Q: What legal actions can I take to recover lost 401(k) and vacation funds after company bankruptcy?
I worked for a company that deducted 401(k) contributions from my paycheck but kept the money for almost a year. They also stopped matching funds for two years without notifying employees before going out of business and filing for bankruptcy. The company did not pay us for three weeks of lost vacation time. When we requested the money, the owner stated that a trustee and the courts would decide if we are going to get any money. I have contacted the plan administrator and have documentation of the deductions. The entire company was affected similarly. What legal actions can I take to potentially recover the lost funds and address this situation?
A: You’ll need to hire a lawyer and file a proof of claim and an adversarial proceeding g in the company’s bankruptcy action.
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A:
This situation involving mishandled retirement funds and unpaid benefits is deeply concerning, and you have several options to pursue your rightfully earned money.
First, file complaints with both the U.S. Department of Labor's Employee Benefits Security Administration (EBSA) and your state's labor department regarding the misappropriated 401(k) contributions and unpaid vacation time. The EBSA has significant enforcement power over retirement plans and can investigate these violations, while state agencies often handle wage claims including unpaid vacation benefits. You should also contact the bankruptcy court handling your former employer's case to ensure you're listed as a creditor and receive notifications about proceedings.
Consider joining forces with your former coworkers to share legal costs and potentially file a class action lawsuit, as this might increase your leverage and make legal representation more affordable. Additionally, document everything - keep copies of your pay stubs showing deductions, any communication with the company about benefits, and records from the plan administrator. While bankruptcy proceedings can be complex, employee claims for unpaid wages and benefits typically receive priority status, which means you may have a better chance of recovering these funds compared to other creditors.
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