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SAN FRANCISCO—A federal judge has ordered the owner of a Fresno, Calif.-based construction contracting firm to restore $519,601 to the now-defunct company's 401(k) plan, the U.S. Employee Benefits Security Administration said.
In a 2010 lawsuit filed in U.S. Eastern District of California Court in San Francisco, the U.S. Department of Labor accused contracting firm Explore General Inc. and its one-time owner, Jaime Gonzalez, of failing to make required payments to its 401(k) plan for government-financed projects, as well as breaching its fiduciary duties under the Employee Retirement Income Security Act.
The EBSA's investigation, according to court documents, revealed that the company withheld more than $319,158 from the retirement plan between 2002 and 2005, electing to use the money to cover operating expenses instead.
In a statement released Wednesday, EBSA officials said the company's actions were a clear violation of its responsibility to administer its 401(k) plan “solely in the best interests of plan participants.”
“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,” Assistant U.S. Department of Labor Secretary for Employee Benefits Security Phyllis Borzi said in the agency's statement. “Unfortunately, the individuals entrusted with protecting this plan violated those safeguards.”
Eastern District of California Chief Judge Anthony W. Ishii's decision, which had initially been rendered in February but finalized this week, declared that Explore General and Mr. Gonzalez were required to pay workers a prevailing hourly wage, plus the contributions to the company's 401(k) plan for each participating worker, for any work financed by federal agencies.
The company was ordered to repay the base amount it withheld, in addition to more than $200,442 in earnings the plan would have accrued had the money been properly deposited.