DOL May Join Oral Arguments in HP Forfeiture Case

The Department of Labor requested to join oral arguments before the U.S. 9th Circuit Court of Appeals regarding HP Inc.’s management of forfeited 401(k) contributions from employees.

The department previously filed an amicus brief supporting the defendants in the case, Hutchins v. HP Inc. The case is the 9th Circuit’s first opportunity to address widespread lawsuits related to how employers handle 401(k) funds forfeited by departing workers that have not fully vested in employer contributions. Oral arguments are scheduled to be held May 20 in San Francisco, with the DOL seeking five minutes of HP’s allotted 15 minutes so that it can support HP’s position.

The 9th Circuit hears appeals from federal district courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington, as well as those from American Samoa, the Northern Mariana Islands and Guam.

According to Encore Fiduciary, 48 forfeiture complaints were filed in 2025, and 29 were filed in 2024. The DOL, since the start of President Donald Trump’s second term, has filed four separate amicus briefs in various appellate courts supporting defendants, including an amicus brief filed in the HP case.

In the amicus brief submitted in Hutchins, the DOL stated that: “a fiduciary’s use of forfeited employer contributions in the manner alleged in this case, without more, would not violate ERISA.”

Typically, the many forfeiture complaints in recent years have centered on a core dispute about how the forfeited funds should be used.

Previous IRS guidance allows plan sponsors to use the funds to either pay down plan expenses or offset future contributions, if permitted by the plan’s documents. In a typical forfeiture dispute, the plaintiffs allege that employers only or disproportionately used the funds to reduce future company contributions, which the plaintiffs argue harms plan participants.

Plaintiffs have been more successful in cases in which the employer’s plan documents had a clear process of how to deal with forfeiture funds, such as paying down plan expenses first.

For example, in Halter v. Providence Health & Services et al., in which plaintiffs secured a settlement of more than $42 million—one of the largest for this kind of claim—Providence’s Form 5500, according to the original complaint, stated that forfeited amounts would be credited to a forfeiture account within the plan and used first to pay plan expenses not covered by Providence, then to restore lost payee accounts, and finally to offset future employer contributions, if any funds remained.

Plaintiffs have been less successful when the employer’s plan documents had less specific statements about how employers could apply forfeiture funds for each given purpose.

Oral arguments in Hutchins begin on May 20. The plaintiff is represented by Hayes Pawlenko LLP and the defendants by Morgan Lewis Bockius LLP.