Baker Sterchi recently obtained an outstanding result for a new client (an industry-leading service provider based in Kansas) that was the subject of a U.S. Department of Labor investigation into its employee benefit plans. Specifically, DOL had alleged that the company had violated ERISA by not adequately monitoring the investment fees charged and portfolio performance obtained by its nationally known investment advisor, resulting in sub-standard performance of the Plan. DOL’s initial settlement demand was for nearly $6 million.

Baker Sterchi worked closely with retained experts to demonstrate to DOL why its demand was excessive, and emphasized to DOL that its client regularly made large voluntary contributions to the Plan for which the company was not receiving credit. We also pointed out to DOL that recent changes in Plan administration would ensure that fees and portfolio performance were being properly monitored.

Following a lengthy meeting with DOL’s Regional Director and other key DOL staff members, a resolution of the DOL investigation was reached, in which our client agreed to continue the investment monitoring practices that had already been implemented and agreed to make a Plan contribution in early 2023 that was consistent with what the company had, in any event, planned to make to the Plan at that time. The agreement reached with the DOL also avoided the imposition of any DOL penalties upon the client.

As part of the successful defense against the alleged ERISA violations, Baker Sterchi attorneys worked with the DOL to add an additional one million dollars to the Plan, which benefits will be fully shared by the client’s employees, management, and ownership.