Fourteen former employees of a Galloway Township construction company filed a federal lawsuit last month alleging the firm kept money from their paychecks meant for their retirement fund.
The plaintiffs, all former members of Local 76 in Kline Construction Co.’s Gas Division, say the company either set up a 401k plan for them but never contributed the money deducted from their paychecks or never set up a plan for them but still deducted money from their paychecks for it, according to the complaint filed June 26 in U.S. District Court.
Calls to the company went unanswered Friday morning.
In addition, the company never gave the employees plan-related documents and threatened them with firing when they asked for documents or if they tried to withdraw money from the account, the defendants claim. The company, Katherine “Kathie” Kline-Penate, J. Edward “Ed” Kline and Robert “Bob” Miller, officials at the business in charge of administrating the plan, were named as defendants.
Kline-Penate, the company’s chief financial officer, used the money to buy her husband a Chevrolet Corvette, pay him a salary over $100,000 even though he’s not an employee at the company, and buy parts for her RV and boat, according to the lawsuit.
The six-count suit claims the company violated the Employee Retirement Income Security Act, which governs standards for pension plans in private industries, via the missing contributions, engaging in self-interested transactions with the plan assets and unpaid wages.
In what attorneys for the plaintiffs are calling an “illegal pay scheme,” company officials started keeping the plaintiffs’ 401k-designated wage deductions in 2016 for their own benefit and hid it through “misrepresentations and shoddy record-keeping practices by the company and its representatives.”
For example, the company used inconsistent withholding titles and descriptions on the plaintiffs’ paystubs that also failed to correspond with year-to-date totals, the suit alleges.
Once employees left the company in March after the Gas Division was shut down, they learned the deductions from their paychecks for the savings plan were never deposited, according to the suit.
An exact dollar amount of the money the plaintiffs claim was withheld by the company was not included in the lawsuit, but the complaint notes “hundreds of thousands of dollars” in losses.
The plaintiffs are seeking to have the money restored to the 401k plan, to permanently sever company officials from having control over employee benefit plans covered by ERISA, and attorneys’ fees and other costs.