Cintas Corp. reached an agreement in principle to settle a lawsuit by former employees who said the company's 401(k) plan violated ERISA by charging excessive record-keeping fees and offering only actively managed mutual instead of cheaper index funds.
The agreement was announced in a document filed Nov. 3 in the U.S. District Court in Cincinnati by attorneys representing plaintiffs and defendants in the case of Hawkins et al. vs. Cintas Corp. et al.
No terms were disclosed. Details will be provided to the court, which must approve a settlement, by mid-January, said the document, noting that the agreement was reached through mediation.
The plaintiffs sued in December 2019, seeking class-action status. The company sought to dismiss the suit, arguing that the complaint should be handled through arbitration. That argument was rejected by both the circuit court in January 2021 and the 6th U.S. Circuit Court of Appeals in September 2022.
Both courts said arbitration for an ERISA dispute was allowable if an arbitration provision was part of a retirement plan document, but Cintas' arbitration provisions in individual employee contracts didn't extend to ERISA.
A final appeal to the U.S. Supreme Court was unsuccessful when justices in January 2023 declined to review the case.
Cintas Partners Plan, Mason, Ohio, had $2.85 billion in assets as of Dec. 31, 2022, according to the latest Form 5500.