Amazon Faces Class Action Over Allegations of $350 Million Misuse of 401(k) Funds

Investing.com -- Amazon (NASDAQ:AMZN).com is facing a proposed class action lawsuit for allegedly misusing approximately $350 million in unvested 401(k) funds in violation of federal law. The lawsuit claims that Amazon used these funds to offset its own contributions rather than reducing administrative fees for over 20,000 participants.

The suit was filed on Monday in Seattle federal court by Amazon employee Cory Curtis. Curtis accuses the online retail giant of breaching the duty of loyalty and prudence outlined in the 1974 federal Employee Retirement Income Security Act, as it relates to employee benefit plans, and of acting in its own interest.

According to the complaint, participants in Amazon’s 401(k) plan fully vest after three years of service, making them eligible for the company’s matching contributions. Between 2018 and 2023, participants who did not fully vest lost approximately $349 million in matching funds.

The lawsuit claims that Amazon did not use the money to cover more than $18 million in administrative fees in the same period. Instead, it is alleged that Amazon used the funds to reduce its own matching contributions.

The case is identified as Curtis v. Amazon.com and is being heard in the U.S. District Court for the Western District of Washington under case number 2:24-cv-02164.