U.S. Labor Department sues Salem, Massachusetts, construction company and master pension plan sponsor in Texas, alleging violations of federal pension law

Archived News Release — Caution: Information may be out of date.

Boston – The U.S. Department of Labor has sued Linskey Construction Inc. of Salem, Massachusetts, and Plan Benefit Services Inc. of Austin, Texas, alleging violations of the Employee Retirement Income Security Act (ERISA), the federal law that protects private sector pension and employee benefit plans.

An investigation by the Labor Department’s Employee Benefits Security Administration (EBSA) Boston Regional Office determined that Linskey, as well as other employers, adopted a prototype employee benefit plan known as the Contractors and Employees Retirement Plan and Trust (the “master plan”). The aim of the plan is to provide retirement benefits to company employees who work under public contracts subject to federal, state or municipal prevailing wage laws.

The department’s suit, filed in the U.S. District Court for the District of Massachusetts, alleges that, from November 2001 through July 2004, the company performed work on numerous prevailing wage projects and, therefore, was required to make contributions to the plan for all work performed by its employees on those projects. Between January 2002 and October 2004, the company failed to submit $77,187 in prevailing wage contributions to the plan. Those contributions remain outstanding in violation of ERISA.

Plan Benefit Services Inc. (“Plan Benefits”) was the plan administrator from 2002 through May 14, 2005, and has been the master plan sponsor since February 2005. The company has been the administrator since May 15, 2005. The department’s investigation showed that both defendants were fiduciaries and parties in interest with respect to the plan.

The suit alleges, among other things, that the company and Plan Benefits violated ERISA by failing to take all measures necessary to ensure that a fiduciary authorized pursuant to Section 403 of the law was responsible for the monitoring and collection of employer contributions owed to the plan and to the plans of all other employers that adopted the master plan (collectively, the “participating plans”).

Finally, the suit alleges that both the company and Plan Benefits engaged in prohibited extensions of credit to a party-in-interest when they failed to take action to cause the collection of delinquent employer contributions.

The department’s suit asks the court to prohibit the defendants from future violations of ERISA, to prohibit Plan Benefits from continuing to implement the master plan as written, and to require Plan Benefits to modify the master plan to ensure that a fiduciary authorized under Section 403 of ERISA becomes responsible for the monitoring and collection of delinquent employer contributions to the plan and the participating plans.

The court is also asked to prohibit the company from acting in a fiduciary capacity with respect to any employee benefit plan covered by ERISA, to appoint an independent fiduciary to administer the plan, and to require the company and Plan Benefits to reimburse the plan and other participating plans for all losses caused by their fiduciary breaches.

This case was investigated by EBSA’s Boston Regional Office. Employers and workers can reach EBSA at 617.565.9600 or toll-free at 1.866.444.EBSA (3272) for help with problems relating to private sector retirement and health plans. In fiscal year 2006, EBSA achieved monetary results of $1.4 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

Chao v. Plan Benefits Services Inc. and Linskey Construction Inc.;
Civil Action Number: 1:07-CV-11474

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Archived News Release — Caution: Information may be out of date.