Legal Question in Employment Law in California

Re: Profit Sharing

You should contact the company and strongly request answers to your questions. Then, if you don't believe what you are being told, or don't believe they will pay you, it is time to involve an attorney to try to ensure you get paid, timely. The concern is that they don't have the money to pay, in which case you will have to take legal action against the company and its owners under ERISA rules.

Re: Profit Sharing

I concur with what Mr. Nelson told you and would add a few things. As a 401(a) qualified plan, the money is not supposed to be in the company's hands, but in the hands of a trustee or insurance company. Sometimes the company is the trustee, but they are not supposed to commingle plan assets and company assets and the plan assets must not be available to pay the company's debts. If they touch that money, it is a federal crime.

It sounds like you have a "partial termination" here, which means if the employer terminates a substantial portion of their employees, they immediately become 100% vested.

In this situation, the company typically terminates the plan and distributes everything early. Sometimes, however, they appoint a successor plan administrator (typically a former corporate officer or a successor company that buys their assets) and continues the plan as a "wasting trust" until the money is gone.

If things start looking fishy, contact the U.S. Department of Labor, Employee Benefits Security Administration, which is the agency responsible for seeing things are done right here.

ERISA has been my primary area of practice for nearly 24 years. If you run into continuing problems, feel free to call me at (770) 534-1057, or you can e-mail me at [email protected]

Although I practice in Georgia, I have also been a member of the California Bar since 1979.