Taylor Corp., parent company of multiple Top 40 promotional products businesses and other print/promo firms, has agreed to pay $485,000 to settle a lawsuit that former employees brought against the Minnesota-headquartered organization over its 401(k) plan, court records show.

Documents filed April 5 in the U.S. District Court for the District of Minnesota say Taylor and the workers reached an agreement and ask a judge to grant the deal preliminary approval. The settlement, though agreed to by the parties, will still need a final sign-off from a judge. The settlement notes that Taylor Corp. denies “any liability or wrongdoing.”

The former Taylor employees sued in February 2022. They alleged that the 401(k) plan for them from Taylor and its fiduciaries included multiple violations of the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that sets in place minimum standards for most voluntarily established retirement and health plans in private industry, with the aim of protecting individuals in such plans.

In August last year, Minneapolis-based U.S. District Judge Eric C. Tostrud dismissed a number of the claims against Taylor and its fiduciaries. Still, Tostrud permitted the suit to proceed on claims that Taylor and its fiduciaries offered plan participants higher-cost investments when essentially the same, less expensive options were available. 

During mediation discussions on the proposed class action suit, the former employees’ attorneys asserted that Taylor’s alleged failure to utilize the lowest-cost options resulted in damages of about $5.1 million, according to a memorandum on the settlement filed with the court.

Taylor disagreed, defending its decision to offer investment options with revenue-sharing arrangements. According to the memorandum, Taylor’s legal representation argued that even though these had higher gross expense ratios than share classes without revenue-sharing, all revenue-sharing was credited back to the plan and used to pay for various administrative expenses, noting any excess revenue-sharing was distributed to 401(k) plan participants.

Had the case progressed, Taylor argued that it would have demonstrated that “the net expense ratios of the funds with revenue-sharing was actually lower than the least expensive share class that did not provide revenue-sharing,” the memorandum states.

Despite the disagreement, mediation discussions continued, and Taylor and the former employees were able to come to an arrangement acceptable to both. A deal in principle was reached at the end of February but terms weren’t established until recently.

“The settlement will avoid the cost and expense of continued litigation and will provide immediate relief for the settlement class,” the settlement document says.

Attorneys for the former employees plan to ask for up to 30% of the settlement amount in counsel fees, plus reimbursement of litigation expenses, court records show.

Founded in 1975, Taylor Corporation has more than 80 subsidiaries, including Top 40 distributor Taylor Promotional Products (asi/333647) and Top 40 supplier ADG Promo Products (asi/97270).

In a separate case also involving ERISA violation claims, Top 40 distributor Cintas (asi/162167) agreed earlier this year to a settlement that calls for the Cincinnati, OH-headquartered corporation to pay about $4 million to end a class action lawsuit brought by former employees regarding the 401(k) plan it provided workers from December 2013 to at least December 2019.