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Florida Employee Benefits

April 16th, 2007 Posted by Amelia

If you’ve ever wondered what it takes to get US Secretary of Labor Elaine Chao riled up, now you know. The petite, well-dressed Chao is normally described as “ladylike,” but her recent remarks showed that even the normally unflappable Secretary has her limits.

The US Dept. of Labor recently sued a company and its owner to recover over $1.5 million in Florida employee benefits.

In a stinging comment, sedate US Secretary of Labor Elaine Chao said, “Workers’ retirement plans are not to be treated as cash machines for management’s convenience.” She added, “This legal action on behalf of the retirement plan’s participants seeks to recover more than $1.5 million, ensure the plan’s future integrity and prevent the defendants from ever again being in a position to plunder employee benefits.”

The suit was lodged against X-Ray Equipment Co., a firm that sells and services medical equipment including CT scanners, MRIs and PET scanners. The suit alleges that the owner of X-ray misused more than $1.5 million in retirement plan assets to benefit the company.

Misusing retirement funds is a violation of the US Employee Retirement Income Security Act (ERISA). According to the suit, between Sept. 30, 2000 and now the owner of X-ray failed to collect $1,156,800 in loans plus interest owed to the plan. He also kept $427,021 in loan payments made by plan participants and third-party borrowers. In a flagrant violation of trust, the loan repayments were co-mingled with the general assets of the company and used to pay company expenses.

The company owner acted as the plan trustee. In that capacity, he made risky investments with the plan funds resulting in hefty losses. As a result, the plan was unable to pay benefits to retirees who had made contributions.

Under the suit, X-ray and its owner would have to pay back all the lost money, with interest. They would also be barred permanently from service to any plan covered by ERISA. A new plan trustee would be appointed to handle the funds.