While they may not be as common in corporate America as they used to be, pensions can be a strong incentive for employees to stay with a particular company. In some instances, a pension will provide guaranteed income to a retired employee for a number of years after their service to the company has ended. Some employers pay a lump sum as a pension payment when employment ends.
Either way, employees trust employers to manage funds that will comprise their pensions correctly so that the funds will grow as they reach the age of retirement. When that trust is breached, it could form the basis for legal action against the employer.
Such was likely the case of cosmetics maker Avon. The company recently agreed to settle a class action lawsuit brought by its employees over the management of its pension funds. The company reportedly concealed its involvement in a Foreign Corrupt Practices Act (FCPA) investigation. The federal investigation stemmed from claims in 2008 that Avon disclosed that it was investigating its operations in China for potential FCPA operations. Ironically, Avon's investigation led to a probe by the Securities and Exchange Commission and an eventual $125 million settlement for undisclosed violations.
Nevertheless, the violations ostensibly led to Avon's stock falling precipitously. Avon's employees claim that the company's concealment violated ERISA regulations. Indeed, Avon denied the allegations, but after mediation both sides agreed that a settlement would serve their respective interests.
The story exemplifies the need for experienced counsel when corporations take advantage of their employees. If you have questions about your legal rights against an employer, an experienced attorney can help.