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LEGAL NEWSLINE

Friday, March 29, 2024

Judge orders defunct company to restore retirement funds

SAN FRANCISCO (Legal Newsline) - A federal judge has ordered Fresno, Calif. company Explore General Inc. and Jaime M. Gonzalez to pay $519,601 to the company's 401(k) profit-sharing plan.

The judgment and order was in response to a lawsuit filed by the U.S. Department of Labor based on an investigation by its Employee Benefits Security Administration. The DOL action alleged that the company failed to pay required fringe benefits to the plan and breached their fiduciary duties under the Employee Retirement Income Security Act by not administering the plan solely in the best interests of participants.

Gonzalez was the owner and president of the company when the violations occurred.

According to the DOL communique, Eastern District of California Chief Judge Anthony W. Ishii ruled the now-defunct construction company was required to pay its workers an hourly prevailing wage rate when it was contracted to perform work on projects financed by government agencies. This included contributions to the retirement plan.

The company was paid for its work. The payment by the government included fringe benefit amounts. The company stipulated that it was remitting the fringe benefit amounts to the plan.

But instead of sending the money it used the money for general operating expenses, it is alleged. The company allegedly failed to send more than $300,000 to the plan. The judge's order requires the company to restore lost earnings to the plan in addition to that amount,

"Retirement savings are a vital part of ensuring a steady income after we leave the workforce, which is a key reason that Congress chose to give them special protections," said Phyllis C. Borzi, assistant secretary of labor for employee benefits security.

"Unfortunately, the individuals entrusted with protecting this plan violated those safeguards."

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