The U.S. Department of Labor has thrown its weight behind HP Inc. in a closely watched 401(k) forfeiture lawsuit, urging the Ninth Circuit to uphold the dismissal of a proposed class action accusing the tech giant of mishandling retirement funds.
In an amicus brief filed Wednesday, Labor Secretary Lori Chavez-DeRemer told the court that a California federal judge was right to toss the suit in February, siding with HP and rejecting ex-employee Paul Hutchins’ claims that the company’s use of forfeited 401(k) funds violated federal benefits law.
HP Cleared of Fiduciary Breach Claims, Says DOL
The dispute stems from Hutchins’ November 2023 lawsuit on behalf of a proposed class of HP workers, claiming the company improperly used forfeited employer 401(k) contributions to offset future matching obligations — rather than reducing plan-wide fees — and in doing so breached fiduciary duties under the Employee Retirement Income Security Act (ERISA).
But the DOL’s brief called the complaint “bare allegations” and aligned itself with the lower court’s rationale, saying Hutchins failed to state a plausible claim that HP’s actions violated ERISA’s duties of loyalty or prudence.
“For decades, it has been understood that defined contribution plans like HP’s may use forfeited employer contributions to fund future participant benefits, not necessarily to defray administrative costs,” the agency wrote.
