documents. LinkedIn did not immediately respond to a request for comment.
ERISA sets minimum standards that covered retirement and health plans must meet to ensure participants’ and beneficiaries’ interests are protected.
In June, the Kraft Heinz Co. sued insurer Aetna for allegedly “breaching its fiduciary duties and engaging in prohibited transactions” in its administration of Kraft Heinz’s self-funded medical and dental plans, benefiting itself at the expense of Kraft Heinz. That litigation is ongoing.
In August 2022, the U.S. Department of Labor filed a lawsuit against the owner of a New Jersey design firm and her spouse for allegedly breaching their fiduciary duty by investing most of the assets of an employee profit-sharing plan in a bank the spouse owned, costing the plan more than $17 million after the bank’s shares nosedived, according to the lawsuit. The couple settled the lawsuit for more than $2 million.